Market Theories
Investments Seminar
Table of Contents
Introduction 3
Castle in the Air Theory 3
Firm Foundation Theory 3
Effects of the Market 3
Market Theories 5
The Tulip-Bulb Craze 5
Today’s “Tulip-Bulb” Craze, the Dot-Com Crash 5
Conclusion 6
Introduction
Castle in the Air Theory
The Castle in the Air theory was introduced by John Maynard Keynes, an well known economist and successful investor of the 1930s. It was Keynes’ theory that the keys to investing came from supernatural or psychic means. He applied psychological rather than financial principles to the study of the stock market. He believed that it was not only too difficult but also quite time consuming to determine the intrinsic value that would yield a promising return on investments. He thought that it should not take all of that. He proposed that the best way to do so was estimating which investment situations that the public would focus on and then buying “before the crowd.” In other words, instead of picking out six out of a hundred stock based on how attractive they may have looked on the outside, it was better to select those stocks that the public were more likely to like the best. Or more so to predict what an average opinion of the best stocks are likely to be.
The Castle in the Air theory speculates that an investment is worth a certain price to a buyer because the buyer would expect to sell it to someone else at a higher price. And the new buyer anticipated the same thing. Keynes’ approach did pay off for him during the Great Depression. He became famous by playing the stock market from his bed for half and hour each morning and became quite successful. While other investors were struggling to find out the financial magic number of the best investment, he simply anticipated their next move and bought before anyone else. In the text, this theory was also named the greater fool theory because it proposed that there was a sucker born every minute. These “suckers” existed to buy an investment at a higher price than what was paid. The behaviors of the masses as well as the behavior of the economy could be observed and speculated in such a way that...
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...me out too soon too fast. Companies were not ready to go into this thing for the long term and they should have been thinking like so. The industry fell and fell hard after such a short time. Yet, overall taking a risk was perhaps one of the best things to have come out of this craze as well as all others.
Conclusion
In conclusion, I think that it is important for investors to understand both theories. The Castle in the Air theory sets an stage that is easier in my opinion to deal with. It has a way of encouraging an investor to look at and observe the behaviors of the market. The firm foundation theory, in my opinion is a worthwhile theory to research and develop. Knowing how to calculate different values and study the trends of such I believe are a good way to at least be able to make a more reasonable investment decision. Overall, I think that both methods are good because it can generate a better understanding of the market as a whole. Risk taking is a must and an investor is going to have to take risks in order to generate a return. That’s a given. However, it is by far a better thing to use these two theories in order to better equip investors for survival in the market.
Lululemon’s has to produce and sell 150,000 jackets in order to cover their total expenses, fixed and variable. At this level of sales, Lululemon’s will breakeven (profit = loss).
McGuire, C. (2011, April). Workplace Safety 100 Years Ago. Safety Compliance Letter(2524), 1-6. Retrieved April 22, 2014, from http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=60166397&site=ehost-live&scope=site
Western Australian Department of Education. (2010). Occupational Safety and Health. WA: Department of Education. Retrieved from http://www.det.wa.edu.au/policies/detcms/policy-planning-and-accountability/policies-framework/policies/occupational-safety-and-health.en?bbp.s=9&bbp.e=select&bbp.v=4&bbp.i=d0.1&bbp.8.policyID=10918572&g11n.enc=UTF-8&bbp.9.pane=0
People believed that Queen Elizabeth would restore the protestant faith after her sister, Mary destroyed it by persecuting all protestant people. The queen wished to follow this request, as she had grown up protestant and was raised to stay true to the lord. Although, she was dedicated to reestablishing her own beliefs, Elizabeth decided it was best to let Catholicism die out naturally rather than getting involved with the head of the church. Eventually, she succeeded, the majority of England’s population turned to Protestantism leaving very few Catholics. Despite the fact that Elizabeth wanted all of England to become followers of the protestant religion, she was extremely tolerant of all faiths and thought nobody deserved to be persecuted unless they were disturbing England’s peace. Queen Elizabeth I proclaimed the following, "There is only one Christ, Jesus, one faith" she exclaimed later in her reign, "all else is a dispute over trifles." She believed that as long as her fellow citizens followed the laws of the lord, they were allowed to practice whatever belief felt right to them. Elizabeth did not want the church to become a place of violence and disagreement, instead she ensured the church was welcoming to both Catholics and Protestants. People were willing to agree with the queen’s beliefs because she recognized that she was not a perfect protestant; however, Elizabeth prayed everyday hoping she would become a better follower of God. She shared her personal experiences with others, proving to them that she too was a normal person and made mistakes often. Overall, Queen Elizabeth I shaped the face of religion for England by allowing the people to follow the faith of their choosing and reestablishing Protestant
Section 8 of the Safety, Health and Welfare at Work Act (2005) puts the onus on the employer to ensure systems of work that are planned, organised, performed, maintained and revised as appropriate so as to be, so far as is reasonably practicable, safe and without risk to health. Section 19 of the Act requires the employer to conduct a risk assessment of work activities and Schedule 3 of the Act provides the general principles of prevention to ensure the safety of employees in the workplace.
He is credited for being a pioneer in the visual effects realm of the filmmaking world. In his lifetime, he won three Oscars for his effect-based achievements.
The Stock Market Crash marked a major turning point in the history of the United States. For decades the U.S. was the world’s leading superpower, but after the crash the country cascaded into the worlds most harsh depression. This crash was caused by a series of problems in the U.S. including, the over production of goods, unequal distribution of wealth and poor regulation of the stock market itself. Many can argue that the crash of 1929, strengthened the nation, allowing for policies such as roosevelt's first new deal, second new deal, the glass steagall banking act, and new regulations in the stock market, and for big business (Blumenthal, Karen). However, what can’t be argued is how the crash sparked a panic as companies, peoples, and the nation sank into the great depression.
After the death of Henry in 1547, a 10 year old Edward came to the throne. The English Church became increasingly Protestant in worship and doctrine under the Protestant Lord Somerset. Mary succeeded the throne after Edward’s death in 1553. Mary was a devout Catholic and saw it her mission to restore Catholicism back to England. She used mainly persecution to do this, by burning Protestants for not renouncing their beliefs, these actions turned many English people against Catholicism.
The history of black hair has evolved from decade to decade and is still doing so today. No matter the shape, color or form “. . . black hair has long had the power to set trends and reflect societal attitudes” (naturallycurly.com Michelle Breyer). The past history of African-Americans has fueled hate within Black women creating a division within their culture. Black women first began to loose their sense of identity around the 14th century when slaves were forced out of their homelands of Africa by the Europeans thus creating the Transatlantic Slave Trade. During this time women were seen embracing their natural tresses with locks and twists, but that seemed to quickly change. In order to fit into this new European standard of beauty women
Leinweber, D. J., & Madhava, A. N. (2001). Three hundred years of stock market manipulation. The Journal of Investing, 7-16.
Religion was a major issue for Queen Elizabeth I. For many years the Roman Catholic Church dominated England with great power (Elizabethan World View). Most of the people who rebelled against the Roman Catholic Church formed the Protestant religion(Elizabethan World View). For many years people were unsure which religion they should partake in. This was a major conflict for many after Henry VIII, Elizabeth’s father, left the Catholic Church to become a Protestant (Elizabethan World View). After Henry VIII died, Queen Mary, Elizabeth’s half-sister took the throne (Elizabeth I). Mary ferociously tried to reinstate Catholicism in England, believing it was the only religion people should follow, unlike Queen Elizabeth I Mary did not believe in religious freedom (Elizabeth I).
The stock market is an enigma to the average individual, as they cannot fathom or predict what the stock market will do. Due to this lack of knowledge, investors typically rely on a knowledgeable individual who inspires the confidence that they can turn their investments into a profit. This trust allowed Jordan Belfort to convince individuals to buy inferior stocks with the belief that they were going to make a fortune, all while he became wealthy instead. Jordan Belfort, the self-titled “Wolf of Wall Street”, at the helm of Stratton Oakmont was investigated and subsequently indicted with twenty-two counts of securities fraud, stock manipulation, money laundering and obstruction of justice. He went to prison at the age of 36 for defrauding an estimated 100 million dollars from investors through his company (Belfort, 2009). Analyzing his history of offences, how individual and environmental factors influenced his decision-making, and why he desisted from crime following his prison sentence can be explained through rational choice theory.
Eakins, Lara. “Elizabeth I Queen of England.” Tudorhistory.org. Lara E. Eakins. 2014. Web. 30 April 2014.
The stock market is an essential part of a free-market economy, such as America’s. This is because it provides companies the capital they need in exchange for giving away small parts of ownership in their company to investors. The stock market works by letting different companies sell stocks to gain capital, meaning they sell shares of their company through an exchange system in order to make more money. Stocks represent a small amount of ownership in a company. The more stocks a person owns, the more ownership they have of that company. Stocks also represent shares in a company, which are equal parts in which the company’s capital is divided, entitling a shareholder to a portion of the company’s profits. Lastly, all of the buying and selling of stocks happens at an exchange. An exchange is a system or market in which stocks can be bought and sold within or between countries. All of these aspects together create the stock market.
Although workplace accidents are very common, the majority of them can be prevented. As a company, you are obliged by the law to protect your employees, so it is important to take the necessary actions that will minimize the risk of accidents (Intelligent HQ, 2015).