What is happening to the Caracas General stock market?
A year ago it was 40,000 and is now over 539,424.00. Can you go into more detail? Is the country is becoming a dictatorship. Is the stock market from Venezuela? Can they feed their own people?
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It’s called hyperinflation just like Germany in the 1930’s. It would take a wheelbarrow of money to buy a loaf of bread in Germany in the early 1930’s.
Wow, that is interesting! The inflation rate is 720%, but the index is up 1,100%!
But, you have to look at what else is going on. The stock market reflects the only part of the Venezuelan economy that is not going through a death rattle: the oil market. Oil prices have stabilized lately, and Venezuela has worked on ways around US sanctions.
Meanwhile there are no other investments to be made in Venezuela, no other way to beat inflation.
One thing that’s not generally taught about the collapse of the Weimar Republic that preceded Nazism in Germany was the way mortgage holders – particularly farmers – and some other debtors temporarily made out so well under that kind of hyperinflation.
That is, if you’re a farmer, for example, and you have mortgages on everything: home, fields, equipment – but you can grow any food – then those mortgages will be paid off pretty quickly. When you sell a potato for a wheelbarrow full of money, for example, but your mortgage payment is just a fraction of that – because mortgages taken before the period of rapid inflation were never indexed – then you’ll be paying off a thirty-year mortgage in months, if not weeks.
Of course, you’re in the same boat as everyone else when the economy fully tanks (or Hitler starts WWII), but you do own the farm, at least.
I don’t know how much of that kind of issue may be going on in Venezuela right now, but I know that some are profiting from the collapse.
The apparent boom in the Venezuelan stock market is misleading and I wouldn’t recommend investing there. Stocks that are priced in bolivars are showing huge gains due to hyperinflation as others have said. As the Venezuelan government has apparently given up producing regular data on inflation no one can be sure any longer of the real value of these stocks.
Update It fell 99.90% today. to 527.67
No, it did not drop 99.9% . They reset the index to 1/1000th of what it was.
Here is a one month chart on Bloomberg
Ok. The PBS NBR said down 99.9%
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