Whats better, investing or trading on the stock market? Which has the greater probabilty of winning?
I am 18 years old and I want to choose out of the investing or trading of stocks to make money for future business founding capital.
I personally think that trading tends to be more like margin based investing such as CFDs or spread betting, in which I have tried both in practice accounts but lost most of the time, especially with spread betting. I do, however, believe in the idea of value investing of stocks by directly purchasing stocks that are undervalued or stocks with high growth potential, (not penny shares!), What would you recommend is best in your opinion out of trading stocks or directly investing into stocks for high growth? What would you do? Please answer for best, best answer. Thanks.
Trading options, CFDS, futures, spread betting or any margin trading for that matter is risky. Additionally CFDs and options are leveraged products which means that you only need to deposit a small amount of the position outlay – this can potentially multiply profits but also losses. Trying to play with a small amount and using gearing at its maximum level is like playing russian roulette. Having said that with prudent trading it is very well possible to make a good income from stock market trading (I’m successful myself). If you’re just starting out it would be best to first buy shares using a traditional broker and as you mentioned you would do well to steer clear of penny shares.
Your best bet at 18 is probably to get a good education which will provide you with a solid foundation to build on in future…
need help with these questions! I was sick when we went over them I just want to make sure they’re right!?
I just was unsure about these questions! Please help! * is what I put! THANKS!!! 
)
1. A closed economy is one which ______.
A) only trades with its neighbors
B) trades goods but not services or assets with other countries
C) does not trade goods, services, or assets with other countries
*D) has a centrally planned economy
2. The Human Development Index is
A) a perfect measure of a countries standard of living
B) the only way to measure living standards between different countries
*C) an incomplete measure of a countries standard of living
D) used by the U.N. to compare nations by measures other than real GDP per capita
3. Discouraged workers are those individuals ________.
*A) who are getting paid too little
B) who do not like their jobs
C) who are working part time but are looking for a full-time job
D) who have given up looking for a job
4. The major difference between the consumer price index and the producer price index is that _______.
A) the PPI is based on retail prices and the CPI is based on wholesale prices
B) the PPI measures the cost of living of self-employed workers and the CPI measures the cost of living of salaried workers
C) the PPI generally registers a higher rate of inflation than the CPI
*D) the PPI is based on the cost of a basket typically purchased by producers, while the CPI is based on the cost of a basket typically purchased by consumers
5. According to Thomas Malthus’s work, which of the following is true concerning his pessimistic predictions of future productivity?
A) As population grew so would output per worker
B) The amount of capital per worker would fall
*C) Technology could be counted on to increase output per worker
D) The amount of land per worker would eventually decline
6. Sources of funds for investment spending are _______.
A) savings by households, government, and foreigners
*B) taxes and transfer payments
C) always equal to U.S. spending on imports
D) directed to their most productive uses by the U.S. government
7. Governments can engage in saving when _________.
A) taxes are less than expenditures
*B) taxes are greater than expenditures
C) the government borrows to finance its expenditures
D) the president insists that Congress balance the budget
8. Capital inflows represent _____.
*A) the net inflow of funds into a country
B) the net outflow of funds from a country
C) the amount that domestic savings exceeds foreign savings
D) the excess of domestic physical capital exported minus the amount of physical capital imported
9. The price determined in the market for loanable funds is _____.
A) the margin call
B) the profit rate
C) the transaction fee
*D) the interest rate
10. A financial asset is ______.
A) a tangible asset like a car
B) a claim that entitles the owner to future income from the seller
C) the value of accumulated savings
*D) all the above
1.)D
2) idk
3.) D
4)
5.)i cant remember from macro but i think b or d
6)a
7)B
8.)A
9.)D
10)D
What exactly is the scam behind global warming?
Denying global warming allows corporations to maintain fat profit margins by avoiding environmental standards and allows speculators to make a fortune by trading in oil futures. It also allows Joe Sixpack to keep driving his Hummer and stuff his face with cheeseburgers.
How exactly would environmentalists profit from their "scam"?
The scam.. or how conservatives see it is why would god let the earth get too hot?
Isn’t arbitrage slightly underrated by EMH?
OK, personally I think there is some truth in EMH and that you can’t predict the big financial markets. But, arbitrage seems a little bit underrated by EMH. I am not sure if Prof. Fama has stated this in his original thesis back in the 70s, but you will find many "official studies" online(and in your university) that in the EMH world arbitrage doesn’t exist or when it occurs – it lasts for just a few seconds. OK….but just a "minor detail" that we have something called "high frequency trading" – Yes, you are right – "a few seconds are NOT problem for a high frequency computer". Actually, below I give you a few examples(without formulas and sophisticated code – just easy to understand arguments), as to why APT, MPT, EMH and all these abbreviations fail when it comes to arbitrage:
1. Arbitrage exists for just 2-3 seconds?:
See above ^…high frequency trading. Also, see this very interesting study from Oxford which not only disproves EMH but even its "refined version" – the Adaptive Market Hypothesis: AMH (too many abbrevations already…funny). So:
http://www.nuffield.ox.ac.uk/users/murphya/Arbitrage%20Opportunities%20in%20Nasdaq%20Stocks.pdf
2. You cannot profit from a carry trade, due to large market risk?
Fail. You can very easily: a) Go long on XAU/USD or vice versa, short it. b) Hedge the market risk with a comex gold futures gold contract. c) Receive the tom rollover on the XAU/USD.
At the end – you end up with no market risk and 3%(or more) leveraged inter market rate. How much is that since both your futures and xauusd forex are margined? You are right: over 50% interest yearly without any market and default risk, the % obviously depends on your broker and how much your forex position is leveraged. The comex gold is an exchange defined initial/maintenance variance margin.
You can make a similar trade with cfd/stocks.
3. Options/betting markets are very efficient:
Fail. With some persistence you can easily find a broker with call/put option sell premium higher than other broker with option buy premium lower, on OTC option markets. You are obviously hedged when buying at the lower price and receiving higher premium at the other broker. Problem here is that there is market risk – but only "virtually", since you cannot lose even if one of the positions is closed. Of course you can do the same in betting markets when the odds summed on -1th power are below 1.
There some other examples.
Point is that when you read about arbitrage you read only about "buy microsoft stock in london and sell it in new york when prices differ" – which is complete ballooney. Not only this type of "Arbitrage" doesn’t happen – but it’s practically nearly impossible to make money from this even when it happens. The other type that you will read about online is the "triangular arbitrage" with 3 currencies – which occurs once in a millenium.
The first examples however are much more practical, if not shocking since some of them exist for quite some time and not even 2-3 seconds. Which means that most "arbitrageurs" are actually stupid not to exploit them, despite being a public knowledge.
I thought to go on details with formulas, links, references, computer code, etc. in this topic…but I am lazy and busy now .
Thanks!
https://riselux.com
I like your question. I trade in the financial markets and it would appear under the strong version of the EMH arbitrage isn’t possible. However, I don’t believe economists look to EMH as a perfect model but merely an approximation. Much like the rational expectations hypothesis only partially explains the slope of the yield curve; one needs to factor in risk premium to derive the complete explanation. Similarly EMH partially explains the price action we observe in markets. Arbitrage assists in the efficiency of markets by facilitating the flow of capital into its most resourceful uses.
Inexpensive FUTURES contracts for beginning traders?
Arent there commodities that are LESS expensive to trade ? Say-corn, milk and sugar? That do not require as much up front margin as the higher priced commodities? I have experience trading stock options but Wall Street has lost its allure. ONLY EXPERIENCED TRADERS REPLY. OTHERS REPORTED FOR ABUSE
If you asked this question 2 years ago, I would have answered, yes – corn would be a great place to start trading commodity options. Currently I would say no. Commodities are all the rage these days; Corn trading at 5.00, wheat and soybeans at 12.00. All these high prices in commodities have increased their volatility and widened the bid ask spread out to far.
The options are still traded the old fashion way and getting a good fill is extremely hard. Not like equity market options.
Hopefully, in a few years these markets will go electronic and then trading options in commodities might be a better venture.
Check out my website: www.pitsavvy.com. I teach my students effective option strategies that are mainly used in equity and index markets for the reasons listed above. Maybe a couple of new strategies will bring new life into your equity trading.
Future contracts and markets?
Which of the following is a correct statement about future contracts and markets?
A.) Trading on futures contracts are similar to forward contracts. There is no need for margin requirements.
B.) Whenever I sell or buy a futures contract in the futures market, I will always be hedging.
C.) Imperfect convergence can be detected at any time during the term of the futures contract.
D.) Basis risk is a residual risk that arises because the movement in an asset’s spot price is not perfectly correlated with the movement in the price of the asset delivered under a futures contract.
E.) The basis risk can only be positive and will fluctuate with an (essentially) unpredictable pattern.
B
In the latter part of 1929, what did stock market investors do when they sensed danger in the market?
1.In the latter part of 1929, what did stock market investors do when they sensed danger in the market?
A.Bought more stock to help stabilize the market
B.Convinced their clients to purchase more stock
C.Began to sell off their holdings
D.Decided to do nothing and watch the market for a few more days
2.One of the factors in the crash of the stock market was the number of people who bought stocks using what method?
A.Based on past performance of the company to predict the future outcomes
B.Buying stocks using their entire personal savings accounts
C.Word of mouth from other investors
D.Buying stocks on margin with borrowed money
3.How did the Federal Reserve Board’s decision to keep interest rates low help fuel the Depression?
A.Because of low interest rates, the government had to raise personal income tax.
B.It allowed individuals and businesses access to money to invest that they could not pay back after the stock market crash.
C.The banks were not making enough profit on the low interest rates so the banks stopped loaning money to businesses.
D.People lost faith in the government’s ability to control banking and refused to buy American-made products.
4.How did low interest rates from the Federal Reserve Board affect U.S. businesses?
A.U.S. businesses borrowed money to produce more products than there was a demand for, resulting in unsold goods and layoffs.
B.Private entrepreneurs were able to start businesses and flooded the market with cheap goods.
C.It had no effect on business in general, which stagnated the economy.
D.Business executives pocketed the excess funds instead of paying back business loans to the
banks.
5.All of the following were long-range causes of the Depression except:
A.Uneven distribution of wealth
B.Farms were not able to produce enough food for everyone
C.Low interest rates by the Federal Reserve Board
D.Overproduction of goods by U.S. businesses
6.Why did the stock market’s crash weaken the banks?
A.The banks depended on stocks for their operating funds.
B.Investors no longer had money to deposit in banks.
C.The banks had invested their deposits in the stock market.
D.Investors could no longer afford to take out loans from the banks.
7.What do most economists agree was a key cause of the Depression?
A.Over consumption
B.Over production
C.Inflation
D.Deflation
8.How did the Hawley-Smoot Tariff affect the economy at the outset of the Depression?
A.It slowed down the Depression because the government loaned the tariff money to the banks at a lower interest rate to stabilize the banks against the stock market decline.
B.The act convinced Europe to reduce their tariffs to help stimulate overseas trade with U.S. companies.
C.It had no effect because the tariff was immediately rejected by President Hoover.
D.It raised tariffs on imports to stimulate the U.S. economy; the tariff backfired when foreign countries raised tariffs on U.S. products.
9.What was President Hoover opposed to that caused him to be slow to respond to the economic crisis?
A.Deficit spending
B.The government investing in stocks
C.Spending money on all public work projects
D.Giving money to private charities
10.How did Americans escape their worries caused by the Depression?
A.They formed social groups to help cope with their depression.
B.They went to the movies and listened to radio shows.
C.They formed cooperatives to share what food they had with others.
D.The held peace marches to voice their concerns about the economy.
11.In response to industrial leaders closing factories and slashing wages, President Hoover proposed what program in hopes of reducing unemployment?
A.The Public Works project
B.The Right to Work Act
C.The One Job per Person policy
D.The U.S. Relief Act
12.All of the following were cultural reactions to the Depression except:
A.Movies grew in popularity as an escape from America’s worries.
B.Literature flourished because writers focused on real life struggles.
C.Artists and photographers gained interest because they paid tribute to the suffering.
D.Restaurants flourished because Americans struggled to grow food on their farms.
13.In response to Hoover’s inability to help with the Depression, the American Communist Party got Americans involved in what activities?
A.A national recall petition to remove President Hoover from office
B.A plan to overthrow the current government
C.Rallies and hunger marches
D.Raising money to bring communists to the U.S. from Europe
14.How did the lack of farm support by President Hoover’s administration affect American farmers?
A.Farmers refused to sell beef and sent herds of cattle to Washington D.C. to protest the economy.
B.Many farmers became angry with the government and protested by destroying crops and dairy products.
C.Farmers protested outside of banks attempting to drive away bank bus
Sure I’m bored I’ll take a stab at your homework for you, I warn you I’m not completely up on my Great Depression details, but I’ll give it a try
1. C
2. D.
3. B.
4. A.
5. Either A or B not sure
6. C.
7. A.
8. D.
9. A.
10. B or C not sure
11. A.
12. D.
13. C.
14. B.
How the options in indian market works. Please explain?
Let us asume that i am buying a call option of ICICI bank @420 -27th Oct-2008 with a premium amoun of Rs20/-. Now the limit of maximum loss i have to bear is 20×175 (lot) =3500/- if the price of the ICICI bank does not go beyond 440/-. If the price of the ICICI bank goes beyond 440/- , then i will get the profit. My question is how my option will be excercised. Whether there will be any margin money i have to pay to my brokor for bying / selling the options. In my above example if the price of ICICI bank will be 480/- on 23th Oct,2008 , what i have to do to get my profit & what will be the amount of my profit. Further can i sell my above Call option if the premium is more than Rs20/ . Also please explain the pro & cons of the option.Is it wise to trade in the options in the current market status & will it be much benfited than cash & future market. I will request all the think tankers to help us , the novice in the market. Thank u.
You seem to be a beginner; therefore we would strongly recommend that you restrict your investment to the cash-and-carry segment of the stock market through purchase of stocks.
You would appreciate that options may be applied at best as an insurance instrument to protect your portfolio of stock positions from the present on going price erosion of stocks across the board in the stock market. Further, to try and apply options contracts as investments would be increasing your risk many fold; as if the market were to continue moving against your position beyond your contract expiry date you would loose the full amount of the options premium you would have paid up front.
If you still want to go ahead with this misadventure, we would strongly recommend that you read the book "Options, Futures & Other Derivatives" by John C. Hull. Further, after fully understanding the nuances of options and futures, you would be well advised to meet a qualified investment advisor to understand fully how the profit would be made from this speculative action on your part.
Sincerely,
Akash
http://www.narachinvestment.com
http://narachinvestment.blogspot.com
http://feedproxy.google.com/narachinvestment/uaXA
http://www.narachphilosophy.com
http://narachphilosophy.blogspot.com
http://www.narach.com
http://finance.narach.com
Has Taiwanese society gone completely insane?
3 dark stories from an average private school in Taichung.
– A grade 1 parent abandons her 7 year old child overnight at the expensive private school. Because ‘he didn’t do his homework.’ The mom refuses to pick the son up, the security guard ends up buying supper for the kid and breakfast for the kid. The next day, it takes repeated phone calls to finally get the mother to come and pick up the kid. (The school authorities never bothered to call the child protection services… to protect the ‘reputation’ of the school.) Epic fail in my opinion. No bad press for them… but doesnt this just mean worse press later when it comes out that the admin didnt do their JOB- to protect the child???
Story 2
Grade 8 female is jealous of a grade 9 girl… for irrational reasons. She has a common contact who invites the g9 girl to go watch a movie. They bring 4 other females (who all go to the same school) into a public restroom and proceed to beat down the girl for having the same shoes and cell phone dangly as the g8 girl. The common ‘contact’ who helped set this situation up is told to hit the girl or else the other 4 will hit her harder.
After surviving the attack, the victimized girl goes to complain to her parents. The school brings the involved parties in to the office. Red Envelopes are given to the victim along with kowtowing apologies.
The victim leaves the school. (who can blame her.- basically there was nothing done.)
-3rd story- the only one that I was personally involved with. A g5 male tells me that his parents locked him outdoors of his house overnight (possibly this is exaggerated.) for performing poorly on a test. What kind of lunatic does this to their own child?? I can understand wanting to put some pressure on… but this is just wrong. Over the top. And it isn’t unique. Its seen as common.
It makes me sick. Is there nothing that can be done? Is there a child protection service to file a report so at LEAST these parents can be put on a watchlist??? Or some kind of code that requires all schools INCLUDING public schools to report this or risk being shut down??? This should not be allowed to happen… but it all gets swept under the rug for ‘efficiency’. I firmly believe that this kind of crap if you tolerate it and permit an instigator to remain unpunished but for a weak apology and some parentally funded red envelopes… this is NOT a message to send to the future members of Taiwanese society.
You dont trade off a kids mind, you dont throw away justice to keep your profit margins. Somewhere, somehow what happened to break these s***ts who dare call themselves the leaders of society???
I need to say something.
This is pure rant. If you feel you have anything to contribute please do so.
Hello Matt,
In Taiwan domestic violence and child abuse is accepted. This is very sad. I came to Taiwan in 1999. I opened up an earthquake repair company in Nantou. After a good year and a half the money slowed down. So I started teaching in Nantou. The amount of students and moms that would come in with bruises was a lot.
I’m an American if a student comes to school with strange bruises the police will be called. I moved to Hsinchu and work at two different schools. One school is close to the science park most of those students are from two parent one child families. Those students are spoiled with no discipline. The other school is close by in Chubei most of these students parents work blue collar jobs. It’s a huge diference. The second school on parents day I have had a lot of parents tell me and my TA it’s ok to beat there kids if they aren’t paying attention? Taiwan used to be a very poor country. The parents that grew up poor are the ones that abuse their children the most. Taiwan is to blame for this with the stupid tests the kids have to take to enter public highschool. Hello Public High School. I think every tax payer here pays for that so why have the stupid tests? My wife was the first born since she was a girl she got stuck with a name that could be a boys or girls name? She didn’t live with her mom and dad for the first seven years of her life? She was like given to her grandmother? All the while her little brother and sister that was younger than the brother grew up with their mom and dad. When she was forced to move home she became the cleaning girl. In other countries in school they have sex education and some parenting classes in High school which everyone is forced to go. The girls that beat the younger one up. This is something they learned from U Tube or MTV? My apartment building has a covered bus stop across from it. Every Friday and Saturday there is a group of kids that spend the night in the bus stop. The youngest I have seen might of been a 12 or 13 year old girl. I have seen the police stop at about 3:30 am and ask the kids what they were doing. I can understand some Chinese. The kids said their parents locked them out to the police. The police drove off after telling the kids to listen to their mom and dad. I couldn’t understand that?
Matt how many times have you seen kids sent to school when they are throwing up or have red eye? How many countries do you know of that have a name for little wife? Shaow Bay That’s not spelled right. But that is how it sounds. I feel for the students they wake up at five am and sometimes go home at eight and nine pm. Not a happy life to live.
Regards,
Should I jump ship or keep trying to stay above water?
Since May 2007 up until tomorrow morning I have invested $77K (in four accounts; two with margin loans within them and two smaller ones without) and have current margin loans in those accounts totalling $37K. That’s $114 worth invested in stocks, with current market value of stocks being $61K. I did well until June of this year, was $12K up at that point but rapidly lost value and now am $50K down as you can see. The loss was due to investment in oil, coal, natural gas, and steel; mostly good companies, horrible losses. As for realized gains/losses, I am actually "green" (more gains than losses – I try not to trade a lot but prefer holding) and these figures represent a lot of unrealized losses or – not sure if I am using the right terminology – loss of stock values by percent right now; my portfolio looks like a lot of "-24%, -30%, -42%" etc. to run down the list but I have not sold; they are just sitting there going up and down but obviously mostly down lately.
Recently and most notably in the last few weeks, I can barely maintain the minimum margin requirement (30%) day by day, having reached that $77K figure by adding $19K in the last two months from what was previously just $58K invested.
My "account value," meaning what would be left it I sold it all right now and settled up the margin loan, is only $24K. What’s worse, the money I have gathered up in the last few months to augment my accounts in order to keep ahead of this margin loan, is largely borrowed (so I’ll be paying on it for some time to come, either way.) I don’t mind paying on loans and I don’t mind waiting for years, if that’s what it takes, for my account values to rise substantially, but I don’t want to lose it to margin call. I can keep gathering bits of $500 and $1000 here and there but not much longer and not more than a few thousand more dollars. The two accounts not threatened by margin loan are valued at only about $8K right now (they are Roths.) I could back the money out of them and use the proceeds to pay down margin loan. Or I could leave them alone as the only accounts not subject to liquidation via margin call.
My instinct is not to sell during a terrible downturn; others say it will get worse, so take the little bit of money left, call it a bust, and run. Should I sell or hold on? I can still eat, pay rent, put a roof over my head – this money is not needed at present, but this represents all the assets I have and invested it for my future and that of my children.
If you don’t need the money and can afford the borrowings then the risk though still a gamble may be worth taking – as you are down so much now. Should have jumped shipped weeks ago. Personally I would get out with what you can and invest in property which should be at bargain rates now.