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FINANCIAL CHRONICLE™ » CORPORATE CHRONICLE™ » Buyer beware: CSE game played on social media

Buyer beware: CSE game played on social media

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Lotus Eater

Lotus Eater
Senior Equity Analytic
Senior Equity Analytic

Sri Lanka’s stock market game has changed: Unlike a decade ago when a few high networth individuals and their crony brokers played the market so much so the regulators were helpless and some of the latter were sent home.

This game – for the lack of a better word – is now played on social media.

One would think the so-called big guys learned their lesson a decade ago but no, they learned to maneuver the loopholes better and talk about certain shares on the Colombo Stock Exchange when they found Twitter, Facebook, telegram, WhatsApp, and what have you not. They hit the jackpot when they found a group of gullibles who will bite the bait and take them up on every word typed online, industry sources said.

This also has a lot to do with freedom of expression and business is thriving.

This time the onus is not on the regulators. It is on those who follow these social media sites. “Most of these people are 18- to 35-year-olds and they are not babies,” a stock market analyst stressed. He added that they should know that a stock should only go up in price to a reasonable fair value. “Crying over spilled milk later is of no use. This was a lesson learned a decade ago.”

Another analyst noted that staying at home during the pandemic with nothing to do in front of a keyboard has made young people join the cause/call.

On the other hand, these so-called high networth individuals’ argument is that when the stock market goes up, those with a ‘negative’ mentality will find fault, and when the opposite happens, they will still have things to say. These arguments have been popularly directed at media personnel and others who point out that something is not right. These allegations are also decades-old.

It is also important to note that one must analyse the track record of certain Twitter warriors and other social media instigators when taking their advice. The choice is yours. Do your homework is all we, as scribes, got to say.

https://www.sundaytimes.lk/210829/business-times/buyer-beware-cse-game-played-on-social-media-453642.html

J-CAT likes this post

ONTHEMONEY


Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics
@Lotus Eater wrote:
Sri Lanka’s stock market game has changed: Unlike a decade ago when a few high networth individuals and their crony brokers played the market so much so the regulators were helpless and some of the latter were sent home.

This game – for the lack of a better word – is now played on social media.

One would think the so-called big guys learned their lesson a decade ago but no, they learned to maneuver the loopholes better and talk about certain shares on the Colombo Stock Exchange when they found Twitter, Facebook, telegram, WhatsApp, and what have you not. They hit the jackpot when they found a group of gullibles who will bite the bait and take them up on every word typed online, industry sources said.

This also has a lot to do with freedom of expression and business is thriving.

This time the onus is not on the regulators. It is on those who follow these social media sites. “Most of these people are 18- to 35-year-olds and they are not babies,” a stock market analyst stressed. He added that they should know that a stock should only go up in price to a reasonable fair value. “Crying over spilled milk later is of no use. This was a lesson learned a decade ago.”

Another analyst noted that staying at home during the pandemic with nothing to do in front of a keyboard has made young people join the cause/call.

On the other hand, these so-called high networth individuals’ argument is that when the stock market goes up, those with a ‘negative’ mentality will find fault, and when the opposite happens, they will still have things to say. These arguments have been popularly directed at media personnel and others who point out that something is not right. These allegations are also decades-old.

It is also important to note that one must analyse the track record of certain Twitter warriors and other social media instigators when taking their advice. The choice is yours. Do your homework is all we, as scribes, got to say.

https://www.sundaytimes.lk/210829/business-times/buyer-beware-cse-game-played-on-social-media-453642.html
Hi all,

I DON’T AGREE. Logically, ASI is representing corporate valuations.Hence, ASI should always be backed by fundamentals. 

SL has e lowest MKT PE, in which ASI have SIGNIFICANT POTENTIAL to GROW

It doesn’t mean all JUNKS should trade in UNJUSTIFIED prices EVEN TECHNICALS supports

The MARKET PE was around 28~30 during 2011. Now market PE is 10.8 

Hence, right now if someone is saying its overvalued or fair value, the readers should carefully check the background/purpose for such a statement.

Good Luck

Lotus Eater, samaritan and mah2903 like this post

xhunter

xhunter
Moderator
Moderator
I agree with @ONETHEMONEY
But there is a statement I can NOT agree with in the above post

SL has e lowest MKT PE, in which ASI have SIGNIFICANT POTENTIAL to GROW”.
Practically this is the other way around.
Market “fair” PE value is actually based on the “POTENTIAL to GROW” of that market.
if the current MKT PE is low comparing to other markets, it doesn’t mean that there is a potential to grow.
“potential to grow” is the independent thing here, then fair market PE is derived by “potential to grow”, then if current MKT PE is less than fair value, that means market is undervalue.
NEVER compare PEs in two different markets.
There is an important factor to decide the fair PE, it is probable ROI.
Assume that there is company named ABC and
their NAV is Rs 100,
and after 2 years NAV is Rs 200.
Assume that current USD to LKR rate is USD 1 = Rs 200
After 2 years USD to LKR rate is  USD 1 = Rs 300
So in USD , ABC NAV growth is  USD 0.5 to  USD 0.75  , 50% increase
But is LKR it is 100%.

So if in a market in a country which has a stable currency ,PE value is 20, and our market PE is 10.8 doesn’t mean we have potential to grow or our fair PE is 20.
Our fair PE value might be 15 or 12 , 16 or even 8 (it is up to us to decide).

ADVENTUS


Moderator
Moderator
@Lotus Eater wrote:
Sri Lanka’s stock market game has changed: Unlike a decade ago when a few high networth individuals and their crony brokers played the market so much so the regulators were helpless and some of the latter were sent home.

This game – for the lack of a better word – is now played on social media.

One would think the so-called big guys learned their lesson a decade ago but no, they learned to maneuver the loopholes better and talk about certain shares on the Colombo Stock Exchange when they found Twitter, Facebook, telegram, WhatsApp, and what have you not. They hit the jackpot when they found a group of gullibles who will bite the bait and take them up on every word typed online, industry sources said.

This also has a lot to do with freedom of expression and business is thriving.

This time the onus is not on the regulators. It is on those who follow these social media sites. “Most of these people are 18- to 35-year-olds and they are not babies,” a stock market analyst stressed. He added that they should know that a stock should only go up in price to a reasonable fair value. “Crying over spilled milk later is of no use. This was a lesson learned a decade ago.”

Another analyst noted that staying at home during the pandemic with nothing to do in front of a keyboard has made young people join the cause/call.

On the other hand, these so-called high networth individuals’ argument is that when the stock market goes up, those with a ‘negative’ mentality will find fault, and when the opposite happens, they will still have things to say. These arguments have been popularly directed at media personnel and others who point out that something is not right. These allegations are also decades-old.

It is also important to note that one must analyse the track record of certain Twitter warriors and other social media instigators when taking their advice. The choice is yours. Do your homework is all we, as scribes, got to say.

https://www.sundaytimes.lk/210829/business-times/buyer-beware-cse-game-played-on-social-media-453642.html
That article is full of BS. 

Many listed entities are doing great and their true value is not being portrayed in the market. It has just started to show that. 
Investors and traders should stay away from speculative and underperforming stocks and select the good ones based on proper research. 

Make use of the platforms available- broker research and HNWIs but YOU be the judge. Also, keep a good eye on the macroeconomic conditions.

niru


Manager - Equity Analytics
Manager - Equity Analytics
@xhunter wrote:I agree with @ONETHEMONEY
But there is a statement I can NOT agree with in the above post

SL has e lowest MKT PE, in which ASI have SIGNIFICANT POTENTIAL to GROW”.
Practically this is the other way around.
Market “fair” PE value is actually based on the “POTENTIAL to GROW” of that market.
if the current MKT PE is low comparing to other markets, it doesn’t mean that there is a potential to grow.
“potential to grow” is the independent thing here, then fair market PE is derived by “potential to grow”, then if current MKT PE is less than fair value, that means market is undervalue.
NEVER compare PEs in two different markets.
There is an important factor to decide the fair PE, it is probable ROI.
Assume that there is company named ABC and
their NAV is Rs 100,
and after 2 years NAV is Rs 200.
Assume that current USD to LKR rate is USD 1 = Rs 200
After 2 years USD to LKR rate is  USD 1 = Rs 300
So in USD , ABC NAV growth is  USD 0.5 to  USD 0.75  , 50% increase
But is LKR it is 100%.

So if in a market in a country which has a stable currency ,PE value is 20, and our market PE is 10.8 doesn’t mean we have potential to grow or our fair PE is 20.
Our fair PE value might be 15 or 12 , 16 or even 8 (it is up to us to decide).

Yes. I fully agree with you.
In overall a few major shareholder individual’s 
become as billionaires in short term.
If you carefully analyze the index appreciation you can see that it was manipulated by few stocks.

J-CAT likes this post

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