Profit Through Investing on Stock Dissertation

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[. . .] Author discusses various matters in this research and covers the topic of risk, diversification and income investing. Here the main focus is on the financial strategies that can pay off big and highlights the financial structure (Greenblatt, 2006).

Analogous to the spectrum of economics, a lucid person is considered as the instigation of the comprehending phase which endeavors to explicate the functionalities of a marketplace in the behavioral finances. A substitutive methodology has been projected by sociological studies which comprises of the comprehension of a wider communal, organizational, and philosophical persuasive elements at the marketplace. To the preceding sociologists like Weber (2000a; 2000b), the procedures prevalent in the marketplace were of immense significance to them, and this significance can also be tracked effortlessly in the studies of the twentieth century (like, Schumpeter (1950), Polanyi (1957)). Nevertheless, the studies augmented with a surging pace in the decade of 1980s regarding the outcomes by the execution of networks in the marketplaces (Granovetter's (1985) study was meticulously significant), and the communal deeds and feedbacks which coalesce in the marketplace.

The occurrence of the financial commotion has been the prime element in a majority of the sociological studies through pervasive inspection and scrutiny. It materializes in these studies as an underlying element with the imminent likelihood of invalidating the conventional economic principles pertaining to the marketplace and supplants them to materialize as a concrete chronological unit. Analyzers like Knorr Cetina and Bruegger (2002a; 2002b), Beunza and Stark (2004, 2005), Abola -- a (1996a; 1996b), and Preda (2002a; 2002b) have stated the diverse rigid, spatial, ethnic, and technological persuasion which explicate the technicalities with which the dealers and experts conduct their commotions within a marketplace. This accentuates the propensity of communal and civilization persuasion on the constituents which propels a long-term conversion of the marketplace commotions and procedural enhancements. As Abolafia states, the outcomes of both the prescribed and unceremonious parameter in the commotions and assessment of the dealers focus on a few elements that are favored and others that are apprehended by the occurrence of visibly obtainable parameters (Abola -- a 1996a: 232). Whilst it is advocated by Preda (2002b) that the inception of contemporary technological means in the marketplace can convert the prevalent parameters of commotion and dealing within their premises (Preda, 2002b).

The study based on Callon's (1998) schemes of association of the performance of a marketplace was conducted by MacKenzie and Millo (2003) and MacKenzie (2003a; 2004). They comprised their assessment of the economic postulations and performance and concluded that these schemes have elongated the sociological prominence to the previously unknown realms. They associate the prevalent economic presumptions, not in the comprehension of the pervasive concepts, but, to supplant the assessment phase and actually contribute in the formulation of these concepts which is an archaic, political, and significant procedure. Hence, if the prime motive is to maximize the profits, then it is advisable on the basis of sociological studies that the share prices should depict a relative and chronological sequence which should be aligned to the functionality of the marketplace (Millo, 2003).

Connections between the market notions and the patterns of share trading

The stock market is faced with various false impressions and one of them is its abnormality. It is assumed that the rise in stock market was certainly due to the overvaluation. The decrease which occurred in the early time of this year was to remove the surplus. However, this assumption about the stock market is certainly not correct. (Ehrmann, Fratzscher and Rigobon, 2005)

October 2002 came with an end of bear market. Major advancements have been in March 2003 after a collision. It is seen that after the 21 recoveries since 1900 there has been a rise in stock prices. The bull market sets a history by hitting the collapse due to the world wide economic recession. Not only this but the shareholders started losing interest and got drifted away with it The market smacked up by recession led to the decline in the overall stock market but if we assume the rise in stock prices this will certainly make a deep comparison with the bear market of 2000-02 which was a hit by recession (Hon, Strauss and Yong, 2007).

With the beginning of February to May a normal position of the stock market was observed. The corrections were made by the 16th month after the start of bull market. The correction period prolonged for four months and the drop in Dow was 16%. However, the recovery which occurred recently began at 17 months and carried on for four months. This recovery led to also 10% of drop down (Chan and Lakonishok, 2004).

The scheme of rise in stock price is also followed by another fact that is of the interests of the shareholders. It is assumed that the correction has occurred due to the attention given to the growing stocks and the credit is not given to the boost in stocks but to get benefits in the future as well. MONEY/ABCNews were hit in March 2003 and this is shown in Consumer Comfort Index. As soon as the earnest faced the recovery the prices came back to normal and it can be seen that before the beginning of correction the confidence was retrieved back till January 2004. However, there has been more than halfway drop down in index as it was dropped in 2003 (Balvers and Wu, 2006; Michael and Erica, 2004).

The emphasis which these communal disciplines display regarding the diverse scaffolds and explications is prevalently and pervasively accessible to comprehend the functionality of a marketplace. Furthermore, in these prevalent scaffolds every single one is overt and majority is contrary to one another. This advocates that a person willing to generate as well as maximize the profits, will opt for that dealing methodology which would be aligned to that person's comprehension of the functionalities of the marketplace. Yet, the implied presumption in this conception accentuates a cognitive recognition of a person's intuitive opinions regarding the temperament of the marketplace. Nevertheless, for amateurs or fresh entrants in the investment dealing, the preference for a share dealing methodology is chiefly based on the imitation of that dealer who holds the prerequisite of share dealing. Hence to vigorously engross himself in the marketplace mechanism, a fresh entrant should advisably attain the expertise of a proficient dealer (Abolafia, 1996b).

A financial marketplace can impose intricate, asymmetrical, and inscrutable circumstances for the experts as well due to their multifaceted attribute which oscillates incoherently. According to the Hull (2001: 22), dealing assessments has become more dubious due to the inception of the "informational upheaval." The superfluous and redundant assortment of commodities, services, recommendations, and statistics accessible are subsisting in the prevalent state of affairs in the marketplace. Hence, fresh entrants are recommended to comprehend that a dealer cannot have the overall understanding. Hence it is best for them to have go for an alcove and consolidate efforts in this regard or opt for profit maximization (Elder 2002: 67). This is altogether coherent with the specialized dealing conducts; as mentioned by Beunza and Stark (2004: 372), experts necessitate a consignment to an appraisal mechanism in order to instigate and preserve rationale-based endeavors.

In today's era the psychology of the investor is more important and he is keener and concern about the trends being followed these days. They focus on the economic trends and observe which are of beneficial to them and which can bring growth to the company (Fong and Yong, 2005).

Oil Prices

The fields of Middle East are getting dry and this has led to a high increase in the oil prices. The times when oil could be purchased at low prices is just gone now and now the price per barrel has now touched $42. This does not mean that the times are going to be real tough and as predicted by the analysts the prices of oil per barrel will be in between $30 to $35 in the next ten years (Qi and Wu, 2006).

Inflation has leaded the prices to go up higher than the average price in last 20 years. However, it is still less than the extremes in past few years. The price of oil in 1981 was $82 per barrel and the cost of a gallon of gasoline was $3. Now, demand has rise and this has caused the price to go up to $42 per barrel. Despite the rise in demand there have been fluctuations in the supply also. Eventually, efforts to improve the supply worked and it has come back to a sufficient position. There has been a 10% increase in the world oil reserves (Steve, 2006)

Inflation

There has been less than 3% increase in the prices over the past few years. But now the rise in prices is seen visibly due to major factor of oil prices. However, it is expected that… [END OF PREVIEW]

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