Soaring Caracas Stock Exchange Undergoes 1000 For 1 "Stock Split"

Tyler Durden's picture


For generating the greatest "wealth effect" and highest return of any global stock market in the world in 2013, the Caracas stock exchange, which closed the year at the ripe level of 2.7 million, is getting surprisingly little attention or love (maybe because unlike other countries, here unpleasant inflation from currency debasement is a coincident indicator resulting in such things as a shortage of toilet paper). Because after all isn't it an economist and monetarist's dream to achieve a 480% return in one year based on simply printing money?

Supposedly, the answer is no.

But for whatever reason, since nobody talks about the massively successful Venezuelan stock market, which in the modern era is second only to the even more "successful" Zimbabwe stock market, it bears noting that earlier today, quietly, the Caracas stock market announced it would proceed with a 1000 for 1 stock, er, index split.

We assume this happened because according to the "specialized technical report prepared by experts in the area of market organization", an index trading at 2,737 appears more attractive to a toilet-paper deprived population than its identical version which however has risen to 2,737,000.

Of course, we give the post-split index a few months before it hits its previous absolute record level. At which point it will be rinse repeat. However, at least the local
"experts" will constantly keep removing zeroes from the benchmark number thereby giving the impression that all is well.

Come to think of it, both Japan and the US could be next when the glorious socialist policies of Venezuela trickle out from the oil-rich Latin American country...

From the Caracas Stock Exchange, google translated. Be careful the Bolsa website may have a virus in it:

A new formula for calculating the Caracas Stock Exchange and the Financial and Industrial indices is effective from today


The Caracas Stock Exchange , based on a specialized technical report prepared by experts in the area of market organization , announced to brokers, investors and the general public a modification of the indicators of the stock market , which comes into effect from today January 2, 2014 , as follows :


Previous Formula :


Index = ( Capitalization Companies / Cap Base) x 1,000


The modification was performed on the multiplier factor " 1.000" , in order to reduce proportionally reflected in indicators of six ( 6) whole numbers to at least three ( 3) whole numbers with two ( 2) decimal values.


New Formula:


The formula to be used from January 2, 2014 is the multiplier factor "1", and is as follows:


Index = ( Capitalization Companies / Cap Base) x 1


The formula has the following parameters :


a. Daily compounding of each of the shares comprising the index basket .


b . Capital base, calculated and corrected based on the capitalization of the index basket 1997 , known as the base year .


c . A constant number used to identify the units or points indicator (Value Today 1 before 1000 )


The Caracas Stock Exchange ( IBC ) is the arithmetic average of the capitalization of each of the securities that make up , these being the largest capitalization and liquidity traded in the stock market of the Caracas Stock Exchange , while the Financial Indices Industrial and have different baskets.


The changes are effective as of January 2, 2014 . However, they were announced to the general public daily from 20 December 2013 until its entry into force on the first day of the new year.

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Thu, 01/02/2014 - 22:20 | 4295276 VD
VD's picture

meth + central banking = split atomz n indices all the live long day...

Thu, 01/02/2014 - 23:03 | 4295392 max2205
max2205's picture

Fib lives.....

Thu, 01/02/2014 - 23:32 | 4295464 Al Gorerhythm
Al Gorerhythm's picture

Rotting, decaying Carcas.

Fri, 01/03/2014 - 01:24 | 4295706 Anusocracy
Anusocracy's picture

Hunter-gatherer geniuses at work.

Fri, 01/03/2014 - 22:55 | 4298670 gallistic
gallistic's picture
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Fri, 01/03/2014 - 22:57 | 4298678 gallistic
gallistic's picture

The article is not attributed to NCRenegade and there is no reference to it.

So is David DeGerolamo one of the Tylers?

Thu, 01/02/2014 - 22:19 | 4295283 walküre
walküre's picture

When they chop zeros off the balance sheets is when you need to own gold and silver. The prices of precious will adjust somewhat but never at the same ratios. Maybe we won't see POG $50,000 but we could see $5,000 when the Fed's balance sheet is only 200 billion again.

Thu, 01/02/2014 - 22:52 | 4295359 CheapBastard
CheapBastard's picture

When money dies, it dies quickly and without a whimper.

Fri, 01/03/2014 - 02:12 | 4295474 Al Gorerhythm
Al Gorerhythm's picture

Oh, there will be whimpers, alright. There'll be gnashing of teeth, caterwauling, howling and stamping of feet. These bastards won't go quietly into the night.

Fri, 01/03/2014 - 04:22 | 4295874 Harbanger
Harbanger's picture

Hope you're right.  More likely it will be the FSA vs the middle fighting over scraps.

Thu, 01/02/2014 - 22:23 | 4295286 Pareto
Pareto's picture

Is this not a reverse split?  So that if you held 1,000 shares ofthe index, say, its now only worth 1?

Thu, 01/02/2014 - 22:55 | 4295367 bad craziness
bad craziness's picture

Correct.  Not to consolidate hairs but I suspect they mean 1 for 1000 as opposed to 1000 for 1.

Thu, 01/02/2014 - 22:24 | 4295290 Cognitive Dissonance
Cognitive Dissonance's picture

The eventual reverse split is gonna be a bitch.

Thu, 01/02/2014 - 22:26 | 4295292 kaiserhoff
kaiserhoff's picture

Damn those decimal points.  Only of interest to accountants and other dweebs.

Economists and Astrologers have better things to do,

like Gawds Work.

(Sometimes god is busy drinking coffee elsewhere.)

Thu, 01/02/2014 - 22:23 | 4295296 LetThemEatRand
LetThemEatRand's picture

Sucks not to have the world reserve currency.   

Thu, 01/02/2014 - 22:27 | 4295301 kaiserhoff
kaiserhoff's picture

Yes, but oil works pretty well, unless you keep pissing in the soup;)

Thu, 01/02/2014 - 22:52 | 4295361 Four chan
Four chan's picture

we will experiance the other side pretty soon, others stealing from us with their fiat reserve and perpetual devaluation.

Fri, 01/03/2014 - 01:30 | 4295713 Anusocracy
Anusocracy's picture

Venezuela - Bennyzuela, what's the diff?

Fri, 01/03/2014 - 03:15 | 4295840 Harbanger
Harbanger's picture

Great. Can the we (the west) stop feeling guilty then, or do we have to dwell in our misery.

Thu, 01/02/2014 - 22:47 | 4295346 TheFourthStooge-ing
TheFourthStooge-ing's picture

Blobbing up US citizenism style, even without reserve currency. Explains a lot. Thousandfold increase in stock certificates all printed on toilet paper (very FRN US citizenish) led to TP shortage.

Fri, 01/03/2014 - 03:45 | 4295855 Harbanger
Harbanger's picture

"Sucks not to have the world reserve currency."
That's your reason/excuse for the 1000 to 1 stock split? No. Venezuela is another fine example leftist ideology at work.

Thu, 01/02/2014 - 22:28 | 4295305 suteibu
suteibu's picture

America doesn't do these kinds of things.  It only recalculates things like unemployment, inflation, and GDP. 

Fri, 01/03/2014 - 09:24 | 4296147 Oldwood
Oldwood's picture

A seasonal adjustment?

Thu, 01/02/2014 - 22:47 | 4295345 Godisanhftbot
Godisanhftbot's picture

 if only they would convert everything to bitcoin, their toilet paper shortage would evaporate.


Thu, 01/02/2014 - 22:53 | 4295358 willwork4food
willwork4food's picture

Actually, if some smart ones did throw some pesos into it a year ago, they would be doing very well indeed- by comparison to others who only saved their money in a bank.

Thu, 01/02/2014 - 22:46 | 4295354 Yen Cross
Yen Cross's picture

   Abe is probably frothing at the mouth over this news... He probably sleeps with a chart of the Caracas exchange under his pillow every night.

Fri, 01/03/2014 - 00:56 | 4295665 AynRandFan
AynRandFan's picture

There is no problem in Venezuela, and even if there was, more power in the President would solve it.

- Al Jazeera -

Fri, 01/03/2014 - 02:16 | 4295779 starman
starman's picture

Didn't know Bernanke was Venezuelan born?

Fri, 01/03/2014 - 03:13 | 4295838 dunce
dunce's picture

In the news today was the report that oil production decreased for the eighth month in a row. They are not making investment in capex welcome and funneling profits to government social programs. Not to worry, they have a plan, really they do. of course the oil will still be there when the government collapses and money weill pour into the country to produce it under a new regime.

Fri, 01/03/2014 - 08:23 | 4296024 wagthetails
wagthetails's picture

I'm not.missing out on the us' 100% run due to.same forces. F this game. All in blind!

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