Book Value: The Chanllenges of Investing in The Stock Market Essay

Book Value: The Chanllenges of Investing in The Stock Market Essay

Length: 1790 words (5.1 double-spaced pages)

Rating: Powerful Essays

Open Document

Essay Preview

Introduction
The idea of investing in the stock market is at times challenging. Heightened activities witness the stock market itself. These activities gained the investor’s interest increasingly. The stock market patterns have changed due to the current globalization and integration of the subsequent markets. Just to name some of the global markets are New York Stock Market, Hong Kong Stock exchange among others. Sometimes these market patterns have changed due to politico-economic backgrounds (Hamid Faruqee, 2008, p. 154).
The equity valuation ratios as seen from portfolio compare the two shares I traded. This comparison enables me to compare a stock’s per-share price. It has become a major problem to control unnecessary volatility of trade market as seen in portfolio. This has triggered the corporate government to rule out and put in place a process of bringing the patterns to a uniform level. Globally, the economic environment has started taking a paradigm shift with the featured securities. Like for instance, the ‘dot com bubble burst’ and the soaring oil prices. It is very challenging when U.S economy is put into an account (Hamid Faruqee, 2008, p. 265). U.S economy has slowed down making the interest rate appear tightened, and the equation made more complex.
To determine the right shares of my portfolio, I needed to have a conservative alternative. Microsoft appeared to have outstanding price Earnings Ratio in its book value. From portfolio performance, the shares I traded are not that bad. Their PE ratios reflect the book value they had. The expected daily returns from shares have a weighted portfolio exhibit significant to non-linear dependence. Shares from Facebook and Microsoft are mostly consistent with previous mar...


... middle of paper ...


...s. From the above review, it may be concluded that the presence of abnormal stock returns for several companies like Microsoft is as a result of volatile stock behaviors. Example of these behaviors is the event announcement of dividend. The same abnormal returns are not subjected to all companies like Alnylam pharmaceuticals.
The abnormality of these returns varies from one sector to the other. The significant abnormal returns for many companies indicate the failure of market strategies in use. The comparative qualitative analysis shows that companies have different sector index to the market.



References
Hamid Faruqee, P. B. (2008). Exchange Rate Volatility, Pricing to Market and Trade Smoothing. London: International Monetary Fund.
subject, S. F. (2014, 03 16). Market Portfolio. Retrieved 03 17, 2014, from Market Watch: http://www.marketwatch.com



Need Writing Help?

Get feedback on grammar, clarity, concision and logic instantly.

Check your paper »

Why Is The Stock Market A Place Of Opportunity For Gain Easy Wealth? Investing?

- Can the stock Market a place of opportunity to gain easy wealth. Investing in stocks, is it financially worth it. You often hear the news how stock went up a couple of point and down the next. Sometimes wondering if I would have purchased some shares then would it had been a good financial investment. Investing in stock can be financially worth purchasing but can also come back and hurt you financially. There are many ways for fast easy making money but it can also be a financial burden in your wallet....   [tags: Stock market, Finance, Investment, Stock]

Powerful Essays
1536 words (4.4 pages)

The Other Side Of Investing Essay

- The Other Side of Investing Each investor has different perspective. Such difference often resulted in a confusion of one thing for another. Taking investing and gambling as a ground base, most investor have a misconception about investing and gambling. Even though they both share similar concept, investing is nowhere close to be considered gambling. Compared to gambling, investment numerous complex components and one of them is various type of investment available in the market. The United Business Service, company that writes the book of Successful Investing, said that stocks investment is one of the most rewarding investment instruments that will produce a great return on investment if...   [tags: Stock market, Stock, Investment, Finance]

Powerful Essays
1463 words (4.2 pages)

Exploring The Basics Of Shares Investing Essay

- Book Blurb Learn everything you need to know about shares investing, from a definition on what it means, to how you make money from shares. This book gives you an in-depth look at shares in a light and easy-to-read fashion. There are no complex calculations, no trends analysis, and no esoteric words that only economists understand. It is a simple guide to shares investing in plain English that gives advice on everything from how to become a clever investor, to how to avoid fraudsters and losing it all....   [tags: Investment, Finance, Stock, Stock market]

Powerful Essays
1081 words (3.1 pages)

Essay about Why Should I Refrain From Investing Stocks?

- Stocks are a type of security that signifies ownership in a corporation and represents a claim on part of the corporation 's assets and earnings. Over the years, the stock market has dramatically shown a decrease in the economy market. The reasons why I refrain from investing stocks because the k knowledge I have about stocks are limited, financial difficulties and the stock market crashed. Investing in stocks sounds corresponding idea to earn money over a time period; however the possibility of making that money is very narrow and uncertain....   [tags: Finance, Stock market, Investment, Public company]

Powerful Essays
757 words (2.2 pages)

Investing in Frisch’s Restaurants Essay

- Ratio analyses can be used for performance evaluation, analyzing trends, assessing industry benchmarks, and forecasting growth within a company (Knežević, Rakočević, & Đurić, 2011). Additionally, investors use financial ratios to make decisions about the viability of investments, the company’s potential growth, how a company manages its debt, and how effectively a company manages its liquidity (Gibson, 2011). Prior to investing in any company, investors should also evaluate the potential investment’s leverage....   [tags: ratio analysis, trends, industry benchmarks]

Free Essays
1096 words (3.1 pages)

The Great Gatsby, the Stock-Market Crash and the Destruction of American Dreams

- The Twenties was a time when people did not care about anything besides having fun. The average person had a job, the economy was flourishing, foreign trade was on the rise and the stock market was booming ("The Crash … and Beyond."). President Hoover said, during his inaugural address, "I have no fears for the future of our country. It is bright with hope" but by the end of 1929 he would regret those inspiring words (Hoover). During a time when people were living the American Dream, few were prepared for or expected the stock market crash and the American nightmare that continued through the 1930s....   [tags: Essays on the American Dream]

Powerful Essays
1812 words (5.2 pages)

Essay about Gdp Vs. Stock Prices

- Research Paper: GDP VS. Stock Prices The nostalgic definition of wealth has been developing demands for centuries. As nations grew; the power of industrialization has developed wealth to become a whole different meaning. In the medieval era, wealth was land ownership. The common working class had not yet realized the meaning of advancing in society. That was until Adam Smith in his book, The Wealth of Nations, described an ideal form of economic functionality. Smith influenced immortalizing economic conquest during the industrial revolution....   [tags: Economics, Gross domestic product, Macroeconomics]

Powerful Essays
1956 words (5.6 pages)

A Random Walk Down Wall Street Essay

- A Random Walk Down Wall Street There is a sense of complexity today that has led many to believe the individual investor has little chance of competing with professional brokers and investment firms. However, Malkiel states this is a major misconception as he explains in his book “A Random Walk Down Wall Street”. What does a random walk mean. The random walk means in terms of the stock market that, “short term changes in stock prices cannot be predicted”. So how does a rational investor determine which stocks to purchase to maximize returns....   [tags: Stock Markets Investing Money Essays]

Powerful Essays
3851 words (11 pages)

The Gdp Growth Rate Over The Past 10 Year Period Essay

- 1) What is the annual US GDP growth rate over the past 10-year period (2004-2014). Year 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 GDP Growth Rate 3.8% 3.3% 2.7% 1.8% (0.3)% (2.8)% 2.5% 1.6% 2.3% 2.2% 2.4% The GDP Growth in these 10 years as CAGR has been 3.7% and GDP growth dollars is 5.431 Trillion USD 2) What is the inflation rate over the past 10-year period (2004-2014). Explain the inflation rate. Year 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 AVE % Inflation 2.68% 3.39% 3.24% 2.85% 3.85% (0.34)% 1.64% 3.16% 2.07% 1.47% 1.62% The formula for calculating the Inflation Rate using the Consumer Price Index (CPI) is relatively simple....   [tags: Stock market, Market capitalization, Inflation]

Powerful Essays
1155 words (3.3 pages)

Picking Stocks Essay

- My knowledge about picking stocks is very unstructured. I did not apply any systematic approach of picking stocks yet. This is my first attempt to formulate rules and techniques. Therefore, this exercise plays important role of developing set of rules and bridge the gap in the overall investing strategy. Also, it will be useful to learn reading this post in the future, when the results of this process will be visible. My understanding of picking stocks is primarily influenced by Warren Buffet and Benjamin Graham....   [tags: Stock Market]

Powerful Essays
950 words (2.7 pages)