The Reality of DSE: What Nobody Tells You

Everything we’ve covered so far — how prices move, what indices mean, how settlement works — describes how the market is supposed to work. Now let’s talk about how it actually works sometimes.

This isn’t meant to scare you or discourage you from investing. The DSE is a legitimate market regulated by BSEC, and plenty of people build genuine wealth through disciplined investing. But pretending that everything is clean and fair would be dishonest. You deserve to know the full picture before you put your money at risk.

The Syndicate Problem

A syndicate, in DSE context, is an informal group of wealthy individuals or entities that coordinate their buying and selling to manipulate a stock’s price. Here’s how a typical operation works:

The Playbook

Accumulation phase: The syndicate quietly buys large quantities of a low-volume stock over several weeks, careful not to push the price up too quickly. They might accumulate at ৳20-25 per share.
Hype phase: Once they’ve built their position, the hype begins. “Tips” start circulating on Telegram channels, Facebook groups, and broker chatrooms. “XYZ company is about to get a huge contract.” “Insider information — guaranteed 50% return.” The stories are compelling and often contain just enough real-seeming detail to be believable.
Pump phase: As retail investors start buying based on these tips, the price rises. The syndicate may continue buying to push it further — ৳30, ৳40, ৳50. Each price increase validates the tip, attracting more buyers.
Dump phase: When the stock has risen enough, the syndicate sells their entire position into the buying frenzy. The stock might hit ৳55, and then suddenly, massive sell orders appear. The price collapses back to ৳22-28.

The syndicate made ৳25-30 per share profit. The retail investors who bought at ৳40-55 are left holding shares worth ৳22. Their losses are the syndicate’s gains.

Why It Persists

Syndicate activity, while illegal under securities law, persists for several reasons:

Difficult to prove: Coordination happens through private channels. Proving that five seemingly unrelated BO accounts are acting in concert requires extensive investigation.
Low-float stocks are vulnerable: Companies with limited public float and low daily volume are easiest to manipulate. A relatively small amount of money can move these stocks dramatically.
Weak enforcement history: While BSEC has taken actions against manipulators, the penalties have not always been severe enough to be a strong deterrent.

The Rumor Culture

The DSE has a deeply embedded rumor culture that every investor needs to understand.

Where Rumors Spread

Telegram groups: Hundreds of stock-focused Telegram channels offer “sure tips,” “insider news,” and “guaranteed picks.” Most are either run by syndicates or by people who are themselves victims, passing along tips they received.
Facebook groups: DSE-related Facebook groups have hundreds of thousands of members. Stock “analysis” posts are often thinly disguised promotions.
Broker floor chatter: In physical broker offices, tips spread by word of mouth. “Everyone is buying ABC” creates a herd mentality.
YouTube and social media “experts”: Self-proclaimed market analysts who show off luxury lifestyles funded by “stock market profits” are rarely what they seem.

How to Evaluate Information

Not all market discussions are rumor-mongering. Here’s a framework:

Credible sources:

Official DSE announcements and price-sensitive information (PSI)
BSEC circulars and regulatory filings
Published audited financial statements
Reputable financial news outlets

Red flags:

“Buy this stock now, thank me later”
Specific price targets with no analytical basis
Claims of insider information (sharing insider information is itself illegal)
Pressure to act quickly (“if you don’t buy today, you’ll miss it”)
Anonymous tips with no verifiable reasoning

The golden rule: If someone truly had guaranteed insider information that a stock was going to double, why would they share it with strangers on Telegram? They’d buy as much as they could themselves. The fact that they’re telling you is, in itself, the biggest red flag.

The IPO Lottery Mentality

IPOs (Initial Public Offerings) on the DSE have historically been priced at a discount, which means most IPOs see a price jump on listing day. This has created a culture where people view IPO applications as a lottery — apply, hope for allotment, sell on listing day for a quick profit.

While this strategy has worked often enough in the past, it has real limitations:

Allotment is not guaranteed. Oversubscribed IPOs mean most applicants don’t get shares.
Not all IPOs go up on listing. Some list below their IPO price and stay there.
It teaches bad habits. The IPO mentality trains investors to think of stocks as quick-flip instruments rather than long-term investments. This mentality often carries over into regular trading — with much worse results.

The Herd Mentality

When DSEX is rising and everyone around you is making money, it’s incredibly difficult to stay disciplined. The fear of missing out (FOMO) is powerful.

You hear stories: your colleague bought a stock at ৳45 and it’s now at ৳120. Your cousin made ৳2 lakh in three months. Social media is full of people showing off profits.

What you don’t hear: the same colleague lost ৳80,000 on another stock. Your cousin has an unrealized loss of ৳3 lakh in two other positions. Social media profits are selectively posted — nobody shares their losses.

Herd mentality works both ways. In a bull market, everyone buys and pushes prices higher. In a crash, everyone sells and pushes prices lower. In both cases, the herd usually enters or exits too late.

Protecting Yourself: Practical Steps

None of this means you shouldn’t invest in the DSE. It means you should invest with your eyes open. Here’s how to protect yourself:

1. Only Invest Money You Can Afford to Lose

This is not a cliche — it’s survival advice. If losing your stock market investment would prevent you from paying rent, buying food, or covering an emergency, you’re investing with too much at risk.

2. Do Your Own Research

Before buying any stock, review the company’s fundamentals yourself — earnings, P/E ratio, NAV, dividend history, debt levels. If you can’t explain in two sentences why a company is a good investment, you shouldn’t buy it.

3. Ignore Tips and Rumors

This is the hardest rule to follow and the most important. When someone tells you about a “sure” stock, smile, nod, and do your own analysis. If the stock is genuinely good, your research will confirm it. If it’s a pump-and-dump, your research will reveal the lack of fundamentals.

4. Be Wary of Illiquid Stocks

Stocks with very low daily volume are more susceptible to manipulation and harder to exit when things go wrong. If a stock trades only ৳5-10 lakh per day, selling ৳2 lakh worth of shares could itself push the price down.

5. Keep Records and Track Everything

When emotions are running high — either greed or fear — your records keep you grounded. Knowing exactly what you paid, what you’ve gained or lost, and how your overall portfolio is performing prevents you from making decisions based on selective memory. FinTrail tracks all of this automatically, giving you an honest, real-time view of your portfolio performance.

6. Invest for the Long Term

Most manipulation is short-term. Syndicates operate over weeks, not years. If you’re buying quality companies at reasonable valuations and holding for years, the short-term noise becomes largely irrelevant. A company with genuinely growing earnings will see its stock price rise over time, regardless of temporary manipulation.

The Other Side of the Story

For all its challenges, the DSE is also a market where real wealth has been built. Many DSE-listed companies have delivered extraordinary long-term returns for patient investors. Pharmaceutical companies, technology firms, and select banking stocks have multiplied investor wealth over 5-10 year periods.

The key is distinguishing between investing and gambling. Investing is buying ownership in real businesses at reasonable prices and holding for the long term. Gambling is buying stocks based on tips, hoping for quick returns, and selling in panic when things go wrong.

The market’s flaws don’t make investing impossible. They make informed investing essential.

Think About This

A friend sends you a Telegram message saying a stock is “about to fly” and you should buy immediately. The stock has risen 25% in the past week on no official news. What would you do, and why?
Why do you think people continue to follow stock tips from anonymous social media accounts despite knowing the risks? What psychological factors might be at play?
If BSEC perfectly eliminated all market manipulation tomorrow, how would the DSE be different? Would stock prices be higher, lower, or about the same as they are now?