stocks = gambling?

[Doug Henwood]

>"The Colombian Stock Market: 1930-1998"
>
>      BY:  IGNACIO VELEZ-PAREJA
>              Universidad Javeriana
>              Management Department
>
>Document:  Available from the SSRN Electronic Paper Collection:
>           http://papers.ssrn.com/paper.taf?abstract_id=145411
>
>    Date:  January 7, 1999
>
> Contact:  IGNACIO VELEZ-PAREJA
>   Email:  Mailto:ignaciov at col1.telecom.com.co
>  Postal:  Universidad Javeriana
>           Management Department
>           Calle 40 N 6-23 P. 8
>           Bogota,    COLOMBIA
>   Phone:  (571) 320 8320
>
>ABSTRACT:
> 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