| Page 2 of 2 < |
Stock Fever Abates As Saudi Market Falls
Experts say the reason for the crash is simple: The market went up too far too fast and now it's come back to earth.
Zaher al-Munajjed, a Harvard-educated adviser to families with large business holdings, compared the crash to the Internet bubble.
  Unidentified Saudi men stream out of a bank in Khobar, Saudi Arabia, on Sunday, Nov. 12, 2006. Many Saudis who invested all their savings in their high-flying stock market during the past few years have lost substantial sums in what analysts say was a predictable correction _ and an important, if painful, lesson. (AP Photo/Hasan Jamali) (Hasan Jamali - AP) Partnership
Resources for anyone who runs a small business or wants to start one, featuring advice and solutions.
• If You Aren't Willing to Invest in Yourself, Why Should Anyone Else?
• Starting a Business Updated Financial Features |
• "The most sophisticated society in the world was burned by dot-com fever," he said. "This is another fever and it's normal."
But, he said, the experience has had a positive effect too.
"We started from nowhere. We didn't have an investment culture," al-Munajjed said. "Now, we have a system, we have equitable distribution among the population and we are building the base of a healthy environment."
Another factor is that in a new market with inexperienced investors, mistakes were inevitable.
"This is an emerging market that is developing and figuring out its way and character," said Ihsan Bu-Hulaiga, president of a consulting firm. "We have learned very important yet painful lessons, and one of them is that shares need to have solid companies behind them."
That is a lesson one travel agent learned the hard way. Like most Saudis, Abdul-Aziz Ali was a short-term investor who had hoped to make a quick buck and get out.
"I just went in without studying the market the way I would normally study a business venture. I saw people making money so I figured I would as well," said Ali, 30.
At first, it went well, with gains sometimes totaling $270 a day.
When the index topped 20,000 in February, Ali had $103,000 in the market. But when it began to plummet and when it became clear the index was not returning to 20,000 soon, Ali took out what was left of his money: $10,900.
"It was then that I realized how stupid I was to throw away my money without a business plan," said Ali.
"Now, I don't want to have anything to do with the market," he added. "I'm not crazy to do it again."
____
On The Net:
