You are gambling when what you buy neither assures you safety of capital nor gives you a reasonable return.
Gautam Chikermane
AT THE end of every stock market scam, particularly when share prices start falling sharply, the one common refrain heard is: the stock market is a gambling den, of the gamblers, for the gamblers, by the gamblers. Last week, one investor who had lost a lot of money in the recent carnage told me, "The stock market is a satta. I’m not coming back again." Interestingly, he said the same thing eight years ago, when he lost money in the securities scam.
He’s not alone. A look at the trading volumes will tell you far more about the departure of investors from the market than any number of newspaper pages or analysts’ reports. Compared to a daily turnover of around Rs 6,300 crore on the National Stock Exchange on December 6, 2000, the daily turnover today is around Rs 1,900 crore–a fall of 70 per cent! The quantity of shares traded has fallen to 97 million, almost half its value, in less than five months. The scam has taken its toll.
Opinion in Outlook Money
Thursday, May 31, 2001
Tuesday, May 15, 2001
In search of enough-II
We, as a civilisation, suffer from the never enough syndrome: the more we have, the more we want to have.
Gautam Chikermane
The one whose appetite is satisfied loathes honey, but to the hungry mouth every bitter thing is sweet. –Proverbs 27:7, Bible
Satish Patel from New Delhi has been one of our earliest, most regular and steadfast readers, encouraging us when we do good work and reprimanding us when we slip up. This time he’s pointed out something so basic, so simple and so obvious, that I wonder why I didn’t think of it before. In my previous column, I had explored the limits of wealth we want, and was wondering when we’ll ever have Enough of it. In response to which Patel writes: "There is a lot of truth in your musings (In Search of Enough, April 30). However, I believe that somewhere down the line the inexorable Law of Diminishing Returns would start to take effect. That’s when people face lifetime crises. And, perhaps, start contributing to others’ wealth–shrinks and doctors."
For those who are not students of economics, the law of diminishing returns is an economic principle that lays down that the application of additional units of any one factor of production– labour, land, capital–to fixed amounts of the other factors yields successively smaller increments in the total output. For instance, if more and more labourers are added to harvest a farm, at some point each additional labourer will add less output than his predecessor did, simply because he has less and less of the fixed amount of land to work on. A long-time characteristic of Indian agriculture, economists have called this ‘disguised unemployment’. First hinted at by sociologist-economist Thomas Robert Malthus in his 1798 paper, Essay on the Principle of Population, this principle was later accepted as an economic law underlying all productive enterprises.
Opinion in Outlook Money
Gautam Chikermane
The one whose appetite is satisfied loathes honey, but to the hungry mouth every bitter thing is sweet. –Proverbs 27:7, Bible
Satish Patel from New Delhi has been one of our earliest, most regular and steadfast readers, encouraging us when we do good work and reprimanding us when we slip up. This time he’s pointed out something so basic, so simple and so obvious, that I wonder why I didn’t think of it before. In my previous column, I had explored the limits of wealth we want, and was wondering when we’ll ever have Enough of it. In response to which Patel writes: "There is a lot of truth in your musings (In Search of Enough, April 30). However, I believe that somewhere down the line the inexorable Law of Diminishing Returns would start to take effect. That’s when people face lifetime crises. And, perhaps, start contributing to others’ wealth–shrinks and doctors."
For those who are not students of economics, the law of diminishing returns is an economic principle that lays down that the application of additional units of any one factor of production– labour, land, capital–to fixed amounts of the other factors yields successively smaller increments in the total output. For instance, if more and more labourers are added to harvest a farm, at some point each additional labourer will add less output than his predecessor did, simply because he has less and less of the fixed amount of land to work on. A long-time characteristic of Indian agriculture, economists have called this ‘disguised unemployment’. First hinted at by sociologist-economist Thomas Robert Malthus in his 1798 paper, Essay on the Principle of Population, this principle was later accepted as an economic law underlying all productive enterprises.
Opinion in Outlook Money
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