Fellow Investors,
I feel that BSE is trying to reduce the losses to investors, caused by the selling spree that happens during times of crisis. Even though this safeguard is encouraging the short term (1Yr) trading.
We are seeing the upside a stock can go to 400%, but we all know, just a Random Walk phenomenon can make stock to touch -400%. The Exchange is reducing our Risk and in turn the returns are also reduced.
Say if a stock is 400 INR at year starting, and it climbs to 1600 INR by the year end. Then 1600 INR becomes the base line. So the next 400% jump can take it to 6400 INR in the year 2. It is only that, in Yr 1 the stock cannot reach 6400 INR. How this policy will be abused is yet to be seen.
May be we have to run some simulations and see. Views are welcome.
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