This story from the Pakistan Daily Times caught my eye this morning. Panic continues to build as this bear market grinds on around the world. I am reminded of the angry employees and investors who were storming Bear Stearns offices when I was in New York in May. Now investors in Pakistan are taking to the streets in frustration and anger to protest recent stock market losses:
“Thousands of angry investors, enraged by the persistent decline in share prices, protested on the floors of stock exchanges in Karachi, Lahore and Islamabad on Thursday, demanding a temporary closure of the markets.
A slump in investor confidence accelerated as stocks fell over four percent and the rupee dropped by 1.3 percent around midday due to fears of political uncertainty and dire economic challenges, including a double-digit inflation rate.
Small investors gathered at the trading hall of the Karachi Stock Exchange (KSE) around 11am and began shouting slogans, while some protestors broke windowpanes and furniture at the trading hall. Edhi sources said at least three people were injured in scuffles with the police officers deployed to handle the situation…
Investors demanded that trading at the KSE be halted for a few days in view of the continuous decline in share values.”
See: Investors enraged as stocks plunge
This story exemplifies a common element of capital markets. Most investors understand so little about how markets actually work or the often dangerous and speculative forces that drive them. Most people are happy and complacent when things are going up but when the inevitable corrections take hold, few are prepared, and many are hurt and most are angry after the fact at the institutions for their losses.
Methodically controlling our individual exposure to capital market cycles is the only hope for retaining gains and avoiding big losses. This takes a proactive, self-disciplined, management style, focused on preserving and protecting our capital before it can be trampled by the masses. As people all around the world are learning once again, buy and hope is not a wise strategy. And it is often a recipe for great human trauma.
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