The Colombian Stock Market: 1930-1998

Latin American Business Review, Vol. 1, No. 4, 2000

21 Pages Posted: 23 Jan 2002 Last revised: 13 Aug 2013

See all articles by Ignacio Velez-Pareja

Ignacio Velez-Pareja

Grupo Consultor CAV Capital Advisory & Valuation

Multiple version iconThere are 2 versions of this paper

Date Written: November 7, 1999


This article explores the behavior of the stock market 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 is measured by the Consumer Price Index. However, as the available monthly data for CPI is recorded since 1954, we analyzed the behavior of annual rates only for the period 1930-1998. When possible, monthly returns were analyzed. This exploratory paper does not intend to present conclusive remarks: in fact, there more questions than answers. They are just ideas to work on. The trends of this analysis show that monthly and per annum return - nominal and real - are well below from 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 stock market, 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

Suggested Citation

Velez-Pareja, Ignacio, The Colombian Stock Market: 1930-1998 (November 7, 1999). Latin American Business Review, Vol. 1, No. 4, 2000. Available at SSRN:

Ignacio Velez-Pareja (Contact Author)

Grupo Consultor CAV Capital Advisory & Valuation ( email )

Ave Miramar # 18-93 Apt 6A
+573112333074 (Phone)


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