Questions tagged [markets]

to be used for any question related to financial markets including share/securities markets, money markets, foreign exchange markets, commodities markets, bond markets, etc.

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198
votes
13answers
52k views

Why would a company care about the price of its own shares in the stock market?

After a company has issues shares, why should it care if the value of the shares go up and down? Since the shares are now being traded among the public, if the value goes up or down, that is strictly ...
100
votes
5answers
12k views

What does it mean for the price of oil to be negative?

The New York Times website currently has this graph, showing that the price of "West Texas Intermediate, May contract" is $-13.10. Does it literally mean that someone's offering $13.10 to ...
57
votes
13answers
14k views

Why isn't the market dropping like a stone with all the bad news?

So I am reading and listening to the news, watching the numbers re Covid-19, listening to and reading apocalyptic accounts of the coming recession, hearing of record breaking unemployment reports and ...
41
votes
6answers
58k views

Maker taker fees - can somebody explain in plain english?

I'm interested in learning about how trading works, but this is all very new to me so bear with me. (I'm just poking around at this point, obviously nowhere near ready to actually be trading) Some ...
39
votes
8answers
32k views

Why do gas stations charge different amounts in the same local area?

I've noticed there can be a 5%-10% difference in the price of gas where I live. For example right now the cheapest premium price is $3.85 and the most expensive is $4.17. It's the same state and ...
24
votes
8answers
7k views
+150

How could an amateur investor make money off of a market crash?

Assume someone 'knows' that a market crash could occur within the next couple of months, and has no access to 'professional tools'. What methods could this person use to prepare for the crash in such ...
24
votes
3answers
13k views

What is the cause of sudden price spikes in the FOREX market?

I just started trading currencies on the FOREX market and notice that, sometimes out of the blue, there is a spike of massive PIPS in an instant. Who has the power to do that and why would anyone buy ...
22
votes
4answers
7k views

Did an additional $32 billion necessarily get invested into Amazon.com stock on October 26th, 2017?

The share price went up about 6.9%, and the market cap is $466 billion. Does that mean that that much new money had to have been invested after hours? Would it otherwise be possible for the stock ...
19
votes
3answers
30k views

How does a dealer (or market maker) earn the bid-ask spread on a stock?

If I am correct, dealers purchase assets for their own accounts, and later sell them for a profit from their inventory. But the spreads is the difference between buy (or "bid") prices and sell (or "...
16
votes
4answers
1k views

May 6, 2010 stock market decline/plunge: Why did it drop 9% in a few minutes?

Today (5/6/2010) the market dropped almost 900 points in less than an hour. I don't see any news story that explains the drop. Am I missing something obvious?
15
votes
4answers
20k views

How do currency markets work? What factors are behind why currencies go up or down?

How do currency markets work? What factors are behind why currencies go up or down? What roles do governments, central banks, institutions, and traders have in the process?
13
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5answers
5k views

Does Joel Greenblatt's “Magic Formula Investing” really beat the market?

Background Joel Greenblatt's book "The little blue book that beats the market" is based on the premise that he has developed a magic formula. I am heavily skeptical of anyone who claims that they ...
12
votes
5answers
10k views

Why does a stock's price fluctuate so often, even when fresh news isn't available?

I get it that the price of a stock goes up and down as fresh news is released, positive or negative. However, fresh news is released only at certain times while the price of a stock changes (by ...
12
votes
3answers
989 views

How is exchange rate calculated?

assume that there is a very new island-country called xland. they decide to name their currency xdollar and there is 1000 xdollars in circulation. the very first foreigner comes and wants to exchange ...
11
votes
1answer
3k views

Why is the price of hydrogen (H2) in Germany fixed at 9.50 EUR per kg?

In Germany there are only a few H2 gas stations. Why do they all have the same price? Why is the free market disabled here? Which law is responsible and why was it created?
11
votes
3answers
3k views

What does “buyer is maker” mean?

What do "buyer is maker" and "buyer is not maker" mean? If a trade happens where the "buyer is maker", does that mean that the trade happened as buyer bought a share? I ...
11
votes
2answers
3k views

What does it mean to invest in potatoes?

There is an amusing thread on Reddit where people discuss what they would do with an unlimited supply of potatoes: http://www.reddit.com/r/AskReddit/comments/37yawp/...
10
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2answers
2k views

Why did the stock chart for Facebook's first trading day show an initial price of $42 when the IPO price was $38?

Facebook was widely reported as having an IPO price of $38. Yet, all the stock charts show Facebook shares priced at $42 until around 11:30 AM, than dropping to $40, and then only at 11:50 AM ...
10
votes
3answers
23k views

How and why does the exchange rate of a currency change almost everyday?

How does the exchange rate of a currency change every day? Why does that happen? Please explain to me with a naive approach and avoiding financial jargon.
9
votes
2answers
393 views

What investments are positively related to the housing market decline?

What investment sectors/areas generally go up when housing prices decline?
8
votes
3answers
1k views

is the bankruptcy of exchange markets possible?

Because exchanged markets like NASDAQ or NYSE are normal public businesses can they go into bankruptcy ? Supposedly they went into mysterious bankruptcy then what will happen to the listed companies ...
8
votes
1answer
840 views

Who sets the price and provides the quoted price values for stocks?

I somewhat understand that the price of stocks is determined by the market, but who exactly changes those prices that we see listed on Yahoo! Finance for example? If I own a share in a company listed ...
8
votes
2answers
3k views

Definition of “secular” in the context of markets?

When fund managers makes statements like this... "... [many market] inefficiencies persist for years due to the long-term nature of secular and structural changes [...]" ... I assume that they are ...
8
votes
1answer
964 views

How are unmarketable market orders (other side of the order book is empty) matched with incoming orders? [duplicate]

Note: This question is erroneously marked as a duplicate. It concerns a very specific situation with unfulfillable market orders in very illiquid markets, one that no other discussion here has covered....
7
votes
3answers
980 views

Efficient markets hypothesis and performance of IPO shares after lock-up period

It's noted here that the Linked In shares dropped 7% after restrictions on insiders from share sales expired. The layman explanation is that a greater supply of shares, and a desire amongst at least ...
7
votes
5answers
12k views

Looking for a stock market simulation that's as close to the real thing as possible [closed]

The title says it all. I'm looking for a simulation stock market to play around with. One that is, ideally, as close to the real thing as possible. I've heard that Investopia is a pretty good ...
6
votes
7answers
1k views

How to make money from a downward European market?

The trader Alessio Rastani speaks in a BBC interview about the development of the Euro zone and his predictions are quite severe. He predicts a crash within the next 12 months but is also telling ...
6
votes
2answers
434 views

How does a company have a net loss in their income statement, but their stock market value still rises?

For example in the case of Tesla, they always have a net loss in their operating income, but still their market value keeps increasing. What do the shareholders get as dividend? Do shareholders get ...
6
votes
5answers
5k views

Why do stocks go up? Is it due to companies performing well, or what else? [duplicate]

I searched for this question but I didn't get any convincing answer. What everyone says is that if a company does well (I assume this means the company has good returns on its projects) then people ...
6
votes
5answers
2k views

Why are the prices of some commodities (e.g. oil) more volatile than others?

Why are the prices of some commodities (e.g. oil) more volatile than others?
6
votes
2answers
56k views

Will a company's stock price be affected when warrants are issued, or exercised?

A company has 500 million outstanding shares, and it issued 100 million warrants 10 years ago. Assume that none of the warrants has been exercised yet. If tomorrow all the holders exercised their ...
6
votes
1answer
233 views

Can mutual fund prices have opening gaps? Might my order to be filled at a higher price?

My broker offers limit orders on mutual funds. I was curious if mutual funds have open gaps like stocks do. If I want to buy a fund if it goes up to a certain price, would it be safe to set a limit to ...
6
votes
2answers
5k views

Market Making vs Market Taking (Quotes vs Orders)

This is in by no means a duplicate. I've found similar questions that didn't clarify. I'm simply wondering if there is a relationship between quote driven markets (market making) and order driven ...
5
votes
3answers
1k views

Does an individual share of a stock have some kind of unique identifier?

A security has an ID like a CUSIP or an ISIN. Does an individual share of a stock have some kind of unique identifier? The sort of thing that once would've been printed on a stock certificate, back ...
5
votes
4answers
247 views

Is debt almost always the cause of crashes and recessions?

It seems every great crash, the underlying fundamentals always point to an ever increasing debt until it becomes unsustainable and bursts. How true would you say is that statement above?
5
votes
2answers
498 views

Mutual fund operations: How do mutual funds deploy incoming cash from investors in a fund?

I know there are many different answers for this depending on the strategy of the fund. I have heard that some funds invest cash from incoming fund purchases into money markets until they are ready ...
5
votes
2answers
1k views

Are there multiple Bitcoin markets?

I have the (possibly wrong) suspect that Bitcoin questions are not received too well here, so I kindly ask you to go easy on me :-) According to this question we should categorize Bitcoin as a ...
5
votes
4answers
318 views

Does bull/bear market actually make a difference?

This may be an extremely naive question, but it is often discussed on the news, here and in person (at least in financial circles) that it is easy to make money in a bull market, and harder to make ...
5
votes
4answers
24k views

How does a high share price benefit a company when it is raising funds?

A company about to raise money desires a higher share price, because that will permit them to issue less shares for the amount of money they need. If the share price drops, they would need to ...
5
votes
1answer
1k views

Why government bonds fluctuate so much, even though interest rates don't change that often?

Why do government bond prices fluctuate on a daily basis on the bond market? I can understand the fluctuation of corporate bonds because they are tied to the credit worthiness of the company and ...
5
votes
1answer
288 views

Who sets the prices on government bonds?

I noticed my country Greece wanted to sell bonds last year and they were stating "If they go above 7% we won't sell.". But who sets the price if not them? Why can't they say "the price is 5% and if ...
5
votes
2answers
164 views

Short-term robots and long-term investors in the stock market

Recently there are more and more robots that follow the short-term trends in stock markets and use it to bring immediate rewards to their owners. Since rewards don't come from thin air, this ...
5
votes
1answer
487 views

Day Trading introductory books

I realize that day trading is considered to be highly risky, but the subject fascinates me and I would like to learn more about it as well as read about past experiences, both good and bad. Do you ...
4
votes
5answers
847 views

Is it possible that any security listed in one country but trades in another country

For example a company which listed in Europe but trades in US market or vice versa. Could you please provide few examples of such securities. I found that depository receipts are foreign company's ...
4
votes
2answers
3k views

Meaning of capital market

From Wikipedia A capital market is a market for securities (debt or equity), where business enterprises (companies) and governments can raise long-term funds. It is defined as a market in which ...
4
votes
2answers
176 views

Is a book from 2005 about fixed income securities obsolete, or still relevant?

This is intentionally a very broad question. How much (if at all) has the fixed income securities market changed from say 2005 to present day? The main reason I ask is because I am debating whether ...
4
votes
2answers
618 views

What causes S&P 500 to grow faster than inflation? [closed]

Facts Average annual rate of USA's inflation is ~2% for the past couple of years Average annual return of S&P 500 is 10% Why? Many people suggest to move your money of your bank, which is maybe ...
4
votes
2answers
99 views

What is the best resource to research the current state of asset classes for mutual funds?

I have a fairly simple asset allocation as follows: 50% Large Cap stocks 15% Small Cap Stocks 5% REIT 10% International Stocks 20% Bonds What is the best web site to track how each one of these ...
4
votes
2answers
137 views

Price discovery and index funds bubble

I have read an article and watched a couple of videos about a possible index fund bubble. One of the arguments to justify this bubble is (if I have understood it correctly) that a very huge ...
4
votes
2answers
3k views

Stock buyer and seller information, and abuse of anonymous markets?

Is it possible to know who offered/offers and who bought stock? If not, what prevents a group of people to buy and sell stocks between them to "fake" interest in that stock and pump up the price?