The Fundamentals of the Stock Market
Oct 20, 2014 5:41:19 GMT
Authored by Ian Al on Oct 20, 2014 5:41:19 GMT
In the good old days, stock market traders borrowed dosh to invest in the US stock market, leading to the Great Depression. There followed a period of assessment of company fundamentals to guide investment. There followed a new phase of following fashionable 'sentiment' leading to the great tech boom and bust.
Since then, the investment in fashionable market segments has waned, although we still had investment in complex derivatives based on mortgages which lead to the bust of 2008.
During the ISIS activity, Syria, Egypt, Hong Kong, Libya, Ukraine, low growth in China, flat-lining of the Euro area growth, the decline in the Federal Reserve economy boosting measures, the drop in oil consumption and many other events, the world stock-market has continued to boom; until now when there has been a mini bust. It looks like there is a rebound in the Asian markets.
So, what's happening to the world stock market? Here's a recent news snippet:
Thursday the U.S. stock market watchdog the Securities and Exchange Commission stated that’s exactly what was happening, slamming Athena with a $1 million penalty, in what it said was its first high-frequency trading manipulation case.'
Wikipedia says:
'It is estimated that as of 2009, HFT accounted for 60-73% of all US equity trading volume, with that number falling to approximately 50% in 2012.'
With half the market doing short-term guesses based on government support of economies and growth and the other half being driven, by the millisecond, according to computer algorithms based on goodness knows what and the other half watching and wondering and guessing what the other half is going to do next, anything can happen. The only damping in this hopelessly unstable system is the long term investments in pension funds.
With half the world boosting economies by injecting cash and the other half cutting the income of their population to balance the books and the banks satisfying governments by increasing their capital reserves, there is very little money that has its true value backed by real world assets.Very rich people are only rich in numbers.
The fundamental of the world stock market is a belief that central banks will somehow stop the boat sinking allowing the market to make trillions.
Since then, the investment in fashionable market segments has waned, although we still had investment in complex derivatives based on mortgages which lead to the bust of 2008.
During the ISIS activity, Syria, Egypt, Hong Kong, Libya, Ukraine, low growth in China, flat-lining of the Euro area growth, the decline in the Federal Reserve economy boosting measures, the drop in oil consumption and many other events, the world stock-market has continued to boom; until now when there has been a mini bust. It looks like there is a rebound in the Asian markets.
So, what's happening to the world stock market? Here's a recent news snippet:
Thursday the U.S. stock market watchdog the Securities and Exchange Commission stated that’s exactly what was happening, slamming Athena with a $1 million penalty, in what it said was its first high-frequency trading manipulation case.'
Wikipedia says:
'It is estimated that as of 2009, HFT accounted for 60-73% of all US equity trading volume, with that number falling to approximately 50% in 2012.'
With half the market doing short-term guesses based on government support of economies and growth and the other half being driven, by the millisecond, according to computer algorithms based on goodness knows what and the other half watching and wondering and guessing what the other half is going to do next, anything can happen. The only damping in this hopelessly unstable system is the long term investments in pension funds.
With half the world boosting economies by injecting cash and the other half cutting the income of their population to balance the books and the banks satisfying governments by increasing their capital reserves, there is very little money that has its true value backed by real world assets.Very rich people are only rich in numbers.
The fundamental of the world stock market is a belief that central banks will somehow stop the boat sinking allowing the market to make trillions.