Showing posts with label stock market history. Show all posts
Showing posts with label stock market history. Show all posts
Monday, 21 May 2012
Sunday, 20 May 2012
Thursday, 22 December 2011
Investors hit by bumper losses after a year in which every stock market index lost money
Investors hit by bumper losses after a year in which every stock market index lost money
The UK was the ninth best performing market, falling by 11pc, according to Standard & Poor’s.
The UK was the ninth best performing market, falling by 11pc, according to Standard & Poor’s.
11:39AM GMT 21 Dec 2011
It is a far cry from the beginning of the year when stock market pundits were in an optimistic mood but the Japan tsunami disaster and a full-blown eurozone crisis in the summer blew any predictions widely off course.
According to Standards & Poor’s the top developed market was the US, which fell by 4.6pc, while the top performing European markets was Ireland, which was down 10.01pc.
Not surprisingly, Greece suffered the worst performance, falling by 60pc, but nations expected to deliver the goods also suffered badly.
The BRIC nations – which many expected to be immune from the developed nations’ meltdown, also had a dire year with Brazil shares falling by 26pc, Russia by XX pc, China by 22pc and India which fell by 37pc.
The top emerging markets were Indonesia (-0.71pc), Philippines (-2.47pc) and Thailand (-4.44pc).
Many experts are still in a cautious mood. Mike Lenhoff at Brewin Dolphin said: “Our expectation of how well the equity markets can do in 2012 is limited but we still hopeful that the FTSE 100 will end 2012 at around 5850. Much will depend on what progress emerges on the eurozone’s ‘fiscal compact’. However, we also expect equity markets to gain support from a more encouraging outlook for the US economy. Also, in view of the scope for conventional policy stimulus in the developing economies, we remain optimistic about the contribution they, and notably China, will make to the global economy in the latter part of the year and beyond.”
Saturday, 15 January 2011
Sunday, 8 August 2010
Friday, 6 August 2010
Investment Experience and Stock Market History Are Important
Ben Graham's 57 years on Wall Street were most instructive, and he expressed his appreciation to them when he alluded to his "old ally, experience".
To an important extent, you learn to invest by investing. Too often we have to make the same mistake as others before the lesson is instructive. All of us, it seems, must learn through the school of hard knocks. We would do better to learn from the likes of Ben Graham.
Graham was a careful student of stock market history, and he placed great emphasis on it. He thought that "No statement is more true and better applicable to Wall Street than the famous warning of Santayana : `Those who do not remember the past are condemned to repeat it.'" Graham could ridicule investors grasp of stock market history, referring to their "proverbial short memories".
It was Graham's knowledge of the long sweep of stock market history that prompted his view that ". . . the investor may as well resign himself. . .to the probability . . . that most of his holdings will advance, say, 50% or more from their low point and decline the equivalent one-third or more from their high point at various periods in the next 5 years." Historical insight is critical to successful investing. It is only through knowledge of the past that we can tell anything about the future.
To an important extent, you learn to invest by investing. Too often we have to make the same mistake as others before the lesson is instructive. All of us, it seems, must learn through the school of hard knocks. We would do better to learn from the likes of Ben Graham.
Graham was a careful student of stock market history, and he placed great emphasis on it. He thought that "No statement is more true and better applicable to Wall Street than the famous warning of Santayana : `Those who do not remember the past are condemned to repeat it.'" Graham could ridicule investors grasp of stock market history, referring to their "proverbial short memories".
It was Graham's knowledge of the long sweep of stock market history that prompted his view that ". . . the investor may as well resign himself. . .to the probability . . . that most of his holdings will advance, say, 50% or more from their low point and decline the equivalent one-third or more from their high point at various periods in the next 5 years." Historical insight is critical to successful investing. It is only through knowledge of the past that we can tell anything about the future.
Thursday, 22 April 2010
How to Understand the Stock Market
Stock Market 101
The Stock Market started over a hundred years ago when Mr. Dow and Mr. Jones realized that every company could offer shares of itself to the public for sale. As a company prospered, so would the public that owned shares of its stocks.
There are, obviously, many companies. But a good barometer of the overall market would be a few very large and stable companies which would indicate how most companies were doing simply by how the few were doing.
This small group of 30 companies, thirty major industries of the United States, was named in honor of Mr. Dow and Mr. Jones as the Dow Jones Industrial Average, the DJIA.
Often referred to as "The DOW," or "Dow Jones," these thirty companies are such well-known names as MacDonald's, General Electric, Disney, etc. To own stock in these companies, you would buy shares from the New York Stock Exchange, the NYSE. You wouldn't have to go to New York, of course. You'd simply tell your stockbroker to buy 100 shares of MCD or 15 shares of GE or 12,000 shares of DIS, for example.
Such an abbreviation would serve as a symbol and made more sense than spelling out the whole company name. That would take up too much space on the ticker. In the early days, you'd have a little machine that fed out a constant tape-sized paper stream of the changing stock prices. The machine would make an audible "tick" as the tape emerged from the machine ... tick ... tick ... tick ... and you'd see what price was now being quoted for GE ... 62.50, or GM ... 77.25, etc. ... all from the convenience of your stock ticker.
If you couldn't afford a stock ticker, you could read your stock quotes right from the business section of the newspaper. Nowadays, it's easy to have a stock ticker right on your computer, and you can even customize it to show only the stocks you want to see ... those in your portfolio.
In the early days, and even now, the NYSE was a madhouse of activity as buyers and sellers would shout their requests from the trading floor, complete with verifying hand signals. Many decades after the NYSE began, certain newer companies chose to be listed on a new sort of stock exchange, where there would be no buyers and sellers shouting from an "open pit" such as the NYSE.
This newer stock exchange would simply take buy and sell orders over the phone or other means and automatically display the current stock price quotes. Thus, a more sensible approach was born, with the National Association of Securities Dealers, Automated Quotient (NASDAQ).
Unlike the two-letter abbreviation of GE or the three-letter symbol of MCD, those on the NASDAQ use four-letter symbols, such as INTC (Intel Corporation) or AAPL (Apple Computer) or YHOO (Yahoo). Our third stock exchange is the AMEX (American Exchange), and their symbols are in three letters, such as AZC (Azco Mining) and FKL (Franklin Capital). You'll see these stock symbols and thousands more in the business section, and you'll see them on the internet.
So, why should anyone invest in the stock market?
- Because history shows that the stock market earns more money than that in a bank account or in Certificates of Deposit (CD's) or Money Market Funds, or Government Treasury Bills (T-Bills).
- Occasionally, as in 1980, when interest rates were over ten percent, it's wiser to have your money in a bank than in the stock market. But that period didn't last long. By 1982, it was time to get out of the bank and back into the stock market again.
Most of the time, the interest you earn in a bank account is very small. In 2005, it was only about one percent. If you'd invested $1000 in a bank, you'd have had ten dollars profit at the end of a year. But if you'd put that $1000 in the stock market, you'd likely have had at least $40 profit (a 4% return) ... and maybe as much as $300 (a 30% return).
Indeed, history shows that stocks earn an average 11% per year, even despite periods like 1929 or 1962 or 1974 or 1987. Plus, there was one period, from 1999 to 2003, when stocks had their biggest "Bull" run in history ... five straight years of 30% gains each year ... an amazing time for investors. There are times, of course, when the stock market seems more like a sleeping Bear than a charging Bull, and your portfolio of stocks falls in value as stock prices fall.
Sure, it's a gamble, much like a bet in Las Vegas. But America's companies don't usually go out of business. While some do, most well-known names and others with equally strong market presence will continue through good times and bad, earning that steady average of 11% per year.
When times are good for the market, the painless way to invest is simply to put your money in a fund that covers the entire market - for instance, the Vanguard Total Stock Market Index (VTSMX). Or, to bank on the largest companies only, buy the Standard & Poor's index of 500 stocks, better known as Spyders (Amex: SPY), Standard & Poor's Depositary Receipts. Other index funds also invest in market sectors such as MDY (for Mid-Caps), DIA (known as "Diamonds" - of the DowJones Industrial Average), and many others. These index funds are traded on the stock exchange just like a share of stock and are thus known by the convenient acronym : ETFs (exchange-traded funds). a complete list and performance comparison can be found at many internet sites such as www.Morningstar.com, for example.
Good times for the market will also urge a bet on the Technology (Tech) sector, with focus on computers and related companies. That would be the NASDAQ 100 (AMEX: QQQ) or other similar funds. And, if you feel the market is DEFINITELY going to go up tomorrow, buy a beta-leveraged fund such as Potomac Over The Counter Index Plus (POTCX) or Profunds Ultra Bull (ULPIX) or Profunds Ultra OTC (UOPIX). If you think the market is going to go down tomorrow, buy a leveraged bear-market fund, such as Profunds Ultra Bear (URPIX) or Ultra Short OTC Inv (USPIX), or Potomac Ultra OTC Short (POTSX), and you'll make money when others are losing.
Stockbrokers used to charge a lot of money to buy or sell stocks for you. With the advent of the internet, and fierce competition between them, you can now trade stocks much easier and cheaper than ever before. Go to a broker like Charles Schwab; it'll cost you a few thousand to open an account and you'll pay $30 per trade (buy or sell). The cheapest is, probably, Scottrade, which charges only $7. Simply go to a Scottrade office (they're all over), give them a check for $500, and you can begin trading stocks from the comfort of your own home, right on your computer (www.scottrade.com).
If you'd like to practice a little, first, for free, go to a site called www.SmartMoney.com and try out a few portfolios to see how they do. The main thing is, to get started taking charge of your finances, making your own decisions about your own investments and your own future, and learning how to earn more money than any bank account could ever earn you.
Written by Jonathon Burket
Saturday, 10 April 2010
Stock Market Timeline
Stock Market Timeline
By franklin on September 20th, 2009
The stock market time line is more extended that most people realize. The Frankfurt Stock Exchange in Germany dates back as far as the 9th century.
Back in the 13th century, merchants and financiers traded government securities and other investments. Most major European cities followed this trend, selling debt-based securities to investors to assist their own economic growth.
However it wasn’t until 1602 with the Dutch East India Company released the first stocks in a privately owned company and listed them on the Amsterdam Stock Exchange that the stock market as we know it today was formed.
Many other company owners realized that selling shares in a company was a great way to expand and grow and the stock market came alive.
It wasn’t until 1792 that a group of New York stockbrokers formally created the New York Stock Exchange board in order to formalize the rules for trading stocks. They agreed to meet daily to trade stocks and bonds.
The New York Stock Exchange expanded dramatically to include investors outside of New York in 1844 when telegraph messages, send via Morse code, were successfully transmitted, enabling investors to send and receive stock market quotes. This eventually was replaced by the stock ticker in 1867.
During 1866 the first transatlantic communications cable was completed between New York and London. This allowed the stock markets from both countries to communicate instantly, however it wasn’t until 1878 that telephones were installed on the trading floor of the New York stock exchange.
The Wall Street Journal announced in 1896 the creation of the Dow Jones industrial stock average and by 1934 the Securities and Exchange Commission (SEC) was formed in order to regulate the stocks and bonds markets. The SEC helped to oversee the requirements for companies wanting to issue stock to the public. It also oversees the daily actions of market exchanges, ensuring compliance.
The NASDAQ (National Association of Securities Dealers Automated Quotation) began trading in 1971, which officially became the world’s first electronic stock market. It wasn’t until 1994 that the first stock trade was placed via the Internet.
Timeline of Infamous Stock Market Crashes
With such a long and diverse history, the stock market has weathered through many periods of economic downturn and investor panic and has seen some spectacular recoveries too. When you consider that stock market declines are not as unusual or rare as many investors seem to think, it helps to restore a little faith in the ability of stock markets to recover even after the worst possible crashes.
Back in 1637, the Dutch stock market collapsed with prices falling almost 90%.
In 1720 the London stock market crashed, leading the government to take control of all National Debt.
In 1869, two American investors attempted to corner the gold market, beginning a gold-price crash and set in motion the events of the first Black Friday on Wall Street.
By 1873 America’s most reputable stock brokerage company collapsed and began a panicked stock sell off. This led to 37 banks and two major brokerage houses collapsing.
In 1884, yet another large stock brokering company collapses, which instigated another panic. This panicked sell off led to the failure of 15 other major brokering companies.
By 1893 the stock market crashed again, throwing America into a deep economic Depression.
1903 saw the ‘Rich Man’s Panic’ crash, and the financial world spiraled into yet another panic as news of the troubles hounding a major New York bank were released and 1907 saw yet another period of sharp downturn in the markets.
The notorious 1929 Black Thursday, followed only four days later by Black Monday saw the largest one-day fall in prices in the US stock market’s history at that time. One day later, Black Tuesday saw prices fall even further. Stock market prices around the world declined in response, but the bottom of the market wasn’t reached until 1932.
The Black Monday one-day percentage fall in stock market pricing was overshadowed by the stock market crash in 1987, when the Dow Jones lost 22.61% during one day.
In 2008, the Dow Jones once again saw the largest one-day pricing decline in history, falling 777 points.
http://www.personalfinancialtimes.com/articles/stock-trading/stock-market-timeline
Important Events Of The Stock Market Timeline
By franklin on April 6th, 2010
A comprehensive stock market timeline would probably need to be done in volumes. In the next several hundred words I will attempt to outline important events of the stock market timeline you might wish to know as a general curiosity.
Our stock market timeline begins in 1790, with the federal government issuance of $80 million in U.S. bonds.
In 1792, there are two government bonds and three bank stocks traded for a total of five securities.
Our stock market timeline moves into the 1800s with government bonds, bank stocks, and insurance stocks trading after the War of 1812.
In 1817, a constitution and rules are developed for doing stock trade. At this time, the New York Stock and Exchange Board is formally organized.
Our stock market timeline now moves us to the opening of the Erie Canal in 1825, when New York State bonds are issued to fund the construction.
In 1850 the shares volume reaches 8500, which represents a fifty-fold increase in only seven years.
In 1836, the NYS&EB prohibits it membership from trading stocks in the street.
During the panic of 1857, the Ohio Life Insurance and trust Company collapses and the market realizes a 45% since the start of the year.
In 1863, the New York Stock and Exchange Board becomes the New York Stock Exchange.
In 1903, the New York Stock Exchange and our stock market timeline move into the twentieth century. The stock market celebrates this by moving to its current residence at 18 Broad Street.
One of the most noteworthy occurrences of our stock market timeline is the panic of 1907, during which problems at Knickerbocker Trust cause a run on all the city banks. J. P. Morgan jumps in and shores up funds and ends the run on the banks.
The Federal Reserve is established in 1913.
The stock market timeline sees Wall Street become the investment capital of the world, supplanting London at the end of World War I.
http://www.personalfinancialtimes.com/articles/stock-trading/important-events-of-the-stock-market-timeline
By franklin on September 20th, 2009
The stock market time line is more extended that most people realize. The Frankfurt Stock Exchange in Germany dates back as far as the 9th century.
Back in the 13th century, merchants and financiers traded government securities and other investments. Most major European cities followed this trend, selling debt-based securities to investors to assist their own economic growth.
However it wasn’t until 1602 with the Dutch East India Company released the first stocks in a privately owned company and listed them on the Amsterdam Stock Exchange that the stock market as we know it today was formed.
Many other company owners realized that selling shares in a company was a great way to expand and grow and the stock market came alive.
It wasn’t until 1792 that a group of New York stockbrokers formally created the New York Stock Exchange board in order to formalize the rules for trading stocks. They agreed to meet daily to trade stocks and bonds.
The New York Stock Exchange expanded dramatically to include investors outside of New York in 1844 when telegraph messages, send via Morse code, were successfully transmitted, enabling investors to send and receive stock market quotes. This eventually was replaced by the stock ticker in 1867.
During 1866 the first transatlantic communications cable was completed between New York and London. This allowed the stock markets from both countries to communicate instantly, however it wasn’t until 1878 that telephones were installed on the trading floor of the New York stock exchange.
The Wall Street Journal announced in 1896 the creation of the Dow Jones industrial stock average and by 1934 the Securities and Exchange Commission (SEC) was formed in order to regulate the stocks and bonds markets. The SEC helped to oversee the requirements for companies wanting to issue stock to the public. It also oversees the daily actions of market exchanges, ensuring compliance.
The NASDAQ (National Association of Securities Dealers Automated Quotation) began trading in 1971, which officially became the world’s first electronic stock market. It wasn’t until 1994 that the first stock trade was placed via the Internet.
Timeline of Infamous Stock Market Crashes
With such a long and diverse history, the stock market has weathered through many periods of economic downturn and investor panic and has seen some spectacular recoveries too. When you consider that stock market declines are not as unusual or rare as many investors seem to think, it helps to restore a little faith in the ability of stock markets to recover even after the worst possible crashes.
Back in 1637, the Dutch stock market collapsed with prices falling almost 90%.
In 1720 the London stock market crashed, leading the government to take control of all National Debt.
In 1869, two American investors attempted to corner the gold market, beginning a gold-price crash and set in motion the events of the first Black Friday on Wall Street.
By 1873 America’s most reputable stock brokerage company collapsed and began a panicked stock sell off. This led to 37 banks and two major brokerage houses collapsing.
In 1884, yet another large stock brokering company collapses, which instigated another panic. This panicked sell off led to the failure of 15 other major brokering companies.
By 1893 the stock market crashed again, throwing America into a deep economic Depression.
1903 saw the ‘Rich Man’s Panic’ crash, and the financial world spiraled into yet another panic as news of the troubles hounding a major New York bank were released and 1907 saw yet another period of sharp downturn in the markets.
The notorious 1929 Black Thursday, followed only four days later by Black Monday saw the largest one-day fall in prices in the US stock market’s history at that time. One day later, Black Tuesday saw prices fall even further. Stock market prices around the world declined in response, but the bottom of the market wasn’t reached until 1932.
The Black Monday one-day percentage fall in stock market pricing was overshadowed by the stock market crash in 1987, when the Dow Jones lost 22.61% during one day.
In 2008, the Dow Jones once again saw the largest one-day pricing decline in history, falling 777 points.
http://www.personalfinancialtimes.com/articles/stock-trading/stock-market-timeline
Important Events Of The Stock Market Timeline
By franklin on April 6th, 2010
A comprehensive stock market timeline would probably need to be done in volumes. In the next several hundred words I will attempt to outline important events of the stock market timeline you might wish to know as a general curiosity.
Our stock market timeline begins in 1790, with the federal government issuance of $80 million in U.S. bonds.
In 1792, there are two government bonds and three bank stocks traded for a total of five securities.
Our stock market timeline moves into the 1800s with government bonds, bank stocks, and insurance stocks trading after the War of 1812.
In 1817, a constitution and rules are developed for doing stock trade. At this time, the New York Stock and Exchange Board is formally organized.
Our stock market timeline now moves us to the opening of the Erie Canal in 1825, when New York State bonds are issued to fund the construction.
In 1850 the shares volume reaches 8500, which represents a fifty-fold increase in only seven years.
In 1836, the NYS&EB prohibits it membership from trading stocks in the street.
During the panic of 1857, the Ohio Life Insurance and trust Company collapses and the market realizes a 45% since the start of the year.
In 1863, the New York Stock and Exchange Board becomes the New York Stock Exchange.
In 1903, the New York Stock Exchange and our stock market timeline move into the twentieth century. The stock market celebrates this by moving to its current residence at 18 Broad Street.
One of the most noteworthy occurrences of our stock market timeline is the panic of 1907, during which problems at Knickerbocker Trust cause a run on all the city banks. J. P. Morgan jumps in and shores up funds and ends the run on the banks.
The Federal Reserve is established in 1913.
The stock market timeline sees Wall Street become the investment capital of the world, supplanting London at the end of World War I.
http://www.personalfinancialtimes.com/articles/stock-trading/important-events-of-the-stock-market-timeline
Saturday, 23 January 2010
The Typical Shareholder of US stockmarket (historical data)
Since the 1950s, there has been a gradual increase in the number of people buying shares. This is a positive trend, because the more shoreholders there are, the more the wealth gets spread around.
Twenty years after the Great Depression, the vast majority of Americans were afraid of stocks and kept their money in the bank, where they thought it was safe. You've heard the expression, "I'd rather be safe than sorry"?
1962
17 million Americans owned stocks. 10% of US population.
The more stock prices rose, the more people jumped on the bandwagon.
1970
By 1970, there were 30 million shareholders in America, 15% of the population.
The eager buyers had pushed prices to dangerously high levels.
Most stocks were fatally overpriced.
Market corrected.
So many brutal sellers during the brutal stock-market correction of the early 1970s.
5 million former shareholders, 3% of the US population exited the market en masse.
1975
It took 5 years for enough people to come back to stocks so that once again, the US had 30 million shareholders.
mid 1980s
47 million shareholders in US
1 out of 5 Americans owned stocks
33% of these invested through mutual funds.
Market value of all stocks on NYSE > $1 trillion
1990
51.4 million shareholders
A larger number of people invested through mutual funds.
The average investor was no longer interested in picking his or her own stocks.
The job was turned over to the professional fund managers at the nearly 4000 funds in existence at the time.
3.7 million shareholders or 7% of total, under the age of 21.
1995
Market value of all the stocks of NYSE > $5 trillion mark (In 1980, these same stocks were worth $1.2 trillion)
The money invested away in stocks had made the investors at least $4 trillion richer in a decade and a half.
That is letting your money do the work!
The typical shareholder in 1900
45 year old man
Annual income: $46,400
Owned: $13,500 worth of stocks
44 year old woman
Annual income: $39,000
Owned: $7,200 worth of stocks
Twenty years after the Great Depression, the vast majority of Americans were afraid of stocks and kept their money in the bank, where they thought it was safe. You've heard the expression, "I'd rather be safe than sorry"?
- In this case, the money was safe and the people were sorry, because they missed the fabulous bull market in stocks during the 1950s.
- There were only 6.5 million shareholders in 1952, only 4.2% of the population, and 80% of those shares were in the hands of 1.6% of the population.
- All the gains went to a small group of people who weren't afraid of stocks and understood the benefits far outweighed the risks.
1962
17 million Americans owned stocks. 10% of US population.
The more stock prices rose, the more people jumped on the bandwagon.
1970
By 1970, there were 30 million shareholders in America, 15% of the population.
The eager buyers had pushed prices to dangerously high levels.
Most stocks were fatally overpriced.
Market corrected.
So many brutal sellers during the brutal stock-market correction of the early 1970s.
5 million former shareholders, 3% of the US population exited the market en masse.
1975
It took 5 years for enough people to come back to stocks so that once again, the US had 30 million shareholders.
mid 1980s
47 million shareholders in US
1 out of 5 Americans owned stocks
33% of these invested through mutual funds.
Market value of all stocks on NYSE > $1 trillion
1990
51.4 million shareholders
A larger number of people invested through mutual funds.
The average investor was no longer interested in picking his or her own stocks.
The job was turned over to the professional fund managers at the nearly 4000 funds in existence at the time.
3.7 million shareholders or 7% of total, under the age of 21.
1995
Market value of all the stocks of NYSE > $5 trillion mark (In 1980, these same stocks were worth $1.2 trillion)
The money invested away in stocks had made the investors at least $4 trillion richer in a decade and a half.
That is letting your money do the work!
The typical shareholder in 1900
45 year old man
Annual income: $46,400
Owned: $13,500 worth of stocks
44 year old woman
Annual income: $39,000
Owned: $7,200 worth of stocks
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