An Evidence of Profitability in Stocks Through the Test of Logic

Abstract

The paper provides an evidence of profitability in Karachi stock exchange through the test of logic. The people who have limited or no knowledge about how the stock market works either they do not enter in it for the fear of it, or enter on speculations and suffer losses in the process. Sometimes people enter into the stock market as investors but due to its false glitter soon tum into gamblers. No doubt stock market has its share of risks but these risks can always be identified and managed. For seasoned investors, stock market is always predictable, gives good returns and even guarantees capital protection. If one can curb his greed and control his panic, then the stock market can be compared with any good business that gives 50% (or more) annual returns to investors. No doubt, returns do not come without putting in a dedicated effort. For those who are new to the stock market, or for those who cannot devote sufficient time and effort, "expert" help in the shape of institutionalized fund managers (representing reputed investment management companies and others) are always available. For most starters, the analysis might seem too complicated or cumbersome. If that be the case, our advice would be to leave it to the experts in the field. By experts we do not mean the brokers, but properly trained and qualified "fund managers" or "financial analysts".

Keywords: RSI, MACD, Advance Decline Ratio, Candle Stick Behavior, 2008 Crash, Speculative Trading, KSE, Pakistan