what is a good stock market index?
I would like to know what makes a good stock market index and the factors affecting the structure of the index?
Broad, accurate, and diversified scope for investing purposes. although the definition of "good" is subjective.
In the big picture (not for investing purposes) an index is suppose to accurately represent "something." If it does, then it is doing its job and is "good."
In the case of investing, you must first ask what is your purpose. If you are trying to represent the US stock market, for example, you want something that is accurate in a meaningful way. The S&P 500 accurately represents "the US stock market" in terms of dollar value. Unlike the DOW, it captures the lions share of the dollar value of the US market on any given day.
On the other hand, if you want to measure "all" or the US market (not just the biggest piece) you will need to use something like the Russell 3000 (98% of the investable market).
What were some popular stocks during the great depression?
I am doing a project and i need to know the name of 9 stocks that were popular during or just before the great depression.
Cotton.
Big Global Investors Seem to be a Bit More Confident
Amid gloom and then rebounding on financial markets, the worries about banks and the optimism about the new Obama Administration in the US, the first of this year’s surveys of big global investor sentiment by Merrill Lynch, has shown some relative optimism.
The December survey saw a hint of this change when it reported that investor sentiment had stepped back from the brink of despair, but more than a third of investors wanted to see greater fiscal stimulus, according to Merrill Lynch’s Survey of Fund Managers for December.
“While 88 percent of the panel believes that the world economy is in recession, December’s survey contains evidence that the rate of deterioration is slowing.
“The net balance of investors who expect the global economy to worsen in the coming year has fallen to 36 percent, down from 60 percent in October.
“More than a quarter of respondents believe the economy will strengthen in 2009. Cash levels average 5.5 percent, up from 5.1 percent in November, the highest level since 2001. Furthermore, a widespread perception exists that stocks are cheap, both in absolute terms and relative to bonds.”
They seem to have got their wishes with the German government upping its support for the faltering economy to some 50 billion euros, the US pushing its stimulus package to some $US825 billion and more rate cuts by central banks, especially the European Central Bank at the start of January and more to start this week in New Zealand.
But there have been more bank bailouts in the US, UK, Ireland, Denmark, France and Germany, while we in Australia are in the processing of filling a gap in funding caused by the flight of foreign banks, such as Bank of America, HBOS and Royal Bank of Scotland.
“Now for January ML reports that global investor gloom has started to lift, with hopes of improving growth and inflation rather than deflation.”
“There is a lot of hope in China’s bounce back as well.
“Broad economic sentiment has improved sharply from the lows of late 2008.
“The Merrill Lynch Fund Manager Composite Indicator for Growth Expectations has climbed to 30 this month from 25 in December and a low of 17 in October. The proportion of fund managers who predict lower inflation has fallen to a net 64 percent from a net 82 percent in December.
“Accordingly, there is a growing conviction that interest rates will rise, with 35 percent of respondents who forecast long term rates to increase in the next 12 months, up from 10 percent in December. At the same time the average cash balance remains high at 5.3 percent, only marginally lower than December’s level of 5.5 percent.
“Investors are talking a more positive story, especially with regards to the U.S., but the fear factor remains,” said Gary Baker, Banc of America Securities-Merrill Lynch head of EMEA equity strategy.
“They have firepower to act, but are unconvinced by the modest recent equity rally, suggesting it is a bear market rally in both sentiment and markets. Global sector allocations remain resolutely defensive.”
ML said that cash positions in Europe are at their highest level since 2001, reflecting the high level of caution within the region. A total of 42% of regional respondents are overweight cash compared with 29% in December.
“The numbers reflect how, while global economic sentiment is lightening, European expectations remain under a cloud with investors embedded in defensive positions.
“Every respondent to the regional survey expects a European recession, up from 91 percent in December. Investors are worried that corporate profits will continue to disappoint.
“This distrust means the percentage of investors who believe that European equities are cheap has almost halved, falling to 22 percent in January from 40 percent in December.
“European investors are still dancing the two-step and are reluctant to try out any more adventurous moves,” said Karen Olney, Banc of America Securities-Merrill Lynch lead European equity strategist.
“Investors continue to rotate between expensive defensive sectors and beaten, but not broken, industrial cyclicals that hope to piggyback on any indication of infrastructure-related spending by governments reigniting economies.”
ML said investors are flocking to Food & Beverage and Pharmaceuticals.
It said two survey records have been broken. Food & Beverage has hit its highest overweight in the history of the survey (net 11% of fund managers overweight).
The gulf in sentiment between Banks and Healthcare sectors is also at a record high. A net 57% of European investors are underweight Banks while a net 46% are overweight Healthcare. “Pharmaceuticals are largely immune to the credit crunch and economic slowdown that has hit banks,” said Olney.
Sterling is viewed as undervalued for the first time in seven years.
In October, a net 58% of respondents viewed sterling as overvalued but this month a net 7% believe it is undervalued. Increasing numbers view both the euro and the yen as overvalued.
US equities have become less in favour with global investors. The net percentage of asset allocators overweight the US equity market fell from 25% in December to 7% in January.
“There has been a notable dip in the U.S. equity market’s popularity and emerging market equities have been the new-year beneficiary of rotation away from the U.S.,” said Michael Hartnett, Bank of America Securities-Merrill Lynch chief emerging markets equity strategist.
The number of investors underweight in global emerging markets has fallen to 7% in January, from 17% in December.
In spite of flows into emerging markets, investors retain caution over China.
The percentage of regional investors who expect the Chinese economy to improve has risen from 6%, but is still low at 10%. The proportion of respondents who expect Chinese growth to slow in the next 12 months has fallen to 70% from 79% in December.
“China remains the big global growth wildcard in 2009. Despite the announcement of huge fiscal stimulus packages in recent months, investors remain very sceptical about Chinese and Asian growth,” said Hartnett.
“Indeed, Japanese investors notably reduced their expectations for Japan’s growth to close to a record low.”
A total of 205 fund managers, managing a total of U.S. $597 billion, participated in the global survey from January 9 to January 15. A total of 167 managers, managing $US359 billion, participated in the regional surveys.
The survey was conducted by Bank of America Securities-Merrill Lynch Research with the help of market research company Taylor Nelson Sofres (TNS).
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Australasian Investment Review
http://www.articlesbase.com/finance-articles/big-global-investors-seem-to-be-a-bit-more-confident-740969.html
Investing in the Stock Market- That Cheap Stock That Becomes Expensive
The meaning of cheap stock, that is, stocks that they are trading under 60 cents or below, are always enticing – because you put down a small amount of money for a potentially lucrative return. It also looks good because with your investment you are getting a lot more shares, or contracts for you amount invested.
However, for many investors, this scenario is just a pipe dream to buy that stock at 10 cents and see it go to $10. Does happen but not very often and it can be very costly. Sometimes they are cheap for a great reason, they are NO GOOD
So what are the downfalls to cheap stocks?
How can you identify if they are cheap These cheaper stocks can also be categorized by their market capitalisation (that is, the total number of shares multiplied by the price per share). Which is the total value of the company If a company’s market cap is less than $100 million, the company is considered a fairly small stock, or a “small cap stock”.
So is bigger better, or are small Fish sweeter, Will they grow? Historically, small cap stocks have outperformed large cap stocks in terms of returns. However this is not always the case and you have to remember the saying risk versus return. This isn’t because a lot of cheap, small companies are better investments than large companies, but because almost all big companies were small when they first sold stock. Everything normally starts out small. Microsoft started in a garage, and now they are one of the biggest company in the world. Most large companies are through growing or are just fighting for market share.
Money-hungry investors turn to small stocks to buy, because these stocks are cheap and it looks like the bigger companies have not much room to grow. Right? We all want to get rich from the stock market, otherwise we would not trade? True? Read the Fine Print- Be careful of ‘the cheap stock’
Traders and investors will often flock to internet chat rooms and talk up a cheap stock, saying they are going to find large amount resource, or they are doing a big deal with a big company. Why does this happen because people buy it and then want someone else to continue to buy it.
This is called “pumping and dumping” and it happens all the time. So make sure you are careful. As if this was true what is being said in the chat rooms, it would be inside trading. Illegal so make sure you do you own homework.
A stock that maybe trades only 5,000 shares a day is a good example of this type of scam and highly illegal. So do not fall into the trap. Otherwise you will lose your money. By pumping up the stock it creates the price to move higher for no good reason. This stock will soon be a DUD Trade. This Stock used to trade at $5 now its 50 cents. So that’s cheap? Wrong
Another thing to avoid is a stock that has dropped significantly in price. Just because a stock looks cheap doesn’t meant it’s going to return to glory and you’ll make yourself a big profit. The reason they fall is because something fundamental may have changed, they could have lost most of their revenue by losing a contract, or could be sued there are a host of reasons for this stock to fall.
You have to ask yourself why the stock fell in the first place? Those odds aren’t good that these stocks will rebound. The odds aren’t in your favour. Following the trend, remember trend is your friend.
BUT REMEMBER THEY CAN REBOUND..
Remember, however, that stocks that have crashed significantly usually continue in one direction: down. Look at the rest of the sector, see how they are performing. Something also to consider is make sure you do your research on finding a great broker, otherwise bad brokers can make you broker. They can be selling and promoting these stocks from time to time, why as they have clients that are losing money, which they want to help them make money. This can be the case when they have really big clients. We have researched these broker to find out who we believe is the best. To find out more find out from www.cfdfxreport.com or email support@cfdfxreport.com
singapore trader
http://www.articlesbase.com/investing-articles/investing-in-the-stock-market-that-cheap-stock-that-becomes-expensive-698578.html