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Wednesday July 06, 2022

Money makers

June 23, 2022

LAHORE: Money makers grab every opportunity to increase their assets both in boom and gloom. The losers are the ones that do not use their head but try to follow money makers blindly.

There are various examples in our day-to-day life when we see a man with small assets losing it totally in the capital market, commodity market, real estate market, poultry farming and many other business ventures.

These men follow herd mentality. We have seen big brokers growing bigger when the market is bullish or even if ruled by bears. These brokers can be counted easily. They are sophisticated manipulators and speculators.

Besides buying and selling stocks they accumulate or dispose of stocks through smaller brokers that work for them. The usual pattern is that they discretely accumulate stocks when the value is down. Then they let the market know that they are accumulating some stocks.

Small traders start buying the same stocks which take the market up. They then start liquidating their low-cost stocks at higher prices. By the time they nearly exhaust their stock the price of that scrip reaches its height.

After a while they openly liquidate their remaining stock, and the prices start declining. That small trader is lucky to dispose of his stock at the earliest. Those who wait end up losing heavily. This cycle is repeated regularly, and big brokers always remain in the driving seat.

Prices of agricultural commodities remain low if the produce is with the farmers. Prices start rising soon after that.

Wheat was available during the harvesting time for Rs2,000 to Rs2,200 per maund. Now that it is with middlemen, prices have shot above Rs2,900 per maund (a hefty increase in two months). This stands true for all agricultural produce.

For years when the poultry prices peaked, large farmers made money, but stopped breeding new stocks. Small farmers double their breeding stocks. When these stocks matured, they saw chicken glut in the market and prices dropped below cost. After years of suffering losses, the small poultry farmers have gone bankrupt and now the chicken market is firmly under control of large farmers. This is the reason that poultry rates have remained very high in the past three years (prices increase further due to impact of global commodity rates).

Then there are builders that acquire a small piece of land for a housing society. They then sell the files of plots in their society on some down payment and rest in easy installments to the public even before the start of real development work in the society.

They sell more plots than the land they own. They develop the society from the advance and monthly installments and then sell the developed plots to new buyers at higher than original prices either on cash or on installments. The money thus received is then invested in buying the adjoining land near their society.

Less scrupulous builders then develop that land and then allot the plots to the file owners. This may take four years or even 10 years after all the installments are paid.

Crooks either vanish or deny the allotment even after a decade. These builders become billionaires on the money grabbed from the public, while their original investment is small.

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