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Author Topic: What I don't get...  (Read 3179 times)

Offline Jerrymac

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What I don't get...
« on: September 30, 2008, 03:03:06 PM »
About the stock market.

When people are buying, stocks go up.
When people are selling, stocks go down.
You can't buy unless someone is selling.
You can't sell unless someone is buying.

Weird.
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Offline doak

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Re: What I don't get...
« Reply #1 on: September 30, 2008, 03:38:46 PM »
Your answer is in the "pudding". :)doak

Offline Brian D. Bray

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Re: What I don't get...
« Reply #2 on: September 30, 2008, 11:11:16 PM »
Your answer is in the "pudding". :)doak

Make that Blood Pudding.
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Offline Understudy

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Re: What I don't get...
« Reply #3 on: October 01, 2008, 08:58:31 AM »
About the stock market.

When people are buying, stocks go up.
When people are selling, stocks go down.
You can't buy unless someone is selling.
You can't sell unless someone is buying.

Weird.
That is a huge oversimplification and not entirely accurate.
Not all companies are public. Some private companies have stock but don't trade it on the market. Graybar is prime example of this. The value of their stock doesn't change but it does produce dividends.
Most stocks are owned by holding firms or financial institutions. Not private shareholders(board members excluded). The bulk of stocks are used in mutual funds or institutional trading. Stock prices can rise and fall on speculation just as often as it does based on facts. One great example is Company A produces $100 in profit for the shareholders over 1 year. Next year it only produces $99. Speculators will force the price of this stock down. Company A can produce profits for years but if the profits don't continue to increase the stock loses per share value. Company B produces $100 profit in a year. Next year $101. So the stock would go up. Then a report says the market it sells in is drying up. The stock will fall.
Company C produces no profit in one year but the price will go up because the product it produces has a great deal of potential. Amazon is a great example of that. It didn't produce a profit for it's first few years. But it held because it showed such promise.

You can melt your brain on all the ways the market can change. You learn to hate analyst. You wonder what the hell the fund managers are thinking. And everyone worships at the temple of BRKA(Berkshire Hathaway-Warren Buffet's company)

Sincerely,
Brendhan
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Offline beemaster

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Re: What I don't get...
« Reply #4 on: October 01, 2008, 04:22:41 PM »
Could Vince Mcmahon of WWE Wrestling be the saving force for the American Public in these tough economic times?

Well..... say what you want for Wrestling Entertainment, WWE has had relatively stable stock value for years, seeing a high around 19 a share and now in the 15 range it STILL PAY 9.5% dividends - something unheard of by most standards.

When a money market pay 2% if you are lucky, buting a $15 stock grabs you 9.5% dividends sounds mighty sweet. Reading the pros, they are all fascinated by the return and steady value of WWE really does offer a great return for its risk/value.

here is a link to the info at yahoo

http://www.google.com/search?sourceid=navclient&aq=t&ie=UTF-8&rlz=1T4GGIC_enUS210US211&q=WWE+stock

1000 shares would earn you great dividends, the price is stable (compared to so many markets) and since Mcmahon came out saying it was entertainment, it made it as ligitimate as anything on the market. The value of the stock has remained fairly level at just over a billion for years now. He has a slimlined company that is seriously family oriented, parents and kids alike watch and go to events.

My point, look at something that is stable and at the same time something that pays 4 times the average money market really looks appealing in bad times.

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Offline Wes Sapp

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Re: What I don't get...
« Reply #5 on: October 01, 2008, 04:31:58 PM »
Here's some advice on what to buy!
If you purchased $1,000 of shares in Delta Airlines one year ago, you will have $49.00 today.
If you purchased $1,000 of shares in AIG one year ago, you will have $33.00 today.
If you purchased $1,000 of shares in Lehman Brothers one year ago, you will have $0.00 today.
But, if you had purchased $1,000 worth of beer one year ago, drank all the beer, then turned in the aluminum cans for recycling refund, you will have received $214.00.
Based on the above, the best current investment plan is to drink heavily & recycle. It is called the 401-Keg.
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Offline EasternShore

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Re: What I don't get...
« Reply #6 on: October 01, 2008, 04:51:35 PM »
 :-D :-D :-D :-D :-D   

laughing my patooty off!!

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Offline Irwin

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Re: What I don't get...
« Reply #7 on: October 01, 2008, 08:46:56 PM »
I get about two mile's a gallon of beer that's to the bathroom :-D :-D :-D
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Offline Jerrymac

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Re: What I don't get...
« Reply #8 on: October 07, 2008, 12:12:42 AM »
I get it now. The investors become afraid that we are slipping into recession that they sell everything off causing the recession.  :roll:  :roll:  :roll:
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Offline Keith13

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Re: What I don't get...
« Reply #9 on: October 07, 2008, 09:30:59 AM »
I get it now. The investors become afraid that we are slipping into recession that they sell everything off causing the recession.  :roll:  :roll:  :roll:

Yep thats the great thing about it. also they have triggers that sell at certain values and as those values are crossed more selling occurs and as the price falls more triggers are pulled. That is what caused the stock market bust back in the 30's, well along with people buying on margin.
But even today when you buy on margin(borrowed money) lets say 20%  you put up 20 dollars to buy 100 worth of stock. As the value of the stock rises or falls the amount you have borrowed on margin has changed so if the stock falls 50 bucks to close at 50.00 you now are at 40% and your brokerage will call looking for the money to cover your position. When people do not have the cash to back this up they are forced to sell to have the money to pay back what they already borrowed. By selling they further drive the market down.
Very simplified example of a vicious cycle

Keith

Offline Jerrymac

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Re: What I don't get...
« Reply #10 on: October 07, 2008, 09:52:45 AM »
But there you go again. If they do indeed sell what they have, then therefore someone must have bought. Doesn't the market go up when someone is buying?
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Offline Understudy

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Re: What I don't get...
« Reply #11 on: October 07, 2008, 10:32:49 AM »
Yes that is why the market at the end of the day was only down 300 + points. During the day it was down almost 775 points. Buying at bargain basement prices means there were deals to be made.

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Offline Keith13

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Re: What I don't get...
« Reply #12 on: October 07, 2008, 10:44:20 AM »
But there you go again. If they do indeed sell what they have, then therefore someone must have bought. Doesn't the market go up when someone is buying?

Yes and no bear with me it’s been awhile since I took Finance.
When I buy a share of stock there is not necessarily someone out there selling his share to me. There is a float of stock available to be bought by someone at any time. There are brokers who buy, hold, and sell available shares when someone wants to purchase the stock even though that specific share is not necessarily owned by anyone in particular. What drives the price up is when that pool of available shares starts to disappear then supply and demand kicks in. When people sell the opposite occurs the pool of available stock grows larger thus driving down share price.
Hopefully, the Finance majors on the forums will be polite to my overly simplified version of this process. :-D

Keith

Offline Jerrymac

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Re: What I don't get...
« Reply #13 on: October 15, 2008, 06:21:04 PM »
So now today I read where people are not buying much because of their scare of how tight money will get. This caused retail and whole sale prices to go down. Now I would think since things are getting cheaper... gas also.... that people will start buying again and things would soon return to normal.

But noooooo.... those people on wall street take it as a sign of a full blown recession and so what do they do? Yep. The idiots start selling more stuff and pulling us down into recession.

Who started this wall street crap anyways. That alone seems to be the ruin of us all.
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Offline Brian D. Bray

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Re: What I don't get...
« Reply #14 on: October 16, 2008, 10:38:37 PM »
So now today I read where people are not buying much because of their scare of how tight money will get. This caused retail and whole sale prices to go down. Now I would think since things are getting cheaper... gas also.... that people will start buying again and things would soon return to normal.

But noooooo.... those people on wall street take it as a sign of a full blown recession and so what do they do? Yep. The idiots start selling more stuff and pulling us down into recession.

Who started this wall street crap anyways. That alone seems to be the ruin of us all.

Greed is the route to all evil.  Money is just one of things that makes people greedy.
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Offline kathyp

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Re: What I don't get...
« Reply #15 on: October 17, 2008, 12:52:04 AM »
wall street works on emotion and perception, not necessarily facts.  it is a poor indicator of the true state of the economy, but sometimes a good indicator of confidence.

it's a chicken and egg thing.  usually it goes like this:  something happens that makes people nervous.  usually it starts with the MSM.  they take a weakness or one bad indicator and blow it into a sky is falling thing.  folks feel insecure and don't spend as much.  less spending makes wall street nervous.  one or two sectors start to sell and pretty soon, thanks to media hype, everyone is dumping stock.  that's the public side of it.  of course, trade, manufacturing, sales, go along with consumer confidence in the mix.  one big sector tanking, like the housing market or the .com crash, can take others down.

it is the natural order of things.  the best way to handle it is to leave it alone.  let the bad companies and bad investors go down in flames.  painful but quick.  trying to "fix" it only prolongs the problem and costs us all more money.
.....The greatest changes occur in their country without their cooperation. They are not even aware of precisely what has taken place. They suspect it; they have heard of the event by chance. More than that, they are unconcerned with the fortunes of their village, the safety of their streets, the fate of their church and its vestry. They think that such things have nothing to do with them, that they belong to a powerful stranger called “the government.” They enjoy these goods as tenants, without a sense of ownership, and never give a thought to how they might be improved.....

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Offline Jerrymac

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Re: What I don't get...
« Reply #16 on: October 17, 2008, 05:41:11 AM »
I always buy what I need to buy when I need to buy it. It doesn't matter what they are saying. I keep hearing about this recession that happened in the 1970s. I some how missed it. I was around. I was raising a couple of kids. Wonder how bad it would have been if I knew there was a recession going on and blamed all my troubles on that?
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Offline kathyp

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Re: What I don't get...
« Reply #17 on: October 17, 2008, 11:08:57 AM »
same here.  :-)  the 70's gave us hyper-inflation and really high interest rates.  the inflation did not hurt us to much because we either shopped on base or bought (as we do now) in the discount stores.  we began to save for my husbands continuing education and our future at that time.  the high interest rates gave us a boost.  we were not buying anything on credit or looking for a loan, so the interest rates actually worked in our favor.

one mans disaster is anothers opportunity.  i am buying  :-)
.....The greatest changes occur in their country without their cooperation. They are not even aware of precisely what has taken place. They suspect it; they have heard of the event by chance. More than that, they are unconcerned with the fortunes of their village, the safety of their streets, the fate of their church and its vestry. They think that such things have nothing to do with them, that they belong to a powerful stranger called “the government.” They enjoy these goods as tenants, without a sense of ownership, and never give a thought to how they might be improved.....

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Offline Jerrymac

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Re: What I don't get...
« Reply #18 on: October 17, 2008, 11:22:59 AM »
I read this article..... or some of it. Seems I live in a place that don't feel the pain  :-D

http://news.yahoo.com/s/bw/20081015/bs_bw/oct2008bw20081014006902

Some Cities Will Be Safer in a Recession
By Prashant Gopal Prashant Gopal Wed Oct 15, 8:08 am ET
Oct. 13's 937-point surge in the Dow notwithstanding, the economic crisis has left Americans -- even those with no obvious connection to Wall Street -- wondering about their own future. The 401(k)s of many Americans are still on shaky ground, foreclosures are spiking, and employers in big cities and small towns alike are struggling to adapt to a new environment of tight credit and feeble consumer spending.

Government leaders are working to avoid a depression -- or at least a late-1970s-level recession -- but if things get really bad, some places will suffer more: states such as California, Florida, and Nevada that are buried under a growing mass of foreclosures, cities like New York and Chicago that have large numbers of financial sector jobs, and manufacturing towns that are already suffering from weak sales of cars and other durable goods.

Other local economies, those dominated by stable industries, could be relatively well-cushioned. BusinessWeek.com worked with data from PolicyMap.com, a demographics and data site run by Philadelphia's Reinvestment Fund, to identify the best places to live during a recession. We looked at places where large portions of the population worked in anticyclical industries such as government, health care, education, agriculture, and legal services.

Secure in the Capital

Topping our list was Arlington, Va., a highly educated urban community just across the Potomac River from Washington, followed by the District of Columbia itself, where many residents work in government or related services. The federal government employs thousands of residents, keeps lawyers, lobbyists, accountants, and journalists busy, and pumps money into the region through outsourcing jobs and multimillion-dollar contracts to companies such as Bethesda (Md.) aerospace contractor Lockheed Martin (NYSE:LMT - News).

While D.C. didn't enjoy Manhattan's Wall Street-driven growth during the past couple of decades, it's now in an enviable position. The capital has become a hub for companies that do defense and homeland security work in the wake of the Sept. 11, 2001, attacks.

"We don't have a Wall Street," said Stephen Fuller, director of the Center for Regional Analysis at George Mason University. "When there's a crisis like this, the Fed goes out and hires a bunch of people to help out. I suspect they'll bring Wall Street guys to Washington and put them up in hotels or empty office buildings and put them to work."

Government towns tend to be relatively stable because -- even though budgets are slashed -- the public sector still must pay the salaries of politicians, building inspectors, police officers, military personnel, and tax-authority employees. Cities that we think might benefit from government employment include Chesapeake, Va., near the massive Norfolk Naval base, and the state capitals of Baton Rouge, La.; Lincoln, Neb.; and Madison, Wis.

College Cushion

Madison has a second recession buffer: the University of Wisconsin. More than 17% of the working-age population works in education, according to PolicyMap. Colleges don't necessarily flourish in bad times, but they don't go out of business either. People tend to go back to school to learn marketable skills when unemployment is high, but alumni donations and state grants do tend to dwindle during recessions. University towns dominated the ranking -- from Durham, N.C., home of Duke University, to Irvine, Calif., with its University of California campus. Major cities with multiple college campuses such as Baltimore, Boston, Philadelphia, and Seattle also appear high on the list.

Towns with many residents working in health care, such as Buffalo; Durham, N.C.; Lubbock, Tex.; Philadelphia; and Pittsburgh will also have a solid layer of protection. Even doctors and nurses feel the pinch in a recession because people without jobs or insurance tend to put off medical visits until it's absolutely necessary. But medical care is in demand in good times and bad.

Farms and grocery stores tend to be relatively stable because even though people might not be able to afford restaurant food, they still need to eat. Lawyers also can find stable work in a recession, although their success has a lot to do with their particular field (commercial litigators and bankruptcy lawyers might be busy while real estate lawyers might not be).

We had hoped to include energy in our analysis despite the recent decline in oil prices, because gasoline and natural gas prices are still relatively high, and energy-producing states such as Alaska, Colorado, Louisiana, New Mexico, Oklahoma, Texas, and Wyoming are benefiting. We weren't able to collect town-level data on energy jobs, but some of the places that came up on our list -- such as Anchorage, Alaska; Baton Rouge, La.; and Lubbock, Tex., are located in energy centers. Baton Rouge and New Orleans have energy-related jobs, but the main strength of their economies is a post-Katrina construction boom.

Flatness in Houston

If energy were factored in, Houston might have shot up to the top of the ranking.

"Texas is buffered, but it's not insulated," said Edward Friedman, an economist who covers Texas for Moody's Economist.com (NYSE:MCO - News). "It's definitely not going to keep on growing the way it is. While the rest of country is in significant decline, you'll have flatness in Houston."

Boston, which came in fifth on our list, doesn't have as much protection as Houston or Washington. But it is surrounded by major universities such as Harvard, Massachusetts Institute of Technology, and Tufts. It's also a medical hub, with some of the best hospitals in the country. But it also has a substantial number of employees working at mutual funds and banks, which will continue to get hit in the financial crisis.

Philadelphia might even have a stronger hand: Like Boston, it has hospitals and major universities such as the University of Pennsylvania. It does not, however, have so many employees in the financial-services sector. About 26% of the population is either in health care or education.

The city is also perfectly positioned close to the population centers of the District of Columbia, Maryland, New Jersey, and New York, and is likely to attract nearby visitors who want to avoid the expense of long-distance travel, said Moody's Economy.com senior economist Ryan Sweet.

Black Eye for Gotham

The recession is "going to leave New York with a black eye, but Philadelphia will escape only bruised," Sweet said. "Philadelphia was never an outperformer during the expansion, and that's why we expect a short and shallow recession here."

It might be impossible to escape the recession entirely because the crisis is tied to the credit markets. Businesses, which often have lumpy revenues month to month, need short-term credit to make payroll and long-term credit to invest in future growth. And consumers use credit to buy houses and iPods.

"This will be a consumer-led downturn: It affects whatever the consumer touches. So all those (businesses) in the pipeline leading to the consumer are going to feel the pinch," said Alan Beaulieu, principal at the Institute for Trend Research, a private economic consulting firm. "It becomes so that there's very little that's not impacted."

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Offline kathyp

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Re: What I don't get...
« Reply #19 on: October 17, 2008, 12:11:15 PM »
note the wording.  CRISIS-DEPRESSION.  also the observation that this is a consumer driven downturn.  why?  because the consumer has been convinced that that there is a CRISIS AND DEPRESSION and they need to stop spending and hunker down.

this is actually a press driven downturn, but no cure for it now.  they have done their dirty work.  gotta love election years.  anything for the cause!
.....The greatest changes occur in their country without their cooperation. They are not even aware of precisely what has taken place. They suspect it; they have heard of the event by chance. More than that, they are unconcerned with the fortunes of their village, the safety of their streets, the fate of their church and its vestry. They think that such things have nothing to do with them, that they belong to a powerful stranger called “the government.” They enjoy these goods as tenants, without a sense of ownership, and never give a thought to how they might be improved.....

 Alexis de Tocqueville