It is the prospect of winning that provides the lift in spirits, even when one knows the odds of winning are long. In a pari-mutual system long odds mean few bettors feel the horse has a chance to win. Short odds identify the favorite, but also betray the fact that a win may not return much profit. Often a favorite winning horse will return RM2.10 on a RM2.0 bet. Ten sen is hardly worth the trip to the window to get it. But you have to go, because the other RM2 is not winnings; it's your money they are just returning.

For some, gambling is profitable. It builds luxurious casinos, employs many people and generates lots of cash. Where does the cash come from? It comes from small bettors [and sometimes large] who are being entertained. A casual observation of the furnishings is enough to tell you the odds are not even.

Before you put cash into the casino window kiss it goodbye, because it is whisked out of sight and you never see it again. You get tokens, scratch-offs or tickets, but your money is gone forever. You have just bought some entertainment. The gambler inside the window has a slight smile as he puts your money in his drawer.

The stock market is not supposed to be gambling. It is investment. But if you don't know what the odds are of getting your money back, then it is gambling. You might get a fund manager to play for you. In this case it often becomes what is known as a businessman's risk, where your money is at risk for a time with a high probability for a return to compensate for the risk. This risk limiting approach only applies to funds which invest in companies listed on mature stock exchanges having sophisticated surveillance techniques.

Then there are the new exchanges, such as the Kuala Lumpur Stock Exchange. The stocks offered here are generally such a mess of interconnected subsidiaries that even the executives themselves cannot judge the risk of any return, much less the prospect for a capital gain. Many of the companies actively traded offer no significant information on their financial condition. Many are technically bankrupt, with no appreciable chance to avoid a forced restructuring. They lack only the announcement of a final auditing and the takeover by special liquidators.

One firm announced yesterday that it had 109 creditors, with a total debt around RM10 billion. The debt, they announce, is to be satisfied soon. "And how is that to be done?" one asks. With more and bigger debt, that's what. Zero coupon bonds due down the road are to be exchanged for loans overdue and non-performing now. The creditors are asked to take the new paper for the old. But the creditors are stuck. They already have their money in, and are trying to get it back. As a new potential investor/gambler, how much risk do you suppose there is at this window?

Money in Malaysia is tight, and in an effort to pry some out of the tight fists of the high-saving public, the banks are now allowed by the treasury to offer higher rates. This is made possible by a commensurate increase in the higher base lending rate charged to borrowers. The zero coupon bonds therefore must have an interest rate that is attractive, and so they offer a coupon rate of nine percent. But nothing is to be paid for a number of years. No interest, no principal ... nothing. You must wait and hope. There is not much excitement in that, but lots of worry.

The national telephone company has managers who find far flung opportunities more attractive than those at home. Malaysia is said by the government ministers to be the fastest developing country in its class. So why is the scarce capital being sent to Ghana? Is Ghana a place where they can watch and manage the money you are thinking of entrusting them with? It is difficult to keep an eye on the Malaysian business scene, without the added worry of what is happening to the big investment in Ghana.

It is a typical case. Perhaps the majority of firms on the Kuala Lumpur stock exchange have extensive investments in other countries, many not profitable, and many are involved in illegal activities of one kind or another. It is a though Malaysia is the head of a rapacious octopus, creating environmental and social pillage worldwide.

Looking at any one of the numerous blue chips on the Kuala Lumpur exchange is like trying to untangle a great mass of tangled thread. Company A has investments of 15% in company B, and 30% in company C, while both B and C own shares in A , and it goes on and on ...

Is there no company which can provide a decent return on equity within its own area of expertise? Why is there this horrid spate of inter-marriages every month that no one can keep track of? Or is confusion the intent? Why so much frenetic activity to float new paper? Why so much transferring around of shares from company to company? It suggests boardroom maneuvering to extricate from beneath mountains of debt, using bizarre methods of finance.

One might take the trouble to unravel the affairs of a given company, investigating the history of all its management decisions; assessing its assets and debts; evaluating the skill and and experience of its management; there is still the problem of untangling the shares it owns in other companies, and what their financial affairs and prospects are. Once that is done, one must then look to see what new purchases or share offerings the executives are contemplating, and what other money-raising schemes are afoot. And because there is always paranoia and secrecy, it is impossible to find out.

The Kuala Lumpur stock exchange offers a sufficient variety of gambling vehicles to satisfy every palate. There are rights issues and warrants enough to provide entertainment for years, just checking the exercise dates and prices. Rights and warrants allow purchase of the underlying stock for a set period of time and at a given price. They equate to buying a call option, though for a longer period. In all instruments of this type you put up a premium to be allowed to buy the stock for a price above the current market. Essentially it is a bet on a scenario with five possible outcomes, one in which you profit, one in which break even, and three in which you lose. But the same basic event occurs; you give the company your money and they give you a piece of paper. And sometimes not even that in this electronic age.

Of course one could just buy the company shares directly, but that is more expensive and less fun [there is less leverage]. The executives do not receive any money when shares are traded between members of the public, whereas rights and warrants are a clear source of cash. If the shares ever must be delivered they can come from existing or new treasury shares, or a new issue can be floated.

But at the time of the right or warrant issue and sale, the premium between the existing share price and the exercise price is a clear profit to the company [less a small cost of distribution]. Is it a good bet? Usually not. Most expire with no value. Certainly it is the company executives' responsibility to try to get the share price price up, but since they are also the ones who write the bonds, and invest in Ghana, they also have a large effect on whether the stock ever reaches the strike price by the expiration date. Rights and warrants are seldom issued by companies with good management and a healthy balance sheet.

In well-regulated markets all companies are required to hire independent auditors who provide to the public objective information on the company every quarter. The managers are not allowed to trade secretly in their own stock. They have inside information that favors their investment decisions. Every corporate executive knows there are ample ways to transfer shares without detection.