# The Crash of the Caracas Generale

**URL:** <https://boards.straightdope.com/t/the-crash-of-the-caracas-generale/824105>\
**Category:** Factual Questions\
**Created:** [November 6, 2018, 11:56pm UTC](https://boards.straightdope.com/t/the-crash-of-the-caracas-generale/824105 "2018-11-06T23:56:24Z")\
**Posts on this page:** 4\
**Page:** 1

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**Author:** ![yearofglad](https://avatars.discourse-cdn.com/v4/letter/y/b782af/32.png) [@yearofglad](https://boards.straightdope.com/u/yearofglad)\
**Post date:** [November 6, 2018, 11:56pm UTC](https://boards.straightdope.com/t/the-crash-of-the-caracas-generale/824105/1 "2018-11-06T23:56:24Z")

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I wrote [a question a little more than a year ago](https://boards.straightdope.com/sdmb/showthread.php?t=839859) about the rapid rise (due to inflation) of Venezuela’s stock market, the Caracas Generale.

The market had a “pretty good year” just by the raw numbers, climbing from 1,981 around January 1st to 504,835 at yesterday’s close, an increase of more than 25,000%; I understand (reasonably) that this was driven by hyperinflation rather than any meaningful increase in assets, etc.

[Today the market was down 504,328.12, a whopping 99.9%.](https://www.bloomberg.com/quote/IBVC:IND)

What I want to know is: why this drastic change? Sure, the market may have been misleading, but something must have happened to account for this incredible drop - a difference in how it is calculated (for instance, in terms of USD instead of the Venezuelan currency?) but I can’t find any information anywhere.

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**Author:** ![Colophon](https://avatars.discourse-cdn.com/v4/letter/c/f05b48/32.png) [@Colophon](https://boards.straightdope.com/u/Colophon)\
**Post date:** [November 7, 2018, 3:04pm UTC](https://boards.straightdope.com/t/the-crash-of-the-caracas-generale/824105/2 "2018-11-07T15:04:03Z")

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The Venezeulan bolivar was revalued recently, with one bolivar soberano (VES) worth 100,000 bolivares fuertes (VEF). The changeover date was meant to be August 20, according to [Venezuelan bolívar - Wikipedia](https://en.wikipedia.org/wiki/Venezuelan_bol%C3%ADvar) , but perhaps the stock market was kept in the old currency longer for some reason?

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**Author:** ![Colophon](https://avatars.discourse-cdn.com/v4/letter/c/f05b48/32.png) [@Colophon](https://boards.straightdope.com/u/Colophon)\
**Post date:** [November 7, 2018, 3:12pm UTC](https://boards.straightdope.com/t/the-crash-of-the-caracas-generale/824105/3 "2018-11-07T15:12:27Z")

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OK, I found a news release explaining it on the Bolsa de Caracas website: [http://www.bolsadecaracas.com/esp/noticias/noticias.jsp?status=2&noticia=7128&sType=R&sEnterp=](http://www.bolsadecaracas.com/esp/noticias/noticias.jsp?status=2&noticia=7128&sType=R&sEnterp=)

> [@](#):
>
> Se informa al público que la fórmula de cálculo de los índices ha cambiado y como consecuencia de ello el número del cada índice tiene tres (3) ceros menos.

i.e. “The public is informed that the formula for calculating the indices has changed and as a consequence the number of each index has three (3) zeros less.”

So, as it appears from the graph, the previous close at the end of last week of 504,835.40, would be 504.84 under the new system. The close on November 6 of 507.32 therefore represents a modest 0.49% increase.

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**Author:** ![yearofglad](https://avatars.discourse-cdn.com/v4/letter/y/b782af/32.png) [@yearofglad](https://boards.straightdope.com/u/yearofglad)\
**Post date:** [November 7, 2018, 3:22pm UTC](https://boards.straightdope.com/t/the-crash-of-the-caracas-generale/824105/4 "2018-11-07T15:22:04Z")

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> [@Colophon](#):
>
> OK, I found a news release explaining it on the Bolsa de Caracas website: [http://www.bolsadecaracas.com/esp/noticias/noticias.jsp?status=2&noticia=7128&sType=R&sEnterp=](http://www.bolsadecaracas.com/esp/noticias/noticias.jsp?status=2&noticia=7128&sType=R&sEnterp=)
> 
> i.e. “The public is informed that the formula for calculating the indices has changed and as a consequence the number of each index has three (3) zeros less.”
> 
> So, as it appears from the graph, the previous close at the end of last week of 504,835.40, would be 504.84 under the new system. The close on November 6 of 507.32 therefore represents a modest 0.49% increase.

Thanks so much. Appreciate it.