97

Fundamentally, I think there's a high level (and perhaps unsatisfying) answer to this. It's because that's not "banking" as a business, and a bank is established to do banking, not to get into the stock market. In other words, this question strikes me about the same as asking, why don't ice cream shops stop selling ice cream, and instead get in the ...


96

If one could build a model for accurately predicting future stock prices then: Why would anyone share it? Wouldn't there be some individuals cornering the market, making people like Peter Lynch, Warren Buffet and a host of very successful hedge fund managers look like amateurs? There are many commercially available tools such as you describe. They are ...


92

Market reactions to information are not always timely, proportional, or rational. We don't know the full impact of our current situation; we're feeling it out. Some people (bulls), believe that the initial dip was an over-reaction, that the government response will prevent further decline, and/or that things will go back to normal pretty quickly, so they ...


61

The answer is that some people do not believe a further drop is coming, or that it will not be so large, or that it will not be so soon. The typical advice given to an individual investor is that 'time in the market beats timing the market'. This means that losing incremental daily gains on the ongoing growth of the economy has historically beaten out the ...


58

The market reacts only to new information. It is already known that the new coronavirus has resulted in a pandemic. It was known long before the current situation. Having infections in most countries, and knowing the growth is exponential is enough. Not all people understand the power of exponential growth and how quickly its rate increases. Yet, there are ...


56

These tools exist (see Nelson's answer), but they aren't available for purchase because once they become publicly available, they cease to work. The logic goes something like this. Suppose the stock of company A is currently trading at $100 each. The software predicts that it will go up to $120. Therefore you buy. Once you buy, you move the market. You can ...


51

No, your billionaire premise is not correct. Most people don't realize that share price drops by the exact amount of the dividend on the ex-dividend date when the stock exchanges adjust the closing price. If you have a $100 stock that is going ex-dividend tomorrow morning for $1, in the morning the adjusted close will be $99. IOW, you will incur a ...


40

Your shares represent partial ownership of the company. You get dividends when the company transfers some of its profits to its owners. When the company is sold, it will usually be for some combination of cash and shares in the company making the purchase. You will receive your share of that cash and shares in proportion to your ownership interest.


38

Short-term fluctuations are more significant than they might seem because: They are not as small in relation to long-term returns as one might expect. For Brownian motion (random walk) the typical move over a given time interval scales only weakly, with the square root of the time interval. So a really bad day can wipe out a whole year's return. They are ...


38

A couple of possible reasons: A disproportionate amount of stock-market risk (e.g., scheduled economic and earnings releases) happens outside market hours, with the goal of avoiding destabilization of the market. (Extended-hours and futures trading are typically occurring, and show the immediate impact, but the regular-hours SPY does not.) Thus, overnight ...


37

The first question to ask yourself is do you even need life insurance? The benefit amount, 500K is fairly large, but it can also be too small for your needs. Do you have people that are dependent upon your income? Do you have a wife or children? If you don't, then you don't need life insurance. As a single person with no children life insurance is ...


36

They do so because it’s free advertising. If they get it wildly wrong, it will be totally forgotten —- it’s not news when a prediction fails to come to pass. Unfortunately, it is often considered news when prediction does come to pass, or even comes close. If it is at 3,850 they will be in the news (again) as being amazingly accurate. If it’s 2900 or ...


35

One possible reason is to allow reasonable granularity of price movements. With a price of 20 cents, a one cent change in price would be a 5% change, so requiring higher prices would allow for more granularity and less variance. Sure, computers can deal with more than two decimals of precision, but humans that are used to units and hundredths in most ...


33

I figure that the buyers and sellers cannot be regular people with stocks as they always buys at the bid price and sell at the ask price, so I'm a little confused as to who these buyers and sellers are? This is incorrect. Buying at the ask price and selling at the bid price (you got them mixed around) is called a market order, but it is not the only way for ...


32

A market maker has several advantages: Faster access to market news and they can change their price faster than you can If they are the market, they buy at the bid and sell at the ask when the public transacts with them and they earn the spread. They see the order book and can trade knowing the depth and size of the market. They can arbitrage a position ...


27

JNJ did pay $0.42 per share in quarterly dividends, but the unadjusted (for splits) share price in the late 70s was $67-$80. It appears as though you're looking at share prices which are adjusted for splits and dividend per share prices which aren't adjusted for splits.


26

There is a lot going on right now. Market volatility rose over the past 2 weeks on the news that Covid-19 cases are growing exponentially. It would be folly to try and correlate a large move on a particular day to other seemingly unrelated news. For that matter, in the midst of people trying to avoid crowds, many industries might suffer. Airlines, cruise ...


25

Pete has a good answer already, but I will add 2 separate thoughts for you to consider: First, go ahead and google "World Financial Group". Google will autocomplete this to "- scam?" This is the first step in determining legitimacy of the company. Note that it is a multi-level-marketing company, which is a happier term for a pyramid scheme. The problem is ...


24

Per the request above: The market reacts to overnight news which includes after hours earnings announcements, economic reports, overseas trading, etc. (very, very few companies announce earnings during regular hours trading). Because of these, the market tends to gap up or down in the morning. In a long term bull market, those gaps are net positive


24

They exist, but it's not for you to buy. Here is a story about Ke Xu, quantitative analyst. Basically, the algorithms exist, but they are closely guarded secrets. Someone tried to steal them and got sued into the ground, along with travel bans, extradition, repeat jail time, private detectives tracking their parents in CHINA (Company was in UK). The legal ...


21

I know IPO means that particular company, regardless of the country, is offering some quantity of their stocks to the public via stock exchange. An IPO is an initial Public offering. They are taking a private company public. This is the first time that they are making shares available through a "stock market". I also assume (but not sure) that in ...


21

You don't have to sell just because the price has gone up 25%. You sell... if you need the money... because you think that the company share price will not be growing any more or even it will be going down... because you have found another investment that has more potential... because you want to rebalance your investments... because you have to pay a tax ...


20

As long as I can buy it today and sell it at a date of my choosing Typically investors don't purchase shares representing indefinite ownership of commodities, instead they are traded as futures. Oil Futures have a settlement date, i.e. they expire and you have to buy them again. Let's take a look at NYMEX WTI Light Sweet Crude Oil futures. Here we can ...


20

Without digging into the specifics of this company, stock prices aren't just fueled by current activity, but by future cash flows. Most think (or hope) that the pandemic will end in the near future, and that most businesses will return to normal. That (among other things) is why you've seen the market overall rebound to all-time highs, and could likely be ...


16

Because your "bank" will fail The related questions assumes a "buy low, sell high", or even better, a "buy low, never sell" scheme of investment. But your proposed geared fund will not have that. They will have clients. Clients that can withdraw at worst possible moment. Recessions come hand to hand with markets down run. Long recessions will cause ...


15

so high According to whom? While S&P 500 is +20% since September, LYV is -19%. An entertainment ETF that represents the industry is -22%. How is that objectively "high"? Stock price represents the discounted cash flow per share of literally 30-50 years of the future. The pandemic lasts 2-3 years max based on historical timeline of vaccine ...


14

It's all in the name: Initial Public Offering (IPO). Before that, it's a private company. If an already public company issues more stock, it's called a secondary offering.


14

The split pay date is August 28, and the split execution date is August 31. On the split execution date, short sellers owe 5 shares instead of 1 share. could short-sellers in theory, borrow one share and sell it between Aug 22nd-Aug 28th inclusive at $1500 then buy the one share back on Aug 31st for $300? No. You could short 1 share before the execution ...


13

The main problem is that indexes like the FTSE only show growth in share price. The FTSE 100 is, by definition large companies, and most of those would be regarded as dividend rather than growth stocks. You need to look at a total return index to get a more accurate picture because if you reinvested dividends you would see an additional ~4% compound growth ...


13

The U.S. recently became an oil and natural-gas exporter and actually a net exporter. With the oil price declining, West Texas fracking is now at real risk. But the oil industry is not the dominant industry in the U.S. and so the ruble is down against the US dollar. Also, neither the euro or the Swiss franc should have any particular advantage over the ...


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