According to Investopedia (2003), the New York Stock Exchange, otherwise known as NYSE, is a stock exchange based in New York City. It is considered the largest equities-based exchange in the world based on total market capitalization of its listed securities. Additionally, it stated that NYSE was founded in 1972 but became a public entity in 2005 after the acquisition of electronic trading exchange Archipelago. The NYSE Euronext is the parent company of the New York Stock Exchange. This came into play when the company merged with the European exchange in 2007. On the other hand, Investopedia (2003) stated that the American Stock Exchange, popularly known as AMEX, is the third largest stock exchange by trading volume in the United States.
This is where the prices of securities are decreasing; resulting in a downward movement that investors predict will go on into the future (Investopedia, 2004). Further, during a bear market, unemployment level will increase due to the fact that employees are being laid off, thus a slow economy will occur during this time. As investors foresee mishaps in a bear market and trade continues, negativity only continues to develop. However, in a bull market, there exists a high demand but a weak supply for securities. Investors wish to purchase securities, but only a few wish to sell. With that said, the costs of shares will rise as investors strive to gain accessible equity. On the contrary, more persons are seeking to sell than to purchase in a Bear Market. Therefore, the demand is lower than supply; prices of share
Investopedia (2003) states that both markets have great opportunities for persons to earn money, but the key in doing so is to use strategies that can generate profits for each condition. This will therefore require individuals to have the ability to take advantage of fear and greed. It further went on to state that in a Bear Market, taking a short position, having put options and short exchange-traded funds are various ways persons can make a profit in a bear market. Taking a short position is when shares, which are not owned, are sold when persons anticipate that the stock will fall in the future, while a put option is the right to sell a stock at a particular price until a specific date in the future and a short exchange-traded fund generates returns that are the inverse of a particular index. On the other hand, in order to profit in a bull market, individuals can engage in long positions, call option or exchange-traded funds. When persons engage in long positons, it means they purchase stocks in the anticipation that price will increase, while a call option is the right to purchase stocks a particular price until a specified date. With exchange-traded funds, they replicate the movement of indexes they follow, less expenses (Investopedia,
The Montreal Stock Exchange was incorporated in the year 1874, but as early as 1832 a group of brokers met regularly to trade stocks within a coffee house which was later named the “Exchange Coffee House”. In 1863, a Board of Brokers was formed which soon grew into a regulated body with a membership subject to election. In 1974, The Montreal Stock Exchange merged with the Canadian Stock Exchange, and a year later becomes the first to sell stock options to Canada. The Montreal Stock Exchange in 1982 officially changes its name to Montréal Exchange in order to reflect the growing importance of financial instruments other than stocks which primarily include options and futures – on its trading floor. By 1986 the number of new listings at the MX
The stock market crash of 1929 was one of the main causes of the Great Depression. Before the stock market crash, many people bought on margin, which caused the stock market to become very unbalanced, which led to the crash. Many people had invested heavily in the stock market during the 1920’s. All of these people who invested in the stock market lost all the money they had, since they relied on the stock market so much. The stock market crash also played a more physiological role in causing the Great Depression.
. If enacted, these proposals could significantly and adversely impact Edward Jones’ partnership's operating costs, its structure, its ability to generate revenue and its overall profitability.
It is often said that perception outweighs reality and that is often the view of the stock market. News that a certain stock may be on the rise can set off a buying spree, while a tip that one may be on decline might entice people to sell. The fact that no one really knows what is going to happen one way or the other is inconsequential. John Kenneth Galbraith uses the concept of speculation as a major theme in his book The Great Crash 1929. Galbraith’s portrayal of the market before the crash focuses largely on massive speculation of overvalued stocks which were inevitably going to topple and take the wealth of the shareholders down with it. After all, the prices could not continue to go up forever. Widespread speculation was no doubt a major player in the crash, but many other factors were in play as well. While the speculation argument has some merit, the reasons for the collapse and its lasting effects had many moving parts that cannot be explained so simply.
Investors purchased stock on margin. For every dollar invested, a margin user would borrow 9 dollars worth of stock. Because of this leverage, if a stock went up 1%, the investor would make 10%! This also works the other way around, exaggerating even minor losses.
There is no doubt that the stock market crash contributed to the great depression, but how? One way that the Crash contributed to the depression was the loss of money it caused to the average man. It is believed that in the first day of the crash almost a billion dollars were lost, this took a large amount out of the pocket of the common man. Without this money people were unable to purchase consumer goods, which the United States economy was based on. Another way the Crash contributed to the depression was the loss of confidence in the market. When t...
The Stock Market crash of 1929 was a terrible event in American history, creating chaos and panic. The crash was caused by an overproduction and underconsumption of goods, and use of credit in the market. People would use credit to buy stocks, and could not afford to repay their loans. This created a failure among banks, overall affecting the nation as a whole. In October of 1929, the Stock Market crashed leading to billions lost in the market, sparking the great depression. ("Overproduction Seen as One of the Cause of Our Most Recent Crisis.")
Post the era of World War I, of all the countries it was only USA which was in win win situation. Both during and post war times, US economy has seen a boom in their income with massive trade between Europe and Germany. As a result, the 1920’s turned out to be a prosperous decade for Americans and this led to birth of mass investments in stock markets. With increased income after the war, a lot of investors purchased stocks on margins and with US Stock Exchange going manifold from 1921 to 1929, investors earned hefty returns during this time epriod which created a stock market bubble in USA. However, in order to stop increasing prices of Stock, the Federal Reserve raised the interest rate sof loanabel funds which depressed the interest sensitive spending in many industries and as a result a record fall in stocks of these companies were seen and ultimately the stock bubble was finally burst. The fall was so dramatic that stock prices were even below the margins which investors had deposited with their brokers. As a reuslt, not only investor but even the brokerage firms went insolvent. Withing 2 days of 15-16 th October, Dow Jones fell by 33% and the event was referred to Great Crash of 1929. Thus with investors going insolvent, a major shock was seen in American aggregate demand. Consumer Purchase of durable goods and business investment fell sharply after the stock market crash. As a result, businesses experienced stock piling of their inventories and real output fell rapidly in 1929 and throughout 1930 in United States.
The stock market is a centralized area where buyers and sellers comes together to perform stock transaction. When one thinks of the stock market, the first thing comes to mind is Wall Street which is sometimes referred to as the New York Stock Exchange as well as the NYSE.
The stock market plays a significant role in the health of the economy; the economy has to be strong for a country and its citizens to prosper. In 1929 over a period of two weeks 30 billion dollars disappeared from the U.S. economy, this was the event that started the greatest period of human hardship of the twentieth century known as the great depression. On October 19,1987 the Dow Jones industrial average plunged almost a third of its value. Many investors went completely bankrupt after one day of trading. Both of these crashes came without warning in booming markets are the currently booming markets heading for a collapse? The current market resembles both 1929 and1987 markets but there is a smaller possibility for collapse.
Haddadin, Haitham. “ Stock Crash Reminds Pros of 1973-74 bear market” U.S. Market News, March 1, 2001.
Once there was a time when “shares in business corporations were rarely bought and sold because few companies were considered promising financial profits” (Blume 21). That is hard to believe considering almost everybody has invested in some stock today. The stock market went through some distinct changes since its inception, and has evolved into a shaping force in the world today. There is one idea that sparked the fire which produced the stock market: capitalism. Everything the stock market is, and was, rooted in the basic idea of capitalism. Without that idea, stocks and bonds would never have come to be.
In conclusion, generally speaking the Law of Supply states that when the selling price of an item rises there are more people willing to produce the item. Since a higher price means more profit for the producer and as the price rises more people will be willing to produce the item when they see that there is more money to be earned. Meanwhile the Law of Demand states that when the price of an item goes down, the demand for it will go up. When the price drops people who could not afford the item can now buy it, and people who are not willing to buy it before will now buy it at the lower price as well. Also, if the price of an item drops enough people will buy more of the product and even find alternative uses for the product.
The biggest stock exchanges are the New York Stock Exchange and NASDAQ. The New York Stock Exchange is a large building in Lower Manhattan that does auction-style trading with a lot of face to face interaction through specialists, brokers, and buyers. There are upper floors in this exchange on which specialists determine the prices of all the stocks. This information then travels to the brokers who work auctions face to face with buyers in order to sell the stocks. America’s biggest companies, like Coca-Cola and McDonald’s, sell their stocks through this exchange. NASDAQ is a virtual stock exchange with no physical building. This exchange was created during the 1970s but began thriving during the tech boom of the 1990s. The tech boom helped this exchange become the home of more technological companies li...
What is the stock market? Businesses share part of the company by selling stock, or shares of ownership. When investors own shares of a company, that company is considered public because the general public has an ownership stake in that company. At the high ranks of the companies are the board of directors, whose job it is to make sure the business’s managers are working in the best interests of the multiple owners and shareholders. Companies sell shares so they can expand their businesses and make them better, such as by building manufacturing plants, buying other companies, and developing new and improved products to keep their business profitable. America’s railroads, steel manufacturers, car companies, and telephone companies all started with the help of money from opening up their business to the Stock Market. The Stock Market started in the 1920’s. People who were smart enough to buy them back then could build up a fortune since the market was growing so rapidly. One wh...