The Rise of Wall Street: History of the Stock Market

By admin | Published September 1, 2010

The Rise of Wall Street: History of the Stock Market

Stock Market is an avenue from which stocks of companies are bought and sold.

For some, they thought that stock market and Wall Street are the same. Wall Street in New York is just one example of a stock market.

Wall Street though is very significant in a sense that this is were the concept of stock market started.

The Wall Street establishment was built in 1653. Its purpose then is for defense and not for commerce. Dutch settlers fortressed themselves from Native Americans and British by building a 12 foot stockade fence,

In 1685, the wall was torn down and replaced by a new street. The British named it Wall Street.

The Stock Exchange

Wall Street is made famous with the emergence of two powerful stock exchanges. This resulted in the chaotic trading which turned out to be the financial markets that we know today.

The first stock exchange in the United States was founded in 1790 in Philadelphia. Two years later, a group of New York traders met and thought about setting up a security business. These 24-man groups are the founders of the New York Stock Exchange.

In 1817, the New York merchants were upset by the bad state of their stock exchange.
They sent one of their members to Philadelphia to take a look at their trading. The representative found out that Philadelphia is doing well in their exchange. The merchant returned to New York and discussed to the group how things were being done in Philadelphia. Shortly after, the New York Stock and Exchange Board was formally organized.

The exchange center was inaugurated on Wall Street. The rest was history. From a troubled beginning, the New York Stock exchange emerged as the place where billions of dollars worth of stocks and bonds are traded each day.

But the success of Wall Street did not happen overnight. In the early 1990s, the New York Stock Exchange was already on the rise. But this financial boom could not be sustained. In 1929, the stock market crashed, shocked the world and caused the Great Depression.

Although the economy eventually recovered, the mistakes of the Great Depression haunted them back. In 1987, the stock market again crashed. The crash was so crippling that the Dow Jones suffered the largest single-day loss in the stock markets history.

Since then, the government and the industry have been trying to set up measures to prevent such a large-scale crash. Now, the stock market is an essential component in the worlds economy. Proper safeguards and systems to reduce or prevent another stock market crash are of utmost importance.

Posted in Stock | Tagged , , , , , , , , , , , , , , , , , , , | Leave a comment

The stock market is a game

By admin | Published August 25, 2010

As a kid, have you ever played the board game Monopoly? This is a game that deals with properties, banks, infrastructure, and millions of colorful dollars.

Like in Monopoly, the stock market is a game in which you have to decide the buying and selling of your properties. Although in the case of the trading business, you are making stock market decisions.

The money you collect in Monopoly when you have circulated the whole board game would be the dividend or the payment in the stock market. The amount of the money you collect would be determined by the properties you have in the game. Just like in the stock market, the more shares you have, the larger amount of money you would be given.

When you are getting bankrupt in the game of Monopoly, you have the power to sell your colorful houses or building when you need to regain your finances. Just like in your stocks, when the market falls, you have the authority of which shares to sell out and which shares to retain.

In winning the Monopoly game, you are obliged to keep your properties before the construction of your houses and hotels. You would lose to your challenger if you sell these properties to him even for twice the normal price of your property. Just like in the stock market, making lots of money does not mean you are successful in what youre doing. In order for you to win with your stocks, you should be able to double your property to give you a higher dividend of shares.

In playing the board game, you need an opponent to start the game. Its your opponents job to prevent you from owning many properties and collecting large amount of money from him and from the bank. Just like in the stock market game, there are also factors that prevent you from the success of your shares. These dont necessarily have to be other investors, but it could be the taxes you are obliged to pay or the interest of your stockbroker from your dividend.

Playing the game of the stock market could be done even with just a little amount of money. Just like in the board game, all you have to own are colorful play-money for you to own properties and collect more money in the future.

Although the trading system could be compared to the board game, you should take the stock market seriously. Why? Because this is real life and real money is at stake.

Posted in Stock | Tagged , , , , , , , , , , , , , , , , , , , | Leave a comment

“You, the dummy, and the stock market”

By admin | Published August 18, 2010

Ok, so you want to dabble in the stock market. Unfortunately, you dont know how and where to begin. So what do you do?

Well, the first relevant thing to do is ask the basic question of what is a stock and its significance.

A stock symbolizes ownership of a company. Some view stock as certificates. So the more stocks a person owns of a particular company, the more of the company they own. And the more the company they own, the bigger the influence they have in running the company. This is called equity investment.

The next thing to do is familiarize yourself with financial terms such as price-earnings ratio, margin, option, earnings per share and leverage.

Then, its on to knowing where and how to actually buy stocks.

There are two ways to buy stocks:

1. brokerage service
2. online exchanges (e.g. banks)

Exchanges are services that allow investors to access stocks all over the world. Here, they can buy and sell stocks without the need for a broker. Certain banks allow you to set up your own stock portfolio and buy and sell stocks online using the money you have in these banks.

Brokerage services are rendered by brokers. These middlemen do all the work for you. They research the stock market, give advice, and buy and sell stocks according to the wishes of their clients. These brokers earn a commission from the stocks bought or sold.

Once you have chosen how to buy and sell stocks, the next thing to do is to open an account. As stated earlier, exchanges allow you to monitor and control your stock portfolio personally. If you choose to enter the stock trade with a bank, then ask your bank the specifics of setting up your own account.

If you choose to trade stocks via a broker, find a reputable broker and ask them to open and manage an account for you.

After you have successfully set up an account, its time to study the stock market and plan your strategy: will you be conservative in investing your money? Or will you be aggressive? Are you in it for the long term? Or are you a day trader?

After you have identified your plan, its time to do some research on the stocks offered in the market. Having a broker will significantly make it easier for you as they will do the research and give you advice. But, it is still best to study the market yourself.

Be warned though, the stock market is volatile. Be prepared for a roller-coaster ride.

Posted in Stock | Tagged , , , , , , , , , , , , , , , , , , , | Leave a comment

Stock Market 101: Stock Market Crash Course

By admin | Published August 11, 2010

Stock market is like a market place for businessmen. In a public market, goods are sold to the public. In a stock market however, stocks are sold to the public. Company stocks are sold in the form of shares. The more shares a person buys in a company, the higher his or her stocks are for that particular company.

The stock market consists of the primary market and the secondary market. Primary market is where companies raise finances for their operating expenses by selling shares to investors. The secondary are investors who buy and sell those shares to other investors. Their decisions are constantly based on changing market conditions.

A stock market is like an auction house. It is a systematic method of buying and selling. In a stock market though, it is a common sight to see people shouting and gesturing at one another.

The buying and selling of stocks begins in different places. If a person decides to purchase stocks in a particular company, a broker is contacted. This broker in turn takes the money of the investor and coordinates with a floor broker at the stock exchange. Usually a floor broker works for the broker or with the company selling the stocks.

At the stock exchange, floor brokers purchase the stock that the investor wants. When a deal is consummated, it is made known to a broker and the investor becomes a stockholder of the company.

That investor may decide to sell the stock. This is usually done when the price per share has gone up. This entails profit for the investor. For example, if a person bought 100 shares at $20.00 per share and the price increased to $25.00, selling those 100 shares results in $500.00 profit.

The economic principle of supply and demand is the driving force of the stock market. The number of shares of stocks that are open to the public dictates the supply and the number of shares that investors want affects the demand.

Movement of stocks in a certain market causes the constant changes in the prices of stocks.

For example, if most people believe that the economy is growing, they would buy more stocks. But if the economy is in a downfall, their tendency is to sell their stocks.

Many businessmen choose to make a long term investment in the stock market. There are instances where stocks decrease in value causing a stockholder to lose money. The stock market does not guarantee profit. The better a person is in reacting to the changes at the stock exchange; the better his chances are for profit.

Posted in Stock | Tagged , , , , , , , , , , , , , , , , , , , | Leave a comment

Learning the basics of the stock market

By admin | Published August 4, 2010

The stock market is a complicated game. In order for you to succeed in this business, learning the basics of the trade would be an important factor for your financial growth.

Before risking your money with the stock market, you should be able to recognize the factors vital in choosing which company to invest in. Here are the basics in learning some facts about the company:

1) Revenue. This refers to the amount of money the company makes. Although some companies that are still in the early development stage have no revenues to offer, many of the companies that have been in the market for years make use of the revenues to cover some losses and other costs.

2) Earnings. This refers to the money the company makes. Aside from revenues, the earnings are the money that would not be used in covering expenses. These are the extra money the company makes. Companies with large earning have an advantage in the stock market because investors examine the earnings made by the company they are about to buy stocks on.

3) Debt. This refers to the money the company owes in many ways. Because the company is in debt, the money they have is for paying up for the debit alone. Buying stocks from these companies would be risky because of the instability of the company.

4) Property. This refers to all the assets (money, stocks, and all businesses they own) of the company. Knowing these assets could give you an understanding of the companys position in the industry. If the companies have significant properties in their hands, you could safely trust their background and immediately buy some of their stocks.

5) Financial responsibility. This refers to the account of the companies that they need to pay out. Meaning, if the value of their financial obligations are low, the company is not in danger of becoming in debt. Examining the companys liabilities and comparing it with its assets could help in determining if you are ready to buy stocks from them. Make sure that the assets of the companies are always higher than the financial responsibilities they need to make.

Its never safe to gamble your money away on some company you dont even know. The basics of the stock market lie on the companies background. Make sure you research to ensure your money is in the right hands.

Posted in Stock | Tagged , , , , , , , , , , , , , , , , | Leave a comment

“How the Internet changed the face of the stock market”

By admin | Published July 28, 2010

“How the Internet changed the face of the stock market”

The Internet has affected the way we live our lives. It has made the world smaller. Now, information is at a persons fingertips.

It has elevated online transactions to greater heights. Goods and services can be purchased online via websites. Book a trip, order a take out, bid at an auction, all in the comfort of your own home.

Financial services have also been improved greatly by the Internet. People no longer needed to queue in banks to affect a transfer, or to go to the nearest automated teller machines. Even stock trading has not escaped this assault by the Internet.

Before, the only way to join the trading bandwagon was engaging the services of a broker and trusting them with your money and stock portfolio.

This was both a complicated and harrowing experience for the average Joe.

Today, virtually any ordinary person can trade stocks on their own, needing only an account which they can open with their preferred bank and an access point to the Internet. Only their financial skills and finances can limit them.

Stock information usually limited to business programs in televisions and newsprint are now made available by several sources on the Internet. Large brokering firms now provide stock market reports, tips and forecasts to subscribers for a fee.

Buying and selling stocks can now be made by a trader over the Internet using online exchanges. Banks now offer stock trading online to depositors as a way of investing and growing their money.

Between May 1999 to January 2000, the number of US households trading stocks and shares online jumped 30 percent from 2.7 million to 3.5 million.

Investment portfolios had also increased 32 percent from $100,000 to $132,000.

Even stock brokers have gone online in the hopes of landing more clients.

Already, 466 new online stock trading firms have opened in Sweden, 685 in the UK and 1178 in Germany.

Even the face of the stock market has changed considerably with the entry of Internet-related businesses. Over the years, startup companies providing online services, web content and electronic commerce have also put up their stocks in the market.

Companies providing services over the Internet such as online search engines have posted some of the most profitable stocks in recent years.

The effect of the Internet on stock trading over the years has been significant. Now, more than ever before, investors are taking control of their own investments, relying less and less on personal brokers.

Posted in Stock | Tagged , , , , , , , , , , , , , , , , , , , | Leave a comment

“Stock Market Investments: Secrets to Success”

By admin | Published July 21, 2010

Everybody can buy and sell stocks. All you need is money to invest, an online exchange and a whole lot of determination.

The truly difficult part is when to sell stocks. Should you sell when its on an upward swing? Or do you wait until it peaks and starts to fall? How long do you wait while the stock falls? Should you keep on holding until it rebounds or should you sell immediately and cut your losses?

Keep those questions in mind while you continue reading the article.

Part of a successful trading is to take a step back from the market and look at the bigger picture. Too many details and information can actually be detrimental to your goal of achieving profits through stock trading.

Here are some secrets for a successful stock market investment:

? Buy when the market signals the start of a bull trend. A bull trend is a set of rallies (an upward surge of stock value) where each rally exceeds the highest point of a previous rally. The start of an uptrend is signaled when the peak of a rally is higher than the previous peak. This means that the value of a stock peaks at a certain value, drops again, and then increases again reaching a value higher than the previous high value.
? Select leading stocks that are outperforming the market
? Sell when the bull trend has ended. This can be seen when the bull trend has a rally whose peak is lower than the peak of the previous rally.
? Sell stocks when they move against this trend

Given the above tips, it may still be difficult for you to actually identify the end of a bull trend. The problem here is when the last peak of the bull trend starts to dip and continues to fall without stopping. When do you sell when that happens?

Thats when the next big secret comes: Trailing stops.

Trailing stops have three uses:

? To limit losses
? To protect profits
? To prevent you from entering (or exiting) a trade too early

Stops can be based on the high/low of the daily trading range or on a trailing percentage.

Based on this, you can formulate your own trailing stop strategy. With a trailing stop strategy, you ride your stocks as high as you can, but if they start to tumble, you have an exit strategy. A good trailing stop is 25% off the highest value the stock reaches.

With these strategies in place, youll be able to have a better chance of minimizing your loss.

Posted in Stock | Tagged , , , , , , , , , , , , , , , , , , , | Leave a comment

How to get a high ROI in stock market trading

By admin | Published July 14, 2010

How to get a high ROI in stock market trading

The Return on Investment (ROI) in stock market trading is the profit you make on the sale of a security or other asset divided by the amount of your investment. ROI in stock market trading is expressed as an as an annual percentage rate.

Return on investment (ROI) is stock market trading includes all the income you earn on the stock. It also includes any profit that results from selling the stock. If the sale price plus any income is higher than the purchase price, then you have a positive ROI. If the sale price plus any income is lower, then your ROI is negative.

Of course as a stock market trader you are always looking not just for a positive but a high ROI. Below are some ways to ensure that you get a high ROI in stock market trading:

Always know what your buying
The most important thing to do to ensure high ROI in stock market trading is to acquire as much information as possible about the company you are planning to invest in. Do some basic analysis to find out if the stock is worth the price or else you will be gambling. You can always ask other people to the research for you if you dont have time. Reliable sources are websites of major brokerage houses, finance publications and mutual-fund companies.

Dont confuse smart investing with a bull market.
There are many reasons why you could be getting a high ROI in stock market trading. One is you could really be investing smartly. Another is that you could just be lucky enough to be in the right place at the right time and made money with hardly any effort. Sometimes we feel smart when the market is going up so were tempted to trade more frequently and take on riskier positions.

Avoid active trading
It is tempting to trade frequently especially when your gaining. This is particularly true with online stock market trading where investing is only a few clicks of the mouse away. But remember that it’s tough to make money by beating the market consistently. It is advisable to employ a buy-and-hold strategy to ensure a high ROI in stock market trading.

Mind the taxes
Frequent trading could also be very costly particularly so with high income taxes triggered by profits that could reach as high as 40%. To get a high ROI in stock market trading therefore, it is advisable to buy and hold for a period of at least a year so you would qualify for the lower capital gains rate of 20%.

Posted in Stock | Tagged , , , , , , , , , , , , , , , , , , , | Leave a comment

Stock market risks: Is my money really worth it?

By admin | Published July 7, 2010

So, finally, you have your money you can call your own. Naturally, you want to see your money grow. Saving your money in a bank doesn’t entice you, seeing it offer too little growth potential. You want something that gives a little more risk, with the hopes of having a much larger financial return. You turn to the stock market.

But wait! Are the risks involved in investing in the stock market worth my money? Investing is a good tool to increase you money, but you have to keep an open mind and know what to look for.

Needless to say, investing in stocks is a risky business. There are some risks that fortunately, you can control.

For example, you must guard against investing in “hot” stocks. True, some get wealthy in investing in “hot” stocks such as the “dot-com” bubble in the 1990s, but when the initial buzz around these stocks begin to slide, so does your investment. Once they fall, they really fall hard in a short period of time. This includes your money and others like you who invested in these stocks. If you really need to invest in these stocks, you have to keep a constant eye on them and try to sell them when they start to level off or drop.

To avoid such risks, you must diversify your portfolio. Basically, it means buying a little bit of a lot of different types of stocks and bonds. In that way, if one stock gets down, another one of your stock might be up and will help you recover some of your losses. It is a good idea to have some stocks in the technology sector, telecommunications, biomedical, and consumer corporations. In time, you could add your portfolio with precious metal and diamond indexes, and some general investment funds.

There are also companies that offer “safety stocks”. It will be a sound decision to have several shares of companies such as this in your portfolio. This is because such stocks rarely fluctuate and most often offer a slow and steady growth, thus giving you an assurance in your investments.

Do not rely on tips saying that this stock is “going to be big” and the like. These tips are often unfounded, and these stocks are almost worthless. Investing in these stocks might give you a higher return but in the long run, these stocks will just give you worries. Read the Wall Street Journal or watch the stock reports on news networks to know more about your stocks. Also check relevant websites to see how your stocks have been performing in recent weeks.

Posted in Stock | Tagged , , , , , , , , , , , , , , , , , , , | Leave a comment

Pros and cons of using your credit card on the

By admin | Published June 30, 2010

Pros and cons of using your credit card on the Internet

With todays technology and the E-commerce, using credit cards on the Internet is now more practiced and favored by consumers and online businesses alike.

For people who are not familiar with shopping on the internet using their credit cards, here is a list of the pros and cons that you must be adept with before considering using your credit card in the internet.

1) As a buyer and owner of the account, there are pros and cons in using your credit card on the internet:

* Online, you don’t have to wait on a queue to purchase anything with your credit card. On the other hand, you might get ripped off since you don’t know the seller.

* Shopping in the internet with your credit card gives you a wider selection of products with low prices. In contrast, shopping in the internet would not give you a chance to examine the product more thoroughly.

* Using your credit card online gives you the advantage of purchasing products anywhere in the world. However, some sellers may not be trustworthy enough to really deliver what you bought.

* Accessibility of shops 24 hours a day could be provided for you when using the internet. Also, 24 hours a day somebody out there could just be lurking waiting for you to key in your credit card number for him or her to use.

* Although there is a large selection of products to supply the needs of the customer, records have it that there is only an average of 1/10 stocks obtainable on the internet.

2) As a businessman using the internet to sell products and services, there are pros and cons in using your credit card on the internet:

* In using the internet to sell to customers that use credit cards, the companys market sales would increase. But, purchasing hardware and software to support these transactions would cost the company a large amount of money. Also, regular maintenance is required to ensure that all transactions happen smoothly.

* Because customers make use of credit cards through the internet, the company would be able to expand their sales globally. On the other hand, a company must make sure that the stocks are enough to supply the global market when the demand suddenly spikes.

*Through the large number of consumers using their credit cards online, the company’s profits won’t be that hard to increase. But this entails keeping up with the competition since there a lot of other companies vying to get the most out of the credit card phenomenon.

Posted in Stock | Tagged , , , , , , , , , , , , , , , , , , , | Leave a comment