STOCK MARKET

stock market

2011-11-30T05:41:00.000-08:00

What is Stock Market?

A stock market which is also known as equity market is a public body in which a free network of economic transactions occurs. It is not a physical facility or secret body. It is the place for the trading of stock or shares of company and its derivatives at an agreeable price. These shares and derivatives are securities that are listed on a stock exchange.
It was estimated that the world’s stock market size was at around $36.6 trillion at the beginning of October 2008. The entire market of world derivative has been estimated at around $791 trillion face or nominal value which is eleven-fold of the total world economy. Since the value of derivative market is presented in terms of notional values, it cannot be straightly compared to a fixed income security or a stock, which conventionally refers t an actual value. Furthermore, the large majority of derivatives cancels each other out which means that a derivative bet on an event that occurs is counteracted by a comparable derivative bet on an event that does not occur. Many of the securities that are relatively not liquid like that are valued as marked to model, instead of valued as an actual market price.

The stocks are traded and listed on stock exchanges which are body of a company or mutual organization that is specialized in getting buyers and sellers of the organizations to a list of securities and stocks together. Categorized by market capitalization, the biggest stock market in the US is the New York Stock Exchange; while in Canada, it is the Toronto Stock Exchange. Examples of leading European stock exchanges comprise London Stock Exchange, Amsterdam Stock Exchange, Paris Bourse, and Frankfurt Stock Exchange (Deutsche Börse). In Africa, there are JSE Limited and Nigerian Stock Exchange. In Asia, there are the Tokyo Stock Exchange, Singapore Exchange, the Shanghai Stock Exchange, the Hong Kong Stock Exchange, and the Bombay Stock Exchange. In Latin America, the examples include the BMV and the BM&F Bovespa.

The participants in London Stock Exchange vary from individual investors to big traders or also known as hedge fund traders, and they can be based anywhere. In the end, their orders are generally handled by professionals at a stock exchange, who will perform the order of buying or selling.

Some of the exchanges have physical locations in which transactions are performed on a trading floor, by a method that is popular as open outcry. This auction type is used in commodity exchanges and stock exchanges in which traders can enter ‘oral’ bids and offers at the same time. The other stock exchange type is the virtual type which is composed of a computer network where trades are executed electronically.

A stock exchange is established to facilitate the securities exchange between buyers and sellers and these activities provide a marketplace whether it is virtual or physical. The actual trades are on the basis of an auction market model in which a buyer bids a certain price for a stock and a seller asks a certain price for the stock. If the bid and ask prices meet, then a trade takes place. If there are more than one bidder and asker, they are served on a basis of first come first served at a certain price.

Benifits of Stock options

2011-11-29T09:21:00.000-08:00

Benefits of Stock Options:

The stock which based on the main of single stock is stock options for example GOOG for Google. We can use it for trading shares without sell or buy the real stock. In the US,Europe, and Asia, the stock options are use to trade only one stock options contract each 100 shares of the underlying stock.

The way of investing using stock options is if we will use the stock options to investing on the other stock, our motive to investing must be same when buy the real stock . One of the different to investing in this stock is the trade done with use options contracts even of the underlying stock. After choose the match stock, to trade the investing of stock will pass three steps. The first step is buy one in the money call option in each 100 shares of stock. The second step is please, wait for the stock price until the options price are go up and the last step is please sell the call options to know our profit.

Advantages of stock options:

The first of advantage is the price of stock options are cheaper than the real stock so the total of margin that needed is lower. So, the trading which smaller trading accounts able to investing with the other stock will be out from scope and in the same time the traders can have the trading which more active.

The second of the advantage is the risk of a long call option is restricted by the total paid for that options so, we can know earlier the risk of trade. When some of the long term stock investors are still hold their stock and when it is fell by $10,000 while the options trader only fell $3.000, that means nothing the risk didn’t care low of the stock price goes.

Day Trading Forex Tips

Stock Types

2011-11-28T04:19:00.000-08:00

Stock Types

BLUE CHIP STOCKS

The stock market term "blue chip" comes from poker, where the blue chips carry the highest value. Large, established firms with a long record of profit growth, dividend payout and a reputation for quality management, products and services are referred to as Blue Chip companies. These firms are generally leaders in their industries and are considered likely candidates for long-term growth. Because Blue Chip companies are held in such high esteem, they often set the standards by which other types of companies in their fields are measured. Well-known blue chips include IBM, Coca-Cola, General Electric and McDonald's.

Blue chip stocks are included in the Dow Jones Industrial Average, an index comprised of 30 companies that are all major players in their respective industries. Popular among individual and institutional investors alike, the 30 stocks listed on the Dow account for about one fifth of the total market value (over $8 trillion) of all U.S. stocks. The types of Investors blue chip stocks attract are the ones who seek investments that pay moderate dividend yields and grow. These types of stock are usually priced high because of their demand, have relatively low volatility and deliver a steady stream of dividends. The main downside is that, since they are so large, they have little room to appreciate, compared to smaller, up-and-coming types of stock.

PENNY STOCKS

Penny stocks are low-priced, speculative stocks that are very risky. These stocks are generally issued by the type of companies with a short or erratic history of revenues and earnings. They are the lowest of the low in price and many stock market exchanges choose not trade them.

Penny stocks (also called designated securities) have these specific qualities: they sell for less than $5, they are sold over the counter (but not on the NASDAQ), and their companies have 2 million dollars or less in net tangible assets. They are listed daily on the Pink Sheets.

The appeal of penny stocks comes from their low price. Though the odds are against it, if the company that issued them suddenly finds itself on a growth track, their stock share price can rise rapidly. This type of stocks is popular among small speculators.

INCOME STOCKS

Income stocks are stocks that pay higher-than-average dividends over a sustained period. These above average dividends tend to be paid by large, established companies with stable earnings. Utilities and telephone company stocks are often classified as income stock types.

Income stocks are popular with types of persons investing for steady income for a long time and who do not need much growth in their stock's value (though some growth does occur). In this sense, investors who choose them have something in common with bondholders. Income stocks can actually be more profitable than bonds. To maximize income, some investors will even seek out companies that frequently raise their dividends and are not saddled with debt.

VALUE STOCKS

A value stock is a type of stock that is currently selling at a low price. Companies that have good earnings and growth potential but whose stock prices do not reflect this are considered value companies. Both the stock market and people investing in it are largely ignoring their stocks. Investors who buy value stocks believe that these stocks are only temporarily out of favor and will soon experience great growth. Any number of factors such as new management, a new product or operations that are more efficient may make a value stock grow quickly.

Many companies alternate between value and growth types of classification. It is a normal aspect of the business cycle. Investing in value stocks is attractive for those who watch markets carefully for undervalued stocks they feel will move upward.

OTHER TYPE OF STOCKS

Defensive stocks are those whose prices stay stable when the market declines and are issued by industries that naturally do well during recessions. Food and utilities companies are defensive stocks. Debt collection companies also tend to perform well when the market turns sour.

Cyclical stocks are a type of stocks that move up or down in sync with the business cycle. Examples include the housing industry and industrial equipment companies, because these companies serve the needs of growing economies. Investors who do not mind buying and selling as the market fluctuates tend to like cyclical stocks. Individuals who prefer to hold a stock for a long time may not like them unless they can weather ups and downs in the stock's value.

Gold stocks are the stocks of gold-mining companies. Their value moves up or down with the price of gold.

Treasury stock is a type of stock that has been bought back by the company that issued it. Companies may buy their stock back from investors when they believe it is underpriced on the market. The company can then set aside the stock for future uses such as debt payment or the awarding of stock options.

Investment Ideas for 2011

2011-11-26T09:04:00.000-08:00

Here are some stocks that combine high growth potential, healthy profit margins and low price-to-earnings multiples. These stocks are a good bet for investment in 2011 The investment environment is uncertain because of various scams coming to light in Indian politics and banking industry. So under these circumstances which companies should an investor choose? A sensible investor has to be obsessed with buying cheap and compare individual P/E ratios with industry averages before taking a decision to buy. At the sight of any more danger or earnings disappointment, the market will flee to safety, abandoning highly priced midcaps and ‘multi-bagger’ stocks. This is not the time for adventure. Indian companies will have to contend with high interest rates in 2011. This means any company exposed to high debt or planning to borrow more will be penalised. Also, firms depending on borrowing-led consumption, like home builders and car makers, will hurt. Companies with strong cash flows will benefit. There are several companies that smartly invested in capacity expansion when cost of funds were low and are ready to start production from the new capacity just as demand picks up. These firms will be able to benefit from the economic growth without having to incur a heavy cost. Our recommendations comprise a set of 10 companies that will not only thrive in a high interest rate regime, but also find themselves the beneficiary of the strongest growth impulses in the economy. These are the themes that will drive the economy forward despite the turbulence in macro indicators. Theme: Agricultural Growth Stock: Coromandel International At a growth rate of 4-5 percent, agriculture is expected to play a crucial role in GDP growth in the coming year. Indian farmers have begun to invest handsomely in improving yields and Coromandel has positioned itself as a complete farm inputs company. While the company has a strong franchise in fertilizers, it is the new businesses such as speciality nutrients that will be the key growth driver. This new revenue stream now accounts for 10 percent of sales, but is seeing a 40 percent annual growth rate. The profit margins are about three times that of the fertilizer business at 10-12 percent. Theme: Freedom from Interest Rate Impact Stock: Bajaj Auto Unlike cars which are mostly bought through loans, three out of four two-wheelers are bought with own cash. Bajaj Auto would thus be able to bypass the interest rate impact as it seeks growth. After the exit of Honda from Hero Honda, the spotlight is on the second largest two-wheeler maker in the country. Investors who are bearish on Hero Honda could shift to Bajaj for the two-wheeler play. Under managing director Rajiv Bajaj, the company is focussing on a stronger product line and growth opportunity in emerging markets. Theme: Control of Raw Material Costs Stock: Tata Steel Neither JSW nor Steel Authority of India has the kind of raw material arrangements that Tata Steel enjoys. The company is 100 percent self-reliant and will not be affected by price increases in iron ore or coking coal. At the same time, it will fully benefit from increase in steel prices. This will lead to improved profitability. It is also the cheapest steel stock among its peers. Theme: Demand for Industrial Consumables Stock: Savita Oil Technologies The company supplies industrial lubricants, waxes and other industrial consumables. It has been showing a scorching growth in net profit for some time now. With a good promoter, sound business model and a great dividend record, it is poised to benefit from industrial growth in the coming year. It is also attractively priced. Theme: Rural Growth Stock: Mahindra & Mahindra Financial Services The company has a strong presence in rural markets and derives about 90 percent of its revenues from there. Its business model reflects the company’s nuanced understanding of the rural segment. As the demand for tractors grows, the company will be a direct beneficiary.

foreign exchange

2011-11-24T09:00:00.000-08:00

Mutual funds

2011-11-23T18:43:00.000-08:00

Definition of Mutual funds:

Definition of Mutual Funds:

A mutual fund is made up of money that is pooled together by a large number of investors who give their money to a fund manager to invest in a large portfolio of stocks and / or bonds

Mutual fund is a kind of trust that manages the pool of money collected from various investors and it is managed by a team of professional fund managers (usually called an Asset Management Company) for a small fee. The investments by the Mutual Funds are made in equities, bonds, debentures, call money etc., depending on the terms of each scheme floated by the Fund. The current value of such investments is now a days is calculated almost on daily basis and the same is reflected in the Net Asset Value (NAV) declared by the funds from time to time. This NAV keeps on changing with the changes in the equity and bond market. Therefore, the investments in Mutual Funds is not risk free, but a good managed Fund can give you regular and higher returns than when you can get from fixed deposits of a bank etc.

Why Should I Invest in a Mutual Fund when I can Invest Directly in the Same Instruments :

We have already mentioned that like all other investments in equities and debts, the investments in Mutual funds also carry risk. However, investments through Mutual Funds is considered better due to the following reasons :-

Your investments will be managed by professional finance managers who are in a better position to assess the risk profile of the investments;

Your small investment cannot be spread into equity shares of various good companies due to high price of such shares. Mutual Funds are in a much better position to effectively spread your investments across various sectors and among several products available in the market. This is called risk diversification and can effectively shield the steep slide in the value of your investments.

Thus, we can say that Mutual funds are better options for investments as they offer regular investors a chance to diversify their portfolios, which is something they may not be able to do if they decide to make direct investments in stock market or bond market. For example, if you want to build a diversified portfolio of 20 scrips, you would probably need Rs 2,00,000 to get started (assuming that you make minumum investment of Rs 10000 per scrip). However, you can invest in some of the diversified Mutual Fund schemes for an low as Rs.10,000/-.

Types of Mutual funds

2011-11-22T04:16:00.000-08:00

WHAT ARE VARIOUS TYPES OF MUTUAL FUNDS

A common man is so much confused about the various kinds of Mutual Funds that he is afraid of investing in these funds as he can not differentiate between various types of Mutual Funds with fancy names. Mutual Funds can be classified into various categories under the following heads:-

(A) ACCORDING TO TYPE OF INVESTMENTS :- While launching a new scheme, every Mutual Fund is supposed to declare in the prospectus the kind of instruments in which it will make investments of the funds collected under that scheme. Thus, the various kinds of Mutual Fund schemes as categoried according to the type of investments are as follows :-

(a) EQUITY FUNDS / SCHEMES

(b) DEBT FUNDS / SCHEMES (also called Income Funds)

(c ) DIVERSIFIED FUNDS / SCHEMES (Also called Balanced Funds)

(d) GILT FUNDS / SCHEMES

(e) MONEY MARKET FUNDS / SCHEMES

(f) SECTOR SPECIFIC FUNDS

(g) INDEX FUNDS

B) ACCORDING TO THE TIME OF CLOSURE OF THE SCHEME :- While launching a new schemes, Mutual Funds also declare whether this will be an open ended scheme (i.e. there is no specific date when the scheme will be closed) or there is a closing date when finally the scheme will be wind up. Thus, according to the time of closure schemes are classified as follows :-

(a) OPEN ENDED SCHEMES

(b) CLOSE ENDED SCHEMES

C) ACCORDING TO TAX INCENTIVE SCHEMES :- Mutual Funds are also allowed to float some tax saving schemes. Therefore, sometimes the schemes are classified according to this also:-

(a) TAX SAVING FUNDS

(b) NOT TAX SAVING FUNDS / OTHER FUNDS

(D) ACCORDING TO THE TIME OF PAYOUT :- Sometimes Mutual Fund schemes are classified according to the periodicity of the pay outs (i.e. dividend etc.). The categories are as follows :-

(a) Dividend Paying Schemes

(b) Reinvestment Schemes

The mutual fund schemes come with various combinations of the above categories. Therefore, we can have an Equity Fund which is open ended and is dividend paying plan. Before you invest, you must find out what kind of the scheme you are being asked to invest. You should choose a scheme as per your risk capacity and the regularity at which you wish to have the dividends from such schemes.

History of the India Stock Market

2011-11-18T05:49:00.000-08:00

The Indian Stock Market has a long and rich history. Originally based on what would become the London Stock Exchange, traders gathered to trade local stock and talk business. Eventually the Indian Stock Market became not just another financial arena in southern Asia, but the most important financial arena outside of Japan. Today the Indian Stock Market still holds prominence in the region.

Origins:
The Bombay Stock Exchange is Asia's oldest stock market. This stock exchange was established in 1875.

History:
The Bombay Stock Exchange began as the Native Share and Stock Brokers Association. This exchange obtained permanent recognition in 1956 from the Indian government. The Bombay Stock Exchange started as an open outcry system where traders would call their orders out and wait for a response.

Meeting Places:
Originally the traders met under banyan trees to do business; as the group grew in numbers these traders needed to move to different locations. A permanent location was found in 1874.

Prominence:
The exchange has become the largest in the number of listed companies and fifth largest in the amount of transactions.

Organization Change:
At first the Bombay Exchange was an Association of Persons, and remained so until the 21st century. In 2002 the exchange became a corporation.

How to Get Started Investing in the Stock Market

2011-11-16T10:49:00.000-08:00

Today's hot stock market is both inviting and intimidating to new investors. Here's how to start an investment portfolio of your own.

Instructions:

- 1
  Get educated: Read about stocks and the market, take a seminar or class on investing and review online financial sites.
- 2
  Develop financial goals and an investing and stock-picking strategy.
- 3
  Research individual stocks by reading annual reports, quarterly reports and other documents on file with the Securities and Exchange Commission. Look them up online at www.freedgar.com
- 4
  Invest in what you know. Consider the stocks of local companies with which you are familiar and in which you have confidence.
- 5
  Check out the holdings of some successful mutual-fund companies. If they are winning with particular stocks, perhaps you will too.
- 6
  Diversify. Avoid putting your money in just one or two stocks or, for that matter, in one or two industries.
- 7
  Use a discount brokerage to buy stocks if you are confident in your investment skills and have the time to do your own investing. You'll save on commissions.
- 8
  Buy stocks that you will feel comfortable holding for three to five years. Resist the temptation to dump a stock the moment its price drops a few percentage points. Give it a chance.

Tips & Warnings:

Know your appetite for risk before you start investing. The stock market can be a roller-coaster ride.
If you don't have time to research and review stocks daily, try investing in a mutual fund account, at least to get started.
Look for value. Use price-earnings ratios, usually reported in newspapers' stock tables, to compare a stock to industry norms before you buy.
Take advantage of investing through 401(k) plans, Individual Retirement Accounts and Keogh plans. These provide tax breaks to the investor.
Don't think that by investing all your money today, you will be a millionaire next month. Invest for the long term.

About NASDAQ

2011-11-11T09:03:00.001-08:00

he NASDAQ Stock Market, also known as the NASDAQ, is an American stock exchange. "NASDAQ" originally stood for "National Association ofSecurities Dealers Automated Quotations". It is the second-largest stock exchange by market capitalization in the world, after the New York Stock Exchange. As of January 13, 2011, there are 2,872 listings.The NASDAQ has more trading volume than any other electronic stock exchange in the world. It was founded in 1971 by the National Association of Securities Dealers (NASD), who divested themselves of it in a series of sales in 2000 and 2001. It is owned and operated by the NASDAQ OMX Group, the stock of which was listed on its own stock exchange beginning July 2, 2002, under the ticker symbol NASDAQ: NDAQ. It is regulated by the Financial Industry Regulatory Authority (FINRA). With the incomplete purchase of the Nordic-based operated exchange OMX, following its disagreement with Borse Dubai, NASDAQ is poised to capture 67% of the controlling stake in the aforementioned exchange, thereby inching ever closer to taking over the company and creating a trans-atlantic powerhouse. The group, now known as Nasdaq-OMX, controls and operates the NASDAQ stock exchange in New York City – the second largest exchange in the United States. It also operates eight stock exchanges in Europe and holds one-third of the NASDAQ Dubai stock exchange. It has a double-listing agreement with OMX, and will compete with NYSE Euronext group in attracting new listings. Bernie Madoff is a co-founder of Nasdaq, a former Chairman of the NASD. When the NASDAQ stock exchange began trading on February 8, 1971, it was the world's first electronic stock market. At first, it was merely acomputer bulletin board system and did not actually connect buyers and sellers. The NASDAQ helped lower the spread (the difference between the bid price and the ask price of the stock) but somewhat paradoxically was unpopular among brokerages because they made much of their money on the spread. NASDAQ was the successor to the over-the-counter (OTC) system of trading. As late as 1987, the NASDAQ exchange was still commonly referred to as the OTC in media and also in the monthly Stock Guides issued by Standard & Poor's Corporation. Over the years, NASDAQ became more of a stock market by adding trade and volume reporting and automated trading systems. NASDAQ was also the first stock market in the United States to start trading online. Nobody before them had ever done this, highlighting NASDAQ-traded companies (usually in technology) and closing with the declaration that NASDAQ is "the stock market for the next hundred years." Its main index is the NASDAQ Composite, which has been published since its inception. However, its exchange-traded fund tracks the large-cap NASDAQ-100 index, which was introduced in 1985 alongside the NASDAQ 100 Financial Index. Until 1987, most trading occurred via the telephone, but during the October 1987 stock market crash, market makers often didn't answer their phones. To counteract this, the Small Order Execution System (SOES) was established, which provides an electronic method for dealers to enter their trades. NASDAQ requires market makers to honor trades over SOES. In 1992, it joined with the London Stock Exchange to form the first intercontinental linkage of securities markets. NASD spun off NASDAQ in 2000 to form a publicly traded company, the NASDAQ Stock Market, Inc. In 2006 NASDAQ changed from stock market to licensed national exchange. On November 8, 2007, NASDAQ bought the Philadelphia Stock Exchange (PHLX) for US$652 million. PHLX is the oldest stock exchange in America—having been in operation since 1790. To qualify for listing on the exchange, a company must be registered with the United States Securities and Exchange Commission (SEC), have at least three market makers (financial firms that act as brokers or dealers for specific securities) and meet minimum requirements for assets, capital, public shares, and shareholders. In February, 2011, in the wake of an announced merger of NYSE Euronext with Deutsche Börse, speculation developed that Nasdaq and IntercontinentalExchange (ICE) could mount a counter-bid of their own for NYSE. Nasdaq could be looking to acquire the American exchange's cash equities business, ICE the derivatives business. As of the time of the speculation, "NYSE Euronext’s market value was $9.75 billion. Nasdaq was valued at $5.78 billion, while ICE was valued at $9.45 billion."[6] Late in the month, Nasdaq was reported to be considering asking either ICE or the Chicago Merc to join in what would be probably have to be, if it proceeded, an $11-12 billion counterbid.[7]