Every few years, the Dhaka Stock Exchange goes through a cycle that follows a predictable pattern. Prices rise. New investors flood in. Euphoria takes over. Then reality reasserts itself, and the people who entered last suffer the most.
Understanding this cycle — and the machinery of rumors and social media that accelerates it — is essential for protecting your capital.
Anatomy of a Greed Cycle
A greed cycle is not a market crash. It is the entire arc — from quiet accumulation to widespread euphoria to painful correction. Here is how it typically unfolds on the DSE:
Phase 1 — Accumulation. Informed investors and institutional players quietly buy stocks at depressed valuations. Most retail investors are still burned from the last downturn and staying away. Volume is low. News coverage is minimal.
Phase 2 — Early rise. Prices start climbing. Financial media begins covering “the market recovery.” Some experienced retail investors re-enter. The DSEX ticks upward steadily.
Phase 3 — Public participation. Friends and family start talking about stock market gains. Brokerage floors fill up. New BO accounts surge. People who have never studied a balance sheet begin investing. At this stage, many stocks have already doubled or tripled from their lows.
Phase 4 — Euphoria. Everyone is making money — or so it seems. Social media is flooded with screenshots of green portfolios. Cab drivers discuss stock picks. People borrow money to invest. Stock prices detach from any reasonable fundamental valuation. A stock with ৳3 EPS trades at ৳300. Nobody questions it because prices keep going up.
Phase 5 — Distribution and collapse. The smart money begins selling to the enthusiastic newcomers. Volume stays high but prices stop rising. Then a trigger — sometimes regulatory, sometimes economic, sometimes just gravity — sends prices downward. Panic selling follows. Those who bought in Phase 4 suffer 40-60% losses.
The 2010 Crash: Bangladesh’s Defining Lesson
The 2010 stock market crash was the most devastating example of a greed cycle in Bangladesh’s history. Between 2009 and late 2010, the DSE General Index surged from approximately 3,000 to 8,918 — a nearly 200% rise fueled by easy margin lending, lax regulation, and widespread speculative fever.
An estimated 3.3 million BO accounts were active. Many investors were first-timers with no financial literacy. People sold land, borrowed from moneylenders at high interest rates, and invested their children’s education funds. The media was euphoric. Brokerages could not process all the new account applications fast enough.
When the crash came in December 2010, the index fell over 50% within months. The losses were not just financial — there were reports of suicides, family breakdowns, and public protests. The government formed inquiry committees. BSEC tightened regulations. But the damage to an entire generation of retail investors was already done.
The painful irony: the companies themselves had not changed. Their factories still ran. Their products still sold. What collapsed was the artificial price inflation driven by speculation and leverage.
How Rumor Culture Works
Bangladesh has a deeply embedded rumor culture around stocks, and understanding how it operates can save you from costly mistakes.
A typical rumor cycle works like this:
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The seed. Someone with a position in a stock starts a rumor — an upcoming rights issue, a foreign partnership, a government contract, a factory expansion. The rumor may contain a grain of truth or be entirely fabricated.
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The amplification. The rumor spreads through brokerage floors, tea stalls near stock exchanges, and increasingly through digital channels. Each retelling adds embellishment and false certainty.
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The price movement. As more people buy based on the rumor, the stock price rises. The rising price itself becomes “proof” that the rumor is true. “See, it’s going up — the news must be real.”
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The exit. The original rumor-spreaders sell into the buying pressure they created. The rumor is either never confirmed or the actual news (if real) turns out to be far less impactful than promised.
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The decline. Without new buyers to sustain it, the price falls. Latecomers are left holding overpriced shares.
Social Media: The New Brokerage Floor
In the past, rumors spread slowly through physical proximity. Today, Telegram groups, Facebook groups, and YouTube channels have become the primary vectors for stock tips — and they are far more dangerous because of their reach and speed.
Here is what you will find in a typical stock tip Telegram group:
- “Target ৳85, current price ৳52. Load up!” — No analysis, no rationale, just a target price plucked from thin air.
- Screenshots of profits — They show their winners but never their losers, creating a survivorship bias that makes the tipster seem infallible.
- Urgency language — “Buy before market open!” “Last chance!” “This will not come back to this price!” Urgency is the enemy of good decision-making.
- Volume calls — Some groups coordinate buying to create artificial demand. This is market manipulation, and the people following the calls are the ones who end up holding the bag.
Facebook stock groups function similarly but with an added social proof dimension. When a post about a stock gets hundreds of likes and comments, it creates the illusion of consensus. But popularity is not analysis.
How Syndicates Operate
The word “syndicate” is used loosely in Bangladesh’s market context, but the general pattern is real: groups of connected individuals or entities coordinate their trading to manipulate stock prices.
A simplified version of how this works:
- A group quietly accumulates a large position in a low-float, thinly traded stock over weeks or months, keeping the price stable or slightly rising.
- They begin generating buzz through social media, brokerage whispers, and sometimes planted media stories.
- As retail investors pile in, volume and price surge. The syndicate sells into this demand.
- Once the syndicate has exited, buying pressure evaporates and the stock collapses.
The stocks targeted are almost always small-cap with low free-float — these are easiest to move with limited capital. Large-cap, high-volume stocks like the major banks or telecoms are much harder to manipulate.
How to Think Independently
Protecting yourself does not mean avoiding the market. It means developing a framework that is resistant to external manipulation:
Verify before acting. If you hear a rumor about a company, check the DSE announcements page. Companies are required to disclose material information. If there is no official disclosure, the rumor is either false or based on insider information that you should not be trading on.
Check the fundamentals. If someone tells you a stock is going to ৳200, ask yourself: what would the P/E ratio be at ৳200? Is that reasonable for this sector? What is the company’s actual earnings trajectory? Numbers do not lie the way rumors do.
Be skeptical of urgency. Genuine investment opportunities do not expire in 24 hours. If someone is pressuring you to buy immediately, they need your buying pressure more than you need the stock.
Track your sources. If you follow stock tip groups, keep a record of their calls. After six months, calculate their actual hit rate including the losers. The results will be sobering.
Understand your role in the chain. When you receive a tip, ask yourself: how many people received this before me? If the answer is hundreds or thousands, you are not early — you are the exit liquidity.
Building Your Own Information System
Instead of relying on tips and rumors, build your own research process:
- Use FinTrail’s stock screener to filter the DSE’s 400+ stocks by actual financial metrics — P/E, EPS growth, dividend yield, debt ratios
- Set price alerts for stocks you have already analyzed, so you are notified when they reach your target buy price rather than when someone tells you to buy
- Read company annual reports and quarterly financials directly
- Follow BSEC circulars and DSE announcements for official corporate actions
This takes more effort than following a Telegram channel. But the results compound over years, while tip-following compounds losses.
Think About This
- Have you ever bought a stock based on a social media tip? What happened? Would you have bought it based on the fundamentals alone?
- Looking at the current market, which phase of the greed cycle do you think we are in? What evidence supports your view?
- If you follow any stock tip groups, what is their actual verifiable track record over the past year — including all calls, not just the winners?
