Stock Markets ~ More Like a Cinema Hall

One of the hottest topics in the current era and the most promising investment class which can beat the high rates of inflation is the “Stock Market”. But what to do if you don’t know anything about the stock market? How to understand the stock market?

In this article I will explain the stock markets, types of people in stock markets in a very fancy way. So, all of us have been to cinema halls at least once in our life. Now while reading this article, every time I mention cinema hall it is a metaphor for the stock market and seats for Stocks.

So let us assume a cinema hall with a single floor only. Now there are broadly three types of seating arrangements in this cinema hall. First of all the seats at the last ( slightly at a higher level) which is very close to the main gate( assuming only one gate), secondly the seats at middle level( at a lower level than the first category),and then the front seats.

This same arrangement is in the stock market. Just before the film begins The intelligent investors book the seats first and  enter the hall from the main gate and occupy the first category seats which are at a higher level. These are people who have a risk taking attitude. 

And as we all know the prices of seats increase as the time passes. So, the intelligent investors acquire the first category seats(stocks) at a fair value. These people enjoy the trailer, and the film too. 

Then comes the conservative investors, who have moderate risk capacity, when they see a little boom in the market , they buy the seats(stocks) at a relatively higher value and enjoy many parts of the film( but not the whole).

Then when there is a boom in the markets, everything becomes overvalued, then getting attracted by the higher returns, there come those people who don’t have any prior knowledge and they are those tip lovers .

Now as the hall is full, the film is almost about to end. Perhaps, if we just see the climax without knowing the whole story, we will surely get confused. And the same happens to the people who enter markets in the last phase, getting attracted  by the boom.

As the film ends, the people at the last seats( first category) leave the hall first, booking profits with flying colors. Next the people at middle level seats with sufficient profits. Then the “tip lovers' ' or “boom-beauty lovers' ' or those “21 din me paisa double karne wale log” ending up in deep water.

And the cycle continues…… 

Now make sure you buy the tickets when the prices are fair and enjoy the whole film. And if someone asks you about that "21 days me double" type scheme then the best investment class to offer them will be horse races or perhaps IPL & other matches too.

Shaurya Gupta

B.com hons, University of Delhi

Text is subjected to copyright. You can use the text but kindly do not publish this content.