Letters
7 years ago

Investment in stocks

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The Bangladesh Stock Market reached around 5,800 at the end of 2016 and moved downwards to around 5,300. For the last one week trading continued its rising trend and came close to 5,800. Whether the market will sustain this trend and will reach a new high of 6,000 or more, only time can tell. The market overall is undervalued although many stocks are highly overvalued in terms of P/E ratio and dividend yield. 
As long as one has purchased a stock at a fair or undervalued price, there should be no panic for downward movement of price as it will move to its potential within a year or so in addition to yielding an annual dividend income of 10 per cent or more and will continue to grow. 
I aimed at making an annual dividend yield of about 20 per cent this year and have achieved my target. Although the period from 2009 to 20012 has been very bad for real investors as is well known. Young people should give it a thought to avail the opportunities offered by Bangladesh Stock Markets for long term investments. For example, the ICB 1st Mutual Fund launched in 1980 outperformed all other investment opportunities including real estate during 35 years of its closed end status. Stocks are as good as cash, but properties are not. This is the reality of investments. There are other investment opportunities like investing in stocks which is practically hassle-free. 
So look before you leap with your hard earned money (not corrupt or bad money).
As Biru Paksha Paul, former Chief Economist of Bangladesh Bank wrote that Sanchaypatra: the Titanic will sink. But over the longer term, prudent stock investing will bring more reward than Sanchaypatra even with its current yield of 11 per cent as against FDR in banks of around 5.0 per cent as is evident from my own managed stock portfolio, the one which began in 2013.
Luthfe Ali 
USA

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