If you look at the share prices of all the companies in Bhutan from a long-term perspective, the stock market increases over time.
BIL was trading at Nu.20 in 2015. If we consider the bonus issue of 2022, that price will be just Nu.10 – 450% gain.
On the basis of the trading price in that same period, DWAL is currently at 1,062% gain!
Share prices of almost all the companies increased. Bhutan Stock Market Index (BSI), started in 2020 at 1,000 points is now at 1,415 points.
This means an overall growth of the Bhutan stock market is 41.5% within these 3 years!
It’s same with other countries as well. Check with S&P 500 of the US, STI of Singapore, SSE Index of China, and SENSEX of India.
So, why the stock market increases over time? If that is the case, why all people don’t make money in the stock market?
Stock Market Increases Over Time
The value of the stock market index – companies forming the index – all increase over time. Why?
The stock market shows overall economic development. Companies can make more money with better technology and growing population.
Stock market increases over time as it also accounts an overall inflation; the rise of prices of goods and services.
The general market price also increases over time. It is the case with the stock market as well.
Our government and banks also keep on printing more money. You know why Nu.100 now is worth Nu.58 in 2012.
Population growth means more collective greed. Companies aim making more money every year.
The collective greed is good for a natural selection – survivability of best and extinction of lousy companies.
All Do not Make Money from Stock
If stock market increases over time, people investing in the stock market will always make money, right?
If you invest in a broad index for an extended period of time, it’s true. But not if you invest in few stocks or even an index for a short period.
Ap Warren Buffett is a billionaire investor. He remained invested for more than 80 years.
If you invest in broad indices for a long period, I can’t say you’ll become a next Ap Buffett but I can say you won’t lose your money.
It makes so much sense why he also recommends investing in low cost broad market ETFs for young people.
Bhutanese not only can’t invest in the indices of other countries but also have no investable index fund/ETF in our stock market.
Conclusion – It ain’t for Everyone
Stock market increases over time. But we can take that advantage if we invest in a low cost index or ETF of an entire market.
We do not have such thing. But one way around can be investing as per the compositions of our BSI.
Whether we invest via indices or individual stocks, making money out of the stock needs patience.
But most of us lack patience. We either cut the loss or take peanut profit and get out of the market.
Ap Warren Buffett therefore said, ‘In the short run, the market is a voting machine and in the long run a weighing machine’.
Stock market increases overtime. The probability of losing money is low. Yet there are who do. Good thing is you now know who such people are. Don’t you?
What do you think of investing in the stock market? Do you think people always lose money in stock?
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