General

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 [...]

Using the Price-Earnings Ratio to
Assess Stock Value

The Price-Earnings Ratio is a valuation ratio to measure a company’s current share price against its
earnings per-share. Often referred to as the “multiple”, the measure indicates how much investors are paying
for each dollar of the company’s earnings. Generally speaking, a high P/E indicates that investors expect the company
to achieve higher earnings growth in the [...]

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 [...]

Institutional Investing and the Stock Market

Institutional investing refers to a non-bank person or organization (mutual funds, pension plans, insurance companies, etc.) that trades securities in large share quantities. When these organizations purchase a particular stock, the market will often have favorable expectations for that stock.

Following what these big players are investing in is believed by many to be a [...]

The Benefits of High Dividend Stocks

High dividend stocks can be wise a investment choice, as you may enjoy price appreciation along with the income offered by the dividend or you can simply re-invest the dividend. In fact, from 1935 to 2007, over 40% of the total return from the S&P 500 came from reinvested dividends.

Who Should Consider High Dividend [...]

The Random Walk Theory, Explained

The random walk theory is a financial hypothesis that says that stock market prices evolve and change by a “random walk”, making stock prices unpredictable. According to the theory, because stock prices are on this unpredictable path, any given stock’s price is as likely to go up in the future as it is to [...]