How do you describe the relationship between the risk and return of an investment?
Answers: Usually the higher the risk of an investment the greater return or loss on investment.
The risk is what you could lose if the investment goes wrong.
This can be minimized with a stop-loss order or by carefully watching and getting out before the loss becomes too great.
The reward is what you could gain if the investment goes right.
This can be maximized by careful watching and selling as it begins to come down from the top.
If the risk is $2 down and the reward is $5 up, the relationship between risk and reward is in your favor because you "will" make $5 per share if you are right and lose $2 per share if you are wrong.
Risk / reward is Always approximate. Don't give up a $4.90 gain because you are waiting for $5.00!!
AND... Don't forget the odds!
What are the chances that you will be rewarded? What are the chances tat you will lose. You really need to keep up on the catalyst that should cause the move you are expecting AND keep up on what may cause a move down. Always know the good and the bad sides of your trades. Not knowing what can hurt you... can hurt you.
Will we see NYSE frenzy selling tomorrow.?
u.k. losses 77 billion pounds on days trading.Answers: I have to agree next to Randy c & hey teach on this one. There is definetely a recession coming. We can simply hope the government doesn't deceide to stick their muzzle in things again. It's pretty unpromising now & I deliberate it will get worse. So frequent homes are being lost surrounded by my area & I live within a small town.
The dollar looses it's value but everything else go up. It's getting harder to make ends come together.
Probably - they are lemmings or is it sheep?
Anyhow this all started over the greed of those trying to get money out of a basic stipulation - housing so the whole piece disgusts me.
Absolutely and it's not just the UK. People are freaking out for a mixture of reasons.
Personally, what I am doing and advise my brother and father to do, is hold tight. For my brother, who has some money he CAN invest, hold a weather eye out for good bargain, but plan for the majority of this year to be a rollercoaster ride that few have ever lived through.
You're going to see innovative fluctuations all over as some folks "snap up bargains" and others kick on what they mistake as an upward trend, then when in attendance is a plunge down, they'll sell within a panic.
What abundantly of folks don't realize is a LOT of trading is being triggered by computer models--they're set to do sell and buys when certain things appear, NO MATTER WHY.
There is also a LOT of market manipulation right very soon. China, in unusual, is being amazingly coy with us. Most of this is smoke and mirrors contained by my opinion and QUALITY stocks will dip, but will survive; deeply of the sheer crap, overpriced too, will fold, which is a good article (I don't own crap stocks so it's a good item in my viewpoint all right).
With the boomers retiring and empire watching what "experts" put in mutual funds, nearby will be a LOT of negative fallout as "nest eggs" are fried.
This is not the "Great Depression, Part II" however unless the freaking government pull another "let's store the markets" act and CAUSE one. Business is cyclical. Markets respond to a LOT of factor.
The people who didn't do their homework are going to grasp it in the shorts and I get the impression sorry for them. I've got dips within my portfolio too--but I know the intrinsic value is more than at hand. This is when folks like Buffett would buy what I buy because it's "on public sale."
could do, we will have to lurk and see.
Will we walk into another depression if the stocks preserve droping??
everyone knows the stocks are droping and thats what cause the first great depression and it kinda looks like its scheduled agian but all over the world presently.Answers: Put simply for you: No. the U.S. is depression proof by economic vocabulary. We are looking at a lengthy recession and the stock open market will continue to drop and/or unsteady for the subsequent couple of years
Wrong. The dropping stock market is a symptom of financial woes that may lead to depression but it is not the mete out, nor was it the wreak of the great depression.
Now, if we go into depression will stocks preserve dropping? Yes, probably until prices become more in smudge with the convenience of the companies they represent.
Stock prices did NOT cause the Depression.
As an economist who in reality knows his stuff, Thomas Sowell, noted:
"In "FDR's Folly," author Jim Powell spells out basically what the Roosevelt administration did and what consequences followed. It tried to put on a pedestal farm prices by destroying enormous amounts of produce — at a time when hunger was a serious problem within the United States. It imposed minimum wage rates that priced unskilled labor out of jobs, at a time of massive severance.
Behind both policies was the belief that what be needed was more purchasing power and that this could be achieve by government policies to lift the prices received by farmers and workers. But prices do not automatically translate into greater purchasing power, unless people buy as much at greater prices as they would at lower prices — which they seldom do.
Then there be the monetary authorities contracting the money supply in the midst of the biggest depression within history — when the economy be showing some signs of revival, until their monetary contraction touched off another big downturn.
With policy after policy and program after program, "FDR's Folly" traces the elevated hopes and disastrous consequences. It would be funny, like the Keystone cops running into one another and falling down, except that millions of those were surrounded by economic desperation while this farce be being played out contained by Washington.
Perhaps worse than any specific policy under FDR be the atmosphere of uncertainty generate by incessant new experiments. Billions of dollars of investment be needed to create millions of jobs for the redundant. But investors were reluctant to risk their money while the rules of the spectator sport were constantly person changed in Washington, amid strident anti-business rhetoric.
Some of the associates who most admired and almost worshipped FDR — poor people and blacks, for example — be hurt the most by amateurish tinkering with the discount by Roosevelt's New Deal administration. This book is an instruction in itself, both within history and in economics. It is also a preventive of what can happen when leaders are chosen for their charm, charisma and rhetoric. "
http://www.jewishworldreview.com/cols/so...
And another Sowell excerpt, different article:
"Back during the Great Depression of the 1930s, when job loss in the United States hit a soaring of 25 percent, one of the many foolish things the governing body did was create international trade restrictions designed to "save" American job. Other countries around the world created similar restrictions to "save" their own workers' jobs.
Net result: world trade within 1933 was one-third of what it have been within 1929, making everybody poorer and therefore smaller quantity able to create job. Many economists have blamed these restrictions for making the depression worse and longer continuing.
Whether with international trade or anything else, the political incentive is always to do something that looks well brought-up right now, near no thought of its repercussions -- especially if those repercussions will not be noticeable back the next see.
The government can other save 10,000 job -- at a cost of 50,000 other jobs. If the job that are saved are within one industry, represented by vocal spokesmen, and the 50,000 lost job are spread thinly across the country within two's and three's here and there, after this is a good deal for the politician who become a hero to those 10,000 voters whose jobs he save.
This is obviously not other for those who lose their jobs but they may not even know why. Moreover, when they are not concentrated surrounded by one place or in one industry, they are unlikely to come to the attention of the medium. So they don't count politically.
We needn't go adjectives the way support to the Great Depression for examples. The Bush administration's restrictions on steel imports enjoy been credited beside saving several jobs within the steel industry -- and costing a larger number of jobs surrounded by industries making steel products with more costly steel than their foreign competitors use.
Anything that increases monetary efficiency -- whether by outsourcing or a hundred other things -- is promising to cost somebody's job. The automobile cost the job of people who took watchfulness of horses or made saddles, carriage, and horseshoes.
Computers sent typewriter manufacturers into collapse.
Whole political movements are based on a refusal to adopt that benefits have costs. Protectionism is purely one of these movements. Environmental extremists often prohibit to accept even the smallest costs for such benefits as the building of much-needed housing or the dredging of rivers and streams to prevent flooding and reclaim human lives.
Ironically, those politicians who complain most loudly about the outsourcing of job often counsel the outsourcing of the job of making foreign policy and safeguarding American national financial guarantee to the United Nations or to our allies in Europe."
http://www.capmag.com/article.asp?ID=356...
Peoples' legitimate concern should be that government's will "do" something. I hope not or we're screwed.
Oh and a depression requires 10% or more loss of the GNP.
The decline in stocks are a symptom of the property bust, newly as 1929 was a symptom of the 1925/1926 property bust. The government's charge cuts and the Fed's interest rate cuts will stall the depression for a year or two.