What I have learned from the stock investing game: Before playing the stock market game, I honestly had no idea about how the stock market work. I, however, have learned so much about the process of the stock market. It was an advantage to learn how to buy and sell stocks without losing any thing, that will indeed enable me to invest in the real stock market without any concern. I learned that there is no certainty about wining or losing; however, there are many factors that we should consider before buying or selling stocks. One of theses factors is follow the daily news about the firm that you are willing to buy its stocks. Following the history of the firm transactions is also a significant factor that must be considered. The level of stability
Moreover, it is not difficult to learn how and where to invest, it is actually easier than doing many other things in the business field. The time value of money is an important factor to consider when thinking about investing in the market stock. Investing in the market stock can generate profit in the long and short run instead of keeping the same amount without investing or just looking for interest which is limited. The following are pros and cons of stock market investing:
The Pros
• Highest returns. Stocks have given the one of the highest historical returns among the various asset classes over the long term.
• Income from dividends. Dividends that are distributed by many companies give the opportunity to stock investors to maximize their profit
• Stocks are easily diversified. Investing in the stock market is not limited in one country, you can actually buy different stocks in different countries which minimize the risk of investing.
• Stocks are highly liquid. Most stocks trading on a major exchange can be easily bought and sold.
The Cons
• Volatile in the short term. Stock prices are not stable, they can be easily increased or decreased based on many factors.
• If you pick the wrong stock, you risk losing the value of your investment. Similarly, firms that perform poorly cannot afford to keep the same amount of
The first strategy that I have learned is that I should buy when the market is down in order to make a huge profit in the future. The idea is that in parts of the year a recession might happen and affect most of the stocks in the market; therefore, I buy in these times and wait for the market to be enhanced to sell them. The second strategy is that I read the weekly, monthly and annual reports and news about any firm I want to buy its stocks. That indeed tells me whether the position of the firm in the market as well as its performance. For example, in the past few months, the CEO of UBER announced some racist statements against females, that led the stocks of company to decrease significantly. That showed me that UBER stocks are risky, so I did not buy them. In addition, the aforementioned strategies are some out of many that I have learned during the market stock
Before we invested, we decided to pick two types of companies to invest in. We would choose companies that had expensive stock but steady increasing prices and we would choose smaller companies that had cheaper stock but whom had a chance for potential huge price increases. If the smaller companies’ stock went down the bigger companies’ steadily increasing stock would even it out, but if the smaller companies’ stock price rose greatly, like we predict, we could sell and make a good profit. We found a big name company that had reliable stock prices pretty quick, but finding a small company whose stock price could rise was hard. We
“What makes the stock market risky?” is what you are probably asking. Well, my answer would be that the stock market is consistently going up and ...
Over the past 60 years, stocks outperformed real estate in terms of return on investment by 4 to 6 percent. One reason for this difference is your ability to fully diversify your portfolio. Instead of investing in one market, such as real estate, you can invest in multiple markets and many different companies by purchasing stocks.
Stock investment means you are purchasing a share of the company, therefore the company’s success determines the value of your investment. Buying stocks is not a difficult process; clarification of some important terminology and differentiation helps gives you the foundation to start investing.
In order to make the most logical and beneficial purchases, it was first important that I fully understood the terminology used within the stock market. Words such as blue chip stock, mutual fund, stock splits, and ticker symbol would all prove incredibly important for me to understand if I was to do well within the game. For example, the first stock I bought, Disney, taught me the definition of a ticker symbol - in Disney’s case, DIS. This enabled me to quickly identify other stocks by their ticker symbols as well, and I soon became familiar with the term. In addition, when I bought Coca-Cola, I soon learned its financial importance as a reliable blue-chip stock, as it and other stocks like it proved profitable for me. My class was also required to buy a mutual fund, and in doing so I learned how exactly a mutual fund differs from a stock, the positives and negatives of buying one, et cetera. In addition, my knowledge of the history that places like the NYSE contains proved incredibly important towards my success within the game. Because I learned about the NYSE’s foundation and the many people who worked to make it what it is today, I was able to fully appreciate the importance of the stock market as I moved through the simulation. This, in turn, helped me take the Stock Market Game seriously and not waste any of my money on stocks that I considered
Lastly, in theory and in practice, market condition playing an integral role and probably indicates most sensible clarification of the tendency of different values. The market is imperfect and it should never be forgotten. No one ensure the presence of instant buyers and sellers in the market. For example, there are a number of different events such as inflation rate which impact the stock price and the organization’s worth.
Another approach for stock selection is technical analysis. Levy (1966) stated concepts of foundation of this analysis. This is determination of market value by supply and demand while those are defined by numerous factors. The second concept is that stock prices tend to move in trends that persist for certain period. Thirdly, trends result of shifts in supply and demand and these shifts can be detected in analysis of market action. Also, trends of prices can be revealed on charts that are the core of technical analysis. Concepts of support and resistance are used in order to determine if the market is trading or trending. That is, prices usually move within the support-resistance range. Support line is the price level through which the stock seldom declines. Resistance is the price level that a stock rarely beats. Moreover, traders buy
We analyzed the market for two weeks to determine when the equity market would turn from a bearish to bullish market. Without a change in the market and a declining bond price, we decided to invest in equities according to our investment strategy, which brought us into the second phase of our portfolio. Therefore, at the beginning of February we bought shares in Sirius, Microsoft, Neon, Washington Mutual, and Nike. As assumed, the equity market continued to plummet decreasing the value of all our stocks except for our Gold Corporation stock.
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? Chapter 1 begins by defining and determining the difference in investing and speculating. Investing defined by Malkiel is the method of “purchasing assets to gain profit in the form of reasonably predictable income or appreciation over the long term”. Speculating in a sense is predicting, but without sufficient data to support any kind of conclusion. What is investing? Investing in its simplest form is the expectation to receive greater value in the future than you have today by saving income rather than spending. For example a savings account will earn a particular interest rate as will a corporate bond. Investment returns therefore depend on the allocation of funds and future events. Traditionally there have been two approaches used by the investment community to determine asset valuation: “the firm-foundation theory” and the “castle in the air theory”. The firm foundation theory argues that each investment instrument has something called intrinsic value, which can be determined analyzing securities present conditions and future growth. The basis of this theory is to buy securities when they are temporarily undervalued and sell them when they are temporarily overvalued in comparison to there intrinsic value One of the main variables used in this theory is dividend income. A stocks intrinsic value is said to be “equal to the present value of all its future dividends”. This is done using a method called discounting. Another variable to consider is the growth rate of the dividends. The greater the growth rate the more valuable the stock. However it is difficult to determine how long growth rates will last. Other factors are risk and interest rates, which will be discussed later. Warren Buffet, the great investor of our time, used this technique in making his fortune.
The other element that makes stock markets more attractive than different sorts of investment is its liquidity. Many people invest in stocks because they need to be the proprietors of the firm, from which they advantage when the organization pays dividends or when stock costs increases. Be that as it may, numerous investors purchase stocks with the end goal of control over the organizations. (Luu, T B., 2014)
The stock market; all though enticing, is no get rich quick scheme. It is a rather complex economic system that can be found throughout the world. It has seen a great deal of changes since its inception. The history of the stock market is very much like that of a graph of a stock with plenty of ups and downs. Without all of its highs and lows we would not have the stock systems we have in place today. Today we have a system where the companies and traders have a mutualistic interest; for the stocks to excel. It is the talking point of many conversations along with being subject to much speculation. Stock markets are ever expanding as more and more IPO’s are being filed. With a platform in place to allow crucial funding to corporations, the stock market is one of the most important systems set in place.
In turn everything in the present and the future is judged through the stocks as they hold a high importance in industrialized economies showing the healthiness of said countries economy. As investing discourages consumer spending over all decreases, it lead...
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.
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...
Eventually, company stocks would perform as good as the market, better than the market, or worse than the market, and a club would win a game, draw a game, or lose a game.