The Stock Market - Mayhem or Millions?

NEOPIA CENTRAL – May 10th, 2005: Nigel the Commodity Broker Chia spoke in front of the general public and announced that there is an ongoing investigation concerning the stock market.

“Good evening, ladies and gentlemen, and thank you for joining me. I have brought you all here to discuss devastating news that has the Stock Market in crisis. It has come to my attention that an investigation has been set into motion concerning the stock market and one of its companies in particular. The only information known is that one of the many honest companies is being investigated for accounting improprieties. That is all that is known, and will be released at this time.”

It is now known that the undisclosed company disguised 2.7 million Neopoints as operation expenses so that it could continue to claim profits despite the fact that it was actually losing Neopoints.

In Year 5, this company reported a 5 million Neopoint profit, but an ex-employee whose name must remain anonymous says otherwise: “It was all a lie! We didn’t turn a profit! We were down hundreds of thousands! I was an assistant and witnessed the acts of injustice personally. I went over the head of the Neopet that I had witnessed committing these crimes directly to the president. That was when my internship was terminated.”

When questioned, the president Krawk replied, “These revelations are outrageous! Our company will fully cooperate with this investigation until this problem can be solved as quickly and quietly as possible with the ones responsible held completely accountable.”

Unfortunately for him however, a witness tells quite a different story. A young Cybunny told reporters, “I was sitting at a table in the new Kelp establishment last week and heard the Krawk president confirming to his associates that the issue was simply not a bookkeeping error and that there must be steps taken to correct the problems before they could be exposed to the general public.”

With the scandal on the rise, shares plummeted as angry loyal shareholders began to anxiously dump the shares before the price dropped any further. Distrust was building among all Neopians investing in stocks, not just ones that had claim to the specific company.

“I’ve completely and utterly lost all faith in an honest market these days. People are being let down and I really don’t know what to believe in any longer,” cried a red Kougra. “I’ve lost my life savings by completely investing in all thousand shares to this company. I can’t go back to my Neohome and tell my petpet I have to sell the furniture to support myself.”

As times continue to rapidly worsen along with the company's share prices, a Scorchio market analyst’s confidence in the system has stayed firm. “There are good and evil in every aspect of life. You have to roll with the punches and understand what you are getting yourself into before you commit. There are ways to turn a great profit in this business if you have your head on tight and your eyes open.”

And how are Neopians supposed to understand the business without being a stockbroker themselves? Here are some pointers before ever considering purchasing stocks:

Do Your Research:

Never buy a stock just because the ticker symbol prods at your funny bone. Do some research about the company and product that they sell. Ask yourself if what they offer is in high demand, not just high in price. After making sure your company’s product is something Neopians will purchase, refer to the message board and find others who have already invested in it. Be sure that your company isn’t new to the scene and ask about the stock’s predictability. Is it known for quickly rising with sudden crashes? If you plan on investing a lump sum, maybe this isn’t the stock of your choice and you’d prefer something more predictable.

Never Be Afraid To Sell:

If something happens and you notice everyone else is bailing out, don’t try to sink with the ship. Cutting your losses and moving on is key to minimally losing Neopoints. This doesn’t mean that you should run out and sell every time the numbers drop slightly because stocks can’t continuously rise either. When your stock gains a vast amount of profit quickly, don’t get greedy and stay on the ride for too long. It is better to have sold a little too early than far too late. Selling is up to your own discretion, but being aware of what is going on with the company and its holders will make it a little easier to know when exactly to quit.

Don’t Put All Your Eggs in One Basket:

Saving for a special something or someone and looking to the Stock Market to boost your funds? Excellent! Keep in mind, however, that placing all the Neopoints. you wish to risk in the market is a lot more risky when you put it all in one company. Splitting it up will minimalise losses because if one stock ends up going belly up, the other one you invested in might make a profit, and land you breaking even instead of breaking the bank.

Now That You’re Experienced:

Now that you have some experience with the Stock Market yourself, your buying and selling strategies will probably have changed since when you first began. Now that you have come to gain more experience, you will probably have a good idea about what the highs and lows are all about. Now that you have a feel for it, experiment and play around with your strategies until you find one that really works for you. Remember that gaining never comes without a loss or two. With this in mind, never gamble with what you can’t afford to lose.

In conclusion, the Stock Market is definitely a place to easily get swept away in. Defense is always the best offence. Know what you are getting yourself into before you enter the unknown. Corruption creeps itself into many places in the world, but that does not mean that you have to fall victim. Protecting yourself with good judgment and knowledge could make the difference between fortune and famine.