Wall Street: Where Money Grows

When working, I listen to Bloomberg Television. Commentators and guests banter about the stock market, the Federal Reserve, interest rates, corporate stock, and national news. The day changes, the news is similar, but never trumpery.

As interesting as daily stock market news is to me, I often wonder if market reports matter when most investors are too busy and distracted to pay attention. Investors stay-tuned for the closing market averages; if the market is up, all is right with the world. If the market is down, “I’m in it for the long haul.” If the market cascades unexpectedly, investors second-guess investment decisions.

“Buy! says the Bull” “Sell!”, says the Bear. Who is Right? Stock and bond trading is a tug-of-war between the Bears and the Bulls (similar to the Democrats and the Republicans): one group sees what’s right, the other group sees what’s wrong. Both are opportunists.

If too many become Bulls, the suspicious Bears salivate; when the Bear corrals the Bull, the Bulls know their time is near. Bear traders see the glass half-empty; bull traders see the glass half-full. Together, they make a “market” where stocks, bonds, mutual funds, options, commodities, and derivatives are traded. The Bull and the Bear each get it right, but seldom at the same time; that’s how markets are made.

“Securities markets are a fast-moving, glamorous, complex, multi-billion-dollar business.” The largest located in New York, London, and Tokyo and and the emerging markets located in Sao Paulo, Karachi, and Jakarta, and they all have a history.

In the 13th century, a small group of investors issued 96 shares of the Bazacle Milling Company in Toulouse, France. Trading paper for grain did not catch French imagination (or anyone’s) until the 18th century and the beginning of the Industrial Revolution.
* The 1700′s brought innovation and advancement: 1712 – Thomas Newcomen patents the atmospheric steam engine. * 1756 – John Smeaton invents hydraulic cement. * 1769 – Nicolas Cugnot invents the motorised carriage. * 1775 – Alexander Cummings invents the flush toilet (thank God). * 1778 – Oliver Pollock, a New Orleans businessman, creates the $ symbol * 1798 – Income tax introduced by British parliament (but of course)

New York Stock Exchange investors started “ringing the trading bell” in 1790. A 12 foot high wooden stockade separated that “trading floor” from the British and the Indians. On May 12th, two years later, 24 traders and merchants met under a Buttonwood tree at 68 Wall Street to sign the “Buttonwood Agreement” that empowered them to trade securities for commission. Their agreement is the first of many for the NYSE.

Essentially, stock market entrepreneurs sold paper in place of commodities. Trading cows, land, or lumber became too cumbersome. Further, selling a companies “paper” raises capital for the company, and gives ownership to the investor. Farmers harvest the grain, “listed ” companies process and investors hope they do it right so they can shop for groceries.

The French voiced what every investor sometimes feels: if you cannot hold it in your hand, ownership is risky, while local farmers did not like big city highfalutin ideas. Holding a tangible object may be at the root of all risk concerns. Don’t make a promise, take me to the store so I can have “it”.

On Friday afternoons, I would visit my 82 year-old grandfather. Grampa would sit in his sun porch while I asked him questions about his youth. He owned a lumberyard and believed in tangible goods. I was working for Merrill Lynch at the time, and we always talked about the stock market. One day he said, “The stock market is filled with thieves and hoodlums. It is not as safe and predictable as real estate.”

On his first point, I could not agree; on Grampa’s second point, I would agree that many folks have more value in their real estate (home) than their stock market portfolio. However, real estate prices are contracting, and the stock market is up today. Further proof you should own a little of both because it’s all about asset allocation.

Wall Street: Where Money Grows / A Raymond Randall

Echievements is a self-improvement article library. Go here to read the articles cited in this article. Ray Randall, is a registered investment advisor.

Forex versus Equities?

If you are interested in trading currencies online, you will find that the Forex market offers several advantages over equities trading.

24-Hour Trading

Forex is a true 24-hour market, which offers a major advantage over equities trading. Whether it’s 6pm or 6am, somewhere in the world there are always buyers and sellers actively trading foreign currencies. Traders can always respond to breaking news immediately, and P&L is not affected by after hours earning reports or analyst conference calls.

After hours trading for U.S. equities brings with it several limitations. ECN’s (Electronic Communication Networks), also called matching systems, exist to bring together buyers and sellers-when possible. However, there is no guarantee that every trade will be executed, nor at a fair market price. Quite frequently, traders must wait until the market opens the following day in order to receive a tighter spread.

Superior Liquidity

With a daily trading volume that is 50 times larger than the New York Stock Exchange, there are always broker/dealers willing to buy or sell currencies in the forex markets. The liquidity of this market, especially that of the major currencies, helps ensure price stability. Traders can almost always open or close a position at a fair market price.

Because of the lower trade volume, investors in the stock market are more vulnerable to liquidity risk, which results in a wider dealing spread or larger price movements in response to any relatively large transaction.

100:1 Leverage

100:1 leverage is commonly available from online forex dealers, which substantially exceeds the common 2:1 margin offered by equity brokers. At 100:1, traders post $1000 margin for a $100,000 position, or 1%.

While certainly not for everyone, the substantial leverage available from online currency trading firms is a powerful, moneymaking tool. Rather than merely loading up on risk as many people incorrectly assume, leverage is essential in the forex market. This is because the average daily percentage move of a major currency is less than 1%, whereas a stock can easily have a 10% price move on any given day.

The most effective way to manage the risk associated with margined trading is to diligently follow a disciplined trading style that consistently utilizes stop and limit orders. Devise and adhere to a system where your controls kick in when emotion might otherwise take over.

Lower Transaction Costs

It is much more cost-efficient to trade forex in terms of both commissions and transaction fees. Most forex brokers charge no commissions or fees whatsoever, while still offering traders access to all relevant market information and trading tools. In contrast, commissions for stock trades range from $7.95-$29.95 per trade with online discount brokers up to $100 or more per trade with full service brokers.

Another important point to consider is the width of the bid/ask spread. Regardless of deal size, forex dealing spreads are normally 5 pips or less (a pip is .0005 US cents). In general, the width of the spread in a forex transaction is less than 1/10 that of a stock transaction, which could include a .125 (1/8) wide spread.

Profit Potential in Both Rising and Falling Markets

In every open forex position, an investor is long in one currency and short the other. A short position is one in which the trader sells a currency in anticipation that it will depreciate. This means that potential exists in a rising as well as a falling market.

The ability to sell currencies without any limitations is another distinct advantage over equity trading. In the US equity markets, it is much more difficult to establish a short position due to the Zero Uptick rule, which prevents investors from shorting a stock unless the immediately preceding trade was equal to or lower than the price of the short sale.

Forex versus Equities? / Martin Chandra

Martin Chandra is a full-time investor. Get limited offers at here.

Do You Really Know How To Buy Stocks?

Stocks can be referred to as inventories that can be anything, which a firm has and is not currently being pre-owned by the firm’s functions. Many departments resource within the company will have Stocks of something or the other.

To buy stock you should be familiar with the stocks available in the market. The factory can have Stocks of raw materials ready to produce, the office can have Stocks of stationery and the warehouse can have Stocks of finished goods.

In order to run a company and function smoothly Stocks are essential. There will also be people or companies who will be ready to purchase stock from you. In case, if the production had to be stopped every repeated time the firm ran out of raw materials, the time wasted then can cost the firm a fortune.

Similarly if a shop had no Stocks on the excellent shelves, customers could soon desert them or say drift away from their shop. The same is true of most areas the firm operates in – I am sure you can easily appreciate the importance of planning ahead and having suitable levels of stocks.

How to buy stocks?

To purchase stock in a company is comparatively easy once you’ve researched the stocks you’re interested in and have a broker or brokerage account to handle your purchase. This makes the effort to buy stock a bit easier.

You should always educate yourself fully and get the information to purchase stock and brokers on the Internet purchasing them. Decide on what you want in a broker or a brokerage account. Do you want to meet with someone face-to-face or want to be able to reach someone on the phone? Do you require Internet access?

Is price your only concern? Do you want to buy stock and sell only stocks, or could you also like to purchase stock and sell mutual funds, bonds or foreign stocks?

Choose a broker or brokerage firm to buy stock on your behalf based on your needs. Need a complete heap of advice? Start with a full-service brokerage before you purchase stock the least expensive brokers cannot offer advice. Fairly confidant and want low prices? Try an online brokerage then to satisfy your needs to buy stock.

Contact a broker or firm and ask for an application. Many firms offer online applications, although most require that you send review or wire money to actually open the account to get the details to purchase stock.

Deliver a check in person if possible to speed up the process to buy stock. Begin to sell and purchase stock once your account is open. Review statements you obtain and reevaluate your portfolio’s performance. The concept to buy stock is considered to be as current assets because many types of stocks can be converted into cash reasonably readily.

In particular to purchase stock of finished goods. However, they are generally the least liquid of the current assets. At times of recession or similar circumstances it may be very difficult for the firm to buy stock or sell stocks, and so although they may be listed as a certain value their true value may be lower.

Although the most admired and functional way to purchase stock and sell investments, opening a brokerage account is not absolutely necessary. Many investors aren’t aware of the alternative ways to buy stock and them along with mutual funds. Although working with a qualified broker definitely has advantages, it can be better, to get an acquisition to purchase stock directly.

A number of companies, offer direct stock acquisition plans. These plans allow investors to buy stock and shares of stock directly from the company.

Many have a minimum initial deposit but are happy to disown it in most cases, if someone that understands and has expert knowledge agrees to automatic monthly withdrawals from your checking or savings account. Thus, satisfying the need to purchase stock regularly.

Another way in which the company automatically helps to buy stock for you is by debiting your bank account each and every month. This can be an easy and relatively painless way to save and purchase stock according to your own convenience.

Hence, always think carefully and then only decide to buy stock.

Do You Really Know How To Buy Stocks? / William Smith

William Smith the author provides much more financial information on many subjects as well as the secret to his success in the market along with 5 Free power stock picks emailed daily so grab your Free subscription on his website at Buy Stocks (All is Free)