General

Basic Concepts for a Beginning Stock Market Investor

Many beginning stock market investors see the excitement of the trading floor on the evening news and hear the stories of their friends, neighbors, and co-workers striking it big on some stock. The reality is that stock market investing involves a significant amount of risk. For a beginning investor, it is important to [...]

The Three Types of Wall Street Analysts

Wall Street analysts make their living by evaluating companies and industries for investment opportunities. Leveraging their expertise and interpretation of current market conditions and historical data, the analyst develops a recommended course of action for a specific security. The recommended course of action might be to buy or sell the security or track [...]

What is Behavioral Finance?

Behavioral finance is used to apply psychology-based theories to help explain the actions of investors and stock market fluctuations. The ideas regarding behavioral finance incorporate individual and social psychology with financial hypotheses to help explain the performance of the stock market. The underlying concept is that emotional reactions resulting from these psychological variables [...]

Reasons for a Stock Split and a Reverse Split

A stock split is an adjustment to the number of shares outstanding for a publically traded company. A company’s board of directors may choose to split a stock by issuing the number of shares outstanding. For example, in a 2 for 1 split, the company supplies 2 shares for every share outstanding. [...]

The Influence of Greed and Fear on the Stock Market

As the expression goes, there are two emotions that drive the behavior of stock market investors: fear and greed. Observers of the stock market will note that when prices plummet they do so sharply and quickly. This happens when stock market investors are driven by fear. The same can be said when [...]

Definition of a Secular Bear Market

A secular market trend is a long-term trend that usually lasts a decade or longer. Secular markets are seen not only in stocks, but also in currency, commodity and bond markets. Where a bull or bear market is driven by business cycles, a secular market is longer-term, and usually driven by strong, lingering [...]

The Super Bowl Indicator and Stock Market Performance

The Super Bowl Indicator is based on the theory that if a team from the AFC division (the old AFL) wins, the stock market is destined to decline in the coming year. A win from the NFC division (the old NFL) indicates that the market is bound for a rally in the year ahead. [...]

Historic S&P 500 Returns and
Stock Investment Expectations

Stocks are just one of many ways you could invest your hard-earned money. When you purchase a share of stock, you take a share of ownership in that company. The company is collectively owned by all the shareholders with each share representing a claim on the company’s assets and its earnings. Investors often choose [...]

Over-the-Counter (OTC) Stock Investing

An Over-the-Counter (OTC) stock is a security that is traded in an environment outside of the formal exchanges, such as the NYSE and the AMEX. Unlike the matchmaking service seen in these specialist exchanges, trading in the OTC market is made possible through a network of middlemen who carry securities in inventory facilitate the [...]

Managing Stock Market Risk

Stock market risk is subject to one of the guiding principles of finance: risk versus return. What it says is that a trade-off exists between expected investment return and investment risk: safer investments will typically offer lower returns, while higher returns require the investor to assume more uncertainty. The risk for the stock market [...]