Mar
5
Stock Market
Filed Under Investing | Leave a Comment
Amit Malhotra
A crowded and clumsy market full of people, running and writing some scores on sheets, yelling on phones and carrying the unusual gestures on their faces – that’s the way a stock market looks like. A stock exchange has always been the interest of the investors and an ocean of uncertainty where investors plunges on their own will. It is not new, even in 12th century it existed in raw form in France. During this long journey, it must have witnessed many hues of many huddles. The coloration and de-coloration of lucks has been a distinct feature of stock market.
Literally, stock exchange refers to the corporation or the organization that facilitates the traders and investors to trade company stocks and other securities. They also provide facilities regarding the issue and redemption of securities and the payment of incomes and dividends through capital events and other financial institutions. The securities to be traded on stock exchange include shares, unit trust and bonds. The listing of the companies is really needed to be listed on stock exchange to be traded. As such, there is a centrally located place where the stocks are enlisted. Gone those days when there was a huddle in stock market. Now, the market has converted into electronic market since the Internet becomes popular.
Stock exchange features various facilities. Using computer to trade without physically visiting stock market is the main deal that revolutionized the stock market. The speedy trading, automatic transfer, online brokers and other facilities also make online stock trading become more and more popular.
Just few words emphasizing over the role of stock exchange presence:
Raising capital: Companies listed on stock exchange generally issue shares and securities, in turn, purchased by traders in return of profits. However, the money extended to buy shares is the capital that can be used by companies for its own prosperity. Mobilizing investment: it’s due to trading in stock market that the savings are mobilized. Share market provided better prospects of re-allocation of funds. The funds are at least in motion rather than being idle in deposits in banks. Hence, “money generates money”, is proven to be a better option rather the money lying idle with banks. Company growth: with the ability to raise funds easily, it tends to let the company grow. The money invested by people is used forth to enhance opportunities for companies. Widening product lines, expanding businesses, all are the share of share market. Re-allocation of wealth: not only the wealth is allocated with the companies to grow; rather the buying and selling of stocks and securities let various people make money and hence, wealth are relocated from time to time with different traders. Government eye: with the companies enlisted on the stock exchange, it provides government to keep a check over companies. Even the companies. With those of public and private management can be compared. Small investor’s interest: the stock exchange has a paramagnetic attraction for small and big investors. It not only has big fishes gushing; rather has an increasing amount of small investors struggling to earn their part of returns. With the introduction of online trading, this trend has been on a boom. Raising funds for developmental themes: government, through shares and securities, can easily raise funds in share market. There are many investors who like to invest in government companies due to their reliability and credibility. It makes government raise capital to invest in developmental projects regarding the infrastructure, welfare and social developments of society. Calculator for economy: stock exchange acts as a calculator to calculate the ups and downs of the economy. The free mobility of shares decides the prices of the shares; hence, an uprising in share market reflects the boom in the economy. The factor of depression, economic recession and financial crises tends stock market to crash down. Therefore, the movement of shares and general stock index indicates the prevailing trend of the economy.
A crowded and clumsy market full of people, running and writing some scores on sheets, yelling on phones and carrying the unusual gestures on their faces – that’s the way a stock market looks like. A stock exchange has always been the interest of the investors and an ocean of uncertainty where investors plunges on their own will. It is not new, even in 12th century it existed in raw form in France. During this long journey, it must have witnessed many hues of many huddles. The coloration and de-coloration of lucks has been a distinct feature of stock market.
Literally, stock exchange refers to the corporation or the organization that facilitates the traders and investors to trade company stocks and other securities. They also provide facilities regarding the issue and redemption of securities and the payment of incomes and dividends through capital events and other financial institutions. The securities to be traded on stock exchange include shares, unit trust and bonds. The listing of the companies is really needed to be listed on stock exchange to be traded. As such, there is a centrally located place where the stocks are enlisted. Gone those days when there was a huddle in stock market. Now, the market has converted into electronic market since the Internet becomes popular.
Stock exchange features various facilities. Using computer to trade without physically visiting stock market is the main deal that revolutionized the stock market. The speedy trading, automatic transfer, online brokers and other facilities also make online stock trading become more and more popular.
Just few words emphasizing over the role of stock exchange presence:
Raising capital: Companies listed on stock exchange generally issue shares and securities, in turn, purchased by traders in return of profits. However, the money extended to buy shares is the capital that can be used by companies for its own prosperity. Mobilizing investment: it’s due to trading in stock market that the savings are mobilized. Share market provided better prospects of re-allocation of funds. The funds are at least in motion rather than being idle in deposits in banks. Hence, “money generates money”, is proven to be a better option rather the money lying idle with banks. Company growth: with the ability to raise funds easily, it tends to let the company grow. The money invested by people is used forth to enhance opportunities for companies. Widening product lines, expanding businesses, all are the share of share market. Re-allocation of wealth: not only the wealth is allocated with the companies to grow; rather the buying and selling of stocks and securities let various people make money and hence, wealth are relocated from time to time with different traders. Government eye: with the companies enlisted on the stock exchange, it provides government to keep a check over companies. Even the companies. With those of public and private management can be compared. Small investor’s interest: the stock exchange has a paramagnetic attraction for small and big investors. It not only has big fishes gushing; rather has an increasing amount of small investors struggling to earn their part of returns. With the introduction of online trading, this trend has been on a boom. Raising funds for developmental themes: government, through shares and securities, can easily raise funds in share market. There are many investors who like to invest in government companies due to their reliability and credibility. It makes government raise capital to invest in developmental projects regarding the infrastructure, welfare and social developments of society. Calculator for economy: stock exchange acts as a calculator to calculate the ups and downs of the economy. The free mobility of shares decides the prices of the shares; hence, an uprising in share market reflects the boom in the economy. The factor of depression, economic recession and financial crises tends stock market to crash down. Therefore, the movement of shares and general stock index indicates the prevailing trend of the economy.
Mar
1
Why are people in the stock market running around so much?
Filed Under Other - Business & Finance | 3 Comments
Just Bored
I always see footage of the stock market and people are running around like crazy and yelling over each other. It seems so chaotic. I know nothing about the stock market or how it works. I know the basics but that’s it. I am just curious. Hopefully someone can give me a good answer and not a smart *** comment or remark. Thanks.
I always see footage of the stock market and people are running around like crazy and yelling over each other. It seems so chaotic. I know nothing about the stock market or how it works. I know the basics but that’s it. I am just curious. Hopefully someone can give me a good answer and not a smart *** comment or remark. Thanks.
Feb
25
What do you know by Stock Market and why do you want to make your career in stock market?
Filed Under Investing | 7 Comments
sunny_bindas
This is the question put enterance test in a crush course in stock market will you please help me to find an answer in 50-60 words. Thanks your stupid friend Sunny?
This is the question put enterance test in a crush course in stock market will you please help me to find an answer in 50-60 words. Thanks your stupid friend Sunny?
Feb
19
101 Stock Market Investing – Finding Stock Market Industry Beta
Filed Under Investing | Leave a Comment
Mike Ashley
Stock Market Industry Beta is the measure of how a stock’s trading price moves compared to the market as a whole. Knowing this figure one can understand how volatile a stock is. A beta of 1 means a stock’s price fluctuates exactly as much as the market. A beta less than 1 means a stock is less volatile than the market and a beta greater than 1 means that stock is more volatile than the market.
Betas can be determined for entire industries also. The “industry beta” would compare the volatility of the industry relative to the whole market. For example, technology stocks tend to be more volatile than the industry so the beta would be more than 1, generally.
To calculate industry beta you need some historical data of the price of the industry stock and historical price data of the entire market. For example if you were going to calculate beta over the last year for compare technology stocks versus the S&P 500, you would first gather the historical data you need. Next, determine the movements of the two prices after each trading day. This will give a percentage change versus the previous day. Once we have 365 of these we can average the group to determine the average move each made over the last year. We can call the average industry movement Ri and the average market movement Rm. Finally, divide the technology industry’s average movement by the S&P’s average movement and we will have an outcome that is less than 1 (less volatile), 1 (equally volatile), or greater than 1 (more volatile). Written out this function looks like this:
Β = Ri / Rm or B = Covariance(Ri , Rm)/ Variance(Rm)
Beta can be useful in stock research when judging how risky a stock is versus a stable investment with a guaranteed rate of return. It must be noted that the longer period of time the beta is acquired the more accurate that beta will be. Also, betas are more valuable when used with stocks that have a long record of high volume trading. Smaller stocks that don’t trade a lot can fluctuate wildly on a busy day and throw the beta out of whack for the period being measured.
Stock Market Industry Beta is the measure of how a stock’s trading price moves compared to the market as a whole. Knowing this figure one can understand how volatile a stock is. A beta of 1 means a stock’s price fluctuates exactly as much as the market. A beta less than 1 means a stock is less volatile than the market and a beta greater than 1 means that stock is more volatile than the market.
Betas can be determined for entire industries also. The “industry beta” would compare the volatility of the industry relative to the whole market. For example, technology stocks tend to be more volatile than the industry so the beta would be more than 1, generally.
To calculate industry beta you need some historical data of the price of the industry stock and historical price data of the entire market. For example if you were going to calculate beta over the last year for compare technology stocks versus the S&P 500, you would first gather the historical data you need. Next, determine the movements of the two prices after each trading day. This will give a percentage change versus the previous day. Once we have 365 of these we can average the group to determine the average move each made over the last year. We can call the average industry movement Ri and the average market movement Rm. Finally, divide the technology industry’s average movement by the S&P’s average movement and we will have an outcome that is less than 1 (less volatile), 1 (equally volatile), or greater than 1 (more volatile). Written out this function looks like this:
Β = Ri / Rm or B = Covariance(Ri , Rm)/ Variance(Rm)
Beta can be useful in stock research when judging how risky a stock is versus a stable investment with a guaranteed rate of return. It must be noted that the longer period of time the beta is acquired the more accurate that beta will be. Also, betas are more valuable when used with stocks that have a long record of high volume trading. Smaller stocks that don’t trade a lot can fluctuate wildly on a busy day and throw the beta out of whack for the period being measured.
Feb
7
What are reasons for the stock market setback in the last two weeks?
Filed Under Investing | 3 Comments
ztim21
The stock market reached all times highs. Is it plain and simple a time for a correction. Can other events be tied into other than the subprime mortgages dilmena. Thanks for your answers.
The stock market reached all times highs. Is it plain and simple a time for a correction. Can other events be tied into other than the subprime mortgages dilmena. Thanks for your answers.
Jan
25
Stock Market?
Filed Under Investing | 4 Comments
i’m learning about the stock market in school, but im still kinda confused. What is Nasdaq and DownJones. I think that is what they are called. I thought you invested in companies, if that is correct, then what companies are those two i just mentioned? thanks!
Jan
19
Stephen Bigalow
Market Sectors – Organizing The Stock Market
Are you a clean freak? Does it drive you crazy when things are out of place or when a picture isn’t quite level? If you are at your friend’s house, do you wipe dust from a shelf or line up the towels when no one is looking? If so, you will like today’s topic; but don’t worry, we won’t lecture you on your obsessive compulsive side! The topic is market sectors and understanding and using them will not only tidy up your stock portfolio but will also help you to strengthen your trading plan as well.
A Definition of Market Sectors
They say a problem will defined is nearly solved; this can be applied to stocks as well. An investor needs a way to sort stocks; the basis of stock technical analysis relies on this comparison. If you can find common ground between two stocks, you can find a measurement of comparison. The best form of association is market sectors. “Market sectors” is a qualification method which looks at the type of business and groups them based on generally accepted names One of the most common classifications breaks the market down into 11 different market sectors. Two are generally regarded as “defensive” and the other nine are referred to as “cyclical”. These market sectors are:
Cyclical Stocks
Transportation
Technology
Health Care
Financial
Energy
Consumer Cyclical
Communication
Capital Goods
Basic Materials
Defensive Stocks
Utilities
Consumer Staples
Defensive Stocks
Defensive investing with defensive stocks are beneficial to a portfolio because companies in these market sectors typically don’t experience as much stock volatility when the market has problems because people still use energy and eat. These are good stabilizers to use for portfolio diversification and offer protection in a falling market.
The downside of defensive stocks is that they don’t climb with a rising market. Although the market is doing well people necessarily use more energy or eat more food. Defensive market sectors follow the image that their name implies; they can be used quite well as hedge funds, stable stocks that prevent too much volatility in a portfolio.
Cyclical Stocks
Cyclical stocks cover the remaining market sectors and they typically react to a variety of market conditions. They do move independently, however, as one may be going up while another is going down. Because of this, purchasing from the cyclical market sectors requires good stock market strategies.
Why do we care about market sectors?
There are two important concepts with market sectors. First, by understanding the different market sectors, it is possible to find relationships between different companies. If you don’t know that one company is in the health care sector and another is in the energy sector, you might compare their earnings per share and draw conclusions that don’t apply. Second, understanding market sectors allows you to add valuable protection to your stock portfolio. By investing in a number of different stock sectors, you can build a higher level of security for your investment. For example, if you invested $11,000 only in the communications sector and it dropped by 50% you will have lost $5,500 or 50% of your investment. If you invested equally in all eleven market sectors and the communications sector dropped by 50%, you will have only lost $500 or 4.5% of your investment. While the example is simplistic, the meaning is very clear; by spreading your investments over a number of market sectors you minimize your risks from a tumble by an entire sector.
Conclusion
Feel like doing a little “spring cleaning” on your portfolio now? By putting the stock market in the right baskets, you can know how to both evaluate a stock and insulate your portfolio from extreme risk. Most analysis matrixes start by comparing businesses from the same sector; as you use your trading plan to evaluate companies in similar market sectors, you will improve your decision making process. Then you can start trying to understand other important things like why those uneven towels bother you so much!
Market Sectors – Organizing The Stock Market
Are you a clean freak? Does it drive you crazy when things are out of place or when a picture isn’t quite level? If you are at your friend’s house, do you wipe dust from a shelf or line up the towels when no one is looking? If so, you will like today’s topic; but don’t worry, we won’t lecture you on your obsessive compulsive side! The topic is market sectors and understanding and using them will not only tidy up your stock portfolio but will also help you to strengthen your trading plan as well.
A Definition of Market Sectors
They say a problem will defined is nearly solved; this can be applied to stocks as well. An investor needs a way to sort stocks; the basis of stock technical analysis relies on this comparison. If you can find common ground between two stocks, you can find a measurement of comparison. The best form of association is market sectors. “Market sectors” is a qualification method which looks at the type of business and groups them based on generally accepted names One of the most common classifications breaks the market down into 11 different market sectors. Two are generally regarded as “defensive” and the other nine are referred to as “cyclical”. These market sectors are:
Cyclical Stocks
Transportation
Technology
Health Care
Financial
Energy
Consumer Cyclical
Communication
Capital Goods
Basic Materials
Defensive Stocks
Utilities
Consumer Staples
Defensive Stocks
Defensive investing with defensive stocks are beneficial to a portfolio because companies in these market sectors typically don’t experience as much stock volatility when the market has problems because people still use energy and eat. These are good stabilizers to use for portfolio diversification and offer protection in a falling market.
The downside of defensive stocks is that they don’t climb with a rising market. Although the market is doing well people necessarily use more energy or eat more food. Defensive market sectors follow the image that their name implies; they can be used quite well as hedge funds, stable stocks that prevent too much volatility in a portfolio.
Cyclical Stocks
Cyclical stocks cover the remaining market sectors and they typically react to a variety of market conditions. They do move independently, however, as one may be going up while another is going down. Because of this, purchasing from the cyclical market sectors requires good stock market strategies.
Why do we care about market sectors?
There are two important concepts with market sectors. First, by understanding the different market sectors, it is possible to find relationships between different companies. If you don’t know that one company is in the health care sector and another is in the energy sector, you might compare their earnings per share and draw conclusions that don’t apply. Second, understanding market sectors allows you to add valuable protection to your stock portfolio. By investing in a number of different stock sectors, you can build a higher level of security for your investment. For example, if you invested $11,000 only in the communications sector and it dropped by 50% you will have lost $5,500 or 50% of your investment. If you invested equally in all eleven market sectors and the communications sector dropped by 50%, you will have only lost $500 or 4.5% of your investment. While the example is simplistic, the meaning is very clear; by spreading your investments over a number of market sectors you minimize your risks from a tumble by an entire sector.
Conclusion
Feel like doing a little “spring cleaning” on your portfolio now? By putting the stock market in the right baskets, you can know how to both evaluate a stock and insulate your portfolio from extreme risk. Most analysis matrixes start by comparing businesses from the same sector; as you use your trading plan to evaluate companies in similar market sectors, you will improve your decision making process. Then you can start trying to understand other important things like why those uneven towels bother you so much!
Jan
4
topher
every time i check the stock market i see the abbreviation mkt cap, and I dont know what it means.
every time i check the stock market i see the abbreviation mkt cap, and I dont know what it means.
Dec
27
Stock Market Trend Analysis
Filed Under Investing | Leave a Comment
Micheal James
Stock market goes through different phases at different points of time. At time the market is bullish, at time it bearish, the market has a correction phase and volatile phase as well. For investing in stock market, and to get profit from your investment, it is important that you identify these phases, predict the coming phase, and plan your investment decisions accordingly. There are different methods that are used by the experts to predict the stock market trend.
Technical analysis – There are so many methods for technical analysis that are used by the experts to predict trend of the market, particular sector and in some cases particular stocks as well. The technical analysis is done on the basis of the data collected from the market. There are some set patterns in technical analysis that are formed from the past histories in the market. Experts try and figure out a pattern out of the information that they get from the market and post these data to make a graphical representation of the stock price. Then they compare the graph pattern to the previous patterns to find out if there is a common pattern and then predict the future behavior of the market from these graphs.
Apart from the technical analysis, there are some other actors as well that also help to predict the stock market trend such as the direction of the market. If the overall market is going up, i.e. the market is in bullish trend, and then the stock prices are all set to grow. On the other hand if the market is bearish in nature then the general trend of stock prices is to reduce. Now these are all passing phases and the market goes through correction phase in between the bullish trend and bearish trend when the market gets stable.
To determine if the market is going through a bullish trend or bearish trend, you need to figure out if the market is having more buyers or more sellers. If the market is having more people investing in stocks than number of sellers, then the market is having a bullish trend. If there is more seller than buyer, then of course the market is going through a bearish trend. To determine what exactly is the prevailing stock market trend. You need to keep a close watch on the price of the stock and volume of the stock. If the price at the market is up and the volume of trading is high then you can predict that the market is bullish in nature. On the other hand, if the prices are reducing and the volume of trading is low as well then the trend of the market is bearish. Stock brokers also closely monitor the Dow Jones Index, the S & P 500 and the NASDAQ to determine the trend of the market.
Stock market goes through different phases at different points of time. At time the market is bullish, at time it bearish, the market has a correction phase and volatile phase as well. For investing in stock market, and to get profit from your investment, it is important that you identify these phases, predict the coming phase, and plan your investment decisions accordingly. There are different methods that are used by the experts to predict the stock market trend.
Technical analysis – There are so many methods for technical analysis that are used by the experts to predict trend of the market, particular sector and in some cases particular stocks as well. The technical analysis is done on the basis of the data collected from the market. There are some set patterns in technical analysis that are formed from the past histories in the market. Experts try and figure out a pattern out of the information that they get from the market and post these data to make a graphical representation of the stock price. Then they compare the graph pattern to the previous patterns to find out if there is a common pattern and then predict the future behavior of the market from these graphs.
Apart from the technical analysis, there are some other actors as well that also help to predict the stock market trend such as the direction of the market. If the overall market is going up, i.e. the market is in bullish trend, and then the stock prices are all set to grow. On the other hand if the market is bearish in nature then the general trend of stock prices is to reduce. Now these are all passing phases and the market goes through correction phase in between the bullish trend and bearish trend when the market gets stable.
To determine if the market is going through a bullish trend or bearish trend, you need to figure out if the market is having more buyers or more sellers. If the market is having more people investing in stocks than number of sellers, then the market is having a bullish trend. If there is more seller than buyer, then of course the market is going through a bearish trend. To determine what exactly is the prevailing stock market trend. You need to keep a close watch on the price of the stock and volume of the stock. If the price at the market is up and the volume of trading is high then you can predict that the market is bullish in nature. On the other hand, if the prices are reducing and the volume of trading is low as well then the trend of the market is bearish. Stock brokers also closely monitor the Dow Jones Index, the S & P 500 and the NASDAQ to determine the trend of the market.
Nov
21
How does one start playing the stock market?
Filed Under Investing | 4 Comments
James C
I’m pretty much a beginner in this, but I’ve always been interested in the stock market. Is it possible to start out with say $100 and just experiment and learn how everything works? How can I do this? What are some good sites where you can purchase shares? Any info would be great.
I’m pretty much a beginner in this, but I’ve always been interested in the stock market. Is it possible to start out with say $100 and just experiment and learn how everything works? How can I do this? What are some good sites where you can purchase shares? Any info would be great.