This day, 24 years ago …

The Times of India dated 23rd April, 1992 carried a story that remained as the biggest scam in corporate India for a little less than 16 years. Ms. Sucheta Dalal broker the story of missing Rs. 500 odd crores. The issue was discussed in the Parliament and a Joint Parliamentary Committee was set up.

One of the biggest bull runs in the Indian stock markets cam to an end.

There are many interesting anecdotes and stories about this episode. In the aftermath of the event, the stock market reforms were undertaken and the markets were never the same. Many safety features were introduced and investing in the Indian stock markets became much safer.

#RidingTheRollerCoaster – 135

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Think, does it really work?

In 2014, a news story int he Times of India caught my attention. A very well known movie star lodged a complaint with the Mumbai police. He had been duped. The con artist had promised to double his money in 45 days and then disappeared. The movie star could not believe that such a fraud was possible. The lure of the high “guaranteed” returns blinded him.

Just to put things in perspective, we present some calculations here. Assume that such a scheme is really available. Assume that one has an option of reinvesting the money in the scheme any number of times.

The scheme would double the amount invested every 45 days, or every 1.5 months. Ethos rate, Rs. 1,000 can grow to Rs. 2.56 lacs in one year, Rs. 6.55 crores in 2 years, and more than Rs. 1,677 crores in 3 years.

At the end of fourth year, one would have accumulated a sum of Rs. 4,29,496 crores. Compare this to India’s fiscal deficit for 2013-14: Rs. 4,90,597 crores.

Think, does it really work? Ask questions. When you are presented with a mouth-watering investment opportunity, your responsibility towards your money is even higher.

#RidingTheRollerCoaster – 132