I do not want to take sides on whether looking at a stock crash as being pessimistic, realistic, probabilistic, optimistic, etc.
I will like to change the direction slightly and ask the following questions to guide us and academically determine, suggest, propose, fortell, etc, or if possible, 'crstall ball' the direction of the Nigerian stock exchange in the short term (~ next one year)
1. What are the early symptoms of a stock crash? What do you watch out for? Are these showing in the
NSE?
2. What is the probablity of stock crash when an economy is aggressively pursuing higher participation of the private sector and promoting companies going public? (I believe Nigerian is doing this)
3. Is stock crash likely when an "average peforming" listed company achieves 50% improvement on year on year profit? Is this not much better than average world performance?
4. Is stock crash likely when this good performance is attracting foreign investors despite "negative foreign media" coverage?
5. Is the average Nigerian Stock under or over priced comparatively to European/American stocks using
Price to Earning ratio (PE) as evaluation guide? (Gurus reply)
With these questions, I believe with 80% confidence, that a stock crash is not likely in the short term (~ next one year).
HOWEVER, NO HUMAN BEING HAS BEEN ABLE TO ACCURATELY PREDICT THE STOCK MARKET WITH 100% SUCCESS!!! This is the basis of my 20% doubt.