stocks = gambling?

Doug Henwood dhenwood at
Fri Feb 26 08:52:10 PST 1999

>"The Colombian Stock Market: 1930-1998"
> Universidad Javeriana
> Management Department
>Document: Available from the SSRN Electronic Paper Collection:
> Date: January 7, 1999
> Email: Mailto:ignaciov at
> Postal: Universidad Javeriana
> Management Department
> Calle 40 N 6-23 P. 8
> Bogota, COLOMBIA
> Phone: (571) 320 8320
> This article studies the behavior of the stockmarket in Colombia
> with the information given by the Bolsa de Bogota Index (Indice
> de la Bolsa de Bogota, IBB). The index is analyzed from January
> 1930 to December, 1998. The inflation rate covers the same
> period; the inflation rate as measured by the Consumer Price
> Index. The results of this analysis show that monthly and per
> annum return, -nominal and real- are well below the expected
> return of any financial investor. A first hypothesis to explain
> this is that the investor and entrepreneurs receive benefits
> that are non-measurable in terms of economic return. Also it can
> be said that inflation is negative to the return at the
> stockmarket, thus: the larger the inflation rate, the smaller
> the real return. It is shown that the market does not anticipate
> the future inflation, and of course it is not included in the
> actual price. Probabilities for selected real return values are
> presented. The probability to obtain a real return greater than
> 0% and other values (-5%, 10%. 12% and 18%) as well, is much
> less than 50%. This might show that investing at the stock
> market is just gambling.
>JEL Classification: E22, E44, G11, G12, G14, G31, M21, N16

More information about the lbo-talk mailing list