Paul looked at the board. The price of the shares he bought yesterday had risen
by 46 cents. Wow ! He took out his calculator. He had bought 3,000 shares.
Multiply that by $0.46 would net him a profit of $1,380. Wow again ! He had made
that amount in just one day.
The share market had been bullish for several
weeks now and many people like Paul was getting a piece of the action. Rumors
were rife that shares would keep rising indefinitely. It was the chance of a
lifetime to make some serious money. In order to buy more shares, Paul took out
a loan of $200,000 from a bank using his retail business as collateral.
For the whole of the following week, Paul joined hundreds of speculators in
the stock exchange, buying up shares that kept rising. Paul's wife warned him
about the consequences of a fall in the share prices, but Paul was confident
that he could make his bundle and get out
before the prices dropped.
Prices kept rising. Paul estimated his profits to be in the region of
$300,000 already. if the trend continued, he would have half a million in two
weeks and a million in a month. He was confident that he would be a millionaire
in a month's time.
Two weeks later, indeed Paul's total shares were worth more than half a
million dollars, and the share prices were still rising. His wife advised him to
sell and take the profit, but he refused. Just two more weeks and he would be a
millionaire, two more weeks !
The drop cam every suddenly one day. At first Paul thought it was just a
temporary fluctuation in the share prices. He held firm, confident that the
prices will rebound upwards. it did the following day and Paul regained
confidence. Then the prices fell again, and again. In three days, he had lost
all his profits plus part of his capital. If he sold then, he would have made a
dreadful loss. No, he would hold on. the
prices would rise again.
One month later, Paul had lost almost everything. Share prices had reached an
all-time low. There was despair all round.
In his greed for riches, Paul lost all his savings and now owed the bank to
the tune of $200,000. Fortunately he had his retail business to
fall back on. He would have to work extra
hard to pay off the bank.
Some speculators were not so lucky. They were reduced to bankruptcy. Such is
the price of greed.