New answers tagged

16

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 ...


18

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 ...


0

I'll offer a different kind of answer. Others have gone into how the lognormal model breaks down in reality. You already understand why lognormal is used instead of normal (because stock prices cannot be negative). I think your question is simply why the starting point is to apply a distribution to changes in price (returns) rather than prices themselves. ...


3

So, the stock market clearly has neither a normal nor a log-normal distribution. The distribution is a complicated mixture distribution that lacks a "first moment." In other words, it has no mean or variance. If you have enough technical math skills, this video will explain why it does not have that. https://youtu.be/R3fcVUBgIZw If you do not have the ...


0

The return on prices are used for modelling purposes as they are constant with the absolute value of the price. This is simple to see as a change of $1 on $100 has much more effect on the value than the same change on $1000. It has been empirically determined that log returns are close to normally distributed by running tests of normality such as Jaques-...


2

There may not be one definitive reason, but I'll throw out one possibility. Many employees are working form home these days, so cloud services like Teams, Skype, and Office are seeing increased usage since the pandemic began. Teams alone saw a 700% increase in usage during a one-month period in Italy. Amazon is probably also benefiting from web services, ...


1

Looking around other places and taking from what D Stanely and Bob Baerker said... S will become TMUS1 as of 4/2/20 Until the cash in lieu amount is determined, the underlying price for TMUS1 will be determined as follows: TMUS1 = 0.10256 (TMUS) this above is stating that every Sprint share, now known as TMUS1, will be worth whatever T-Mobile is at ...


0

would I be making some absurd amount of money because the price dropped from ~$8 per share to $0.10? No - the terms of your S option contract would be changed to create an equivalent option contract on TMUS. So you'd have a new strike price based on the new share price, and you'd have a new quantity to reflect the exchange ratio. Those two effects cancel ...


5

When investors buy stock in an IPO, they give the company money in exchange for the stock. The company now has cash. It uses that cash to buy equipment, hire employees, etc. When an investor buys stock on the stock market, you're normally not buying an IPO. You're buying stock from another investor. In that case the company doesn't get the money: the person ...


1

Generally, a stock that is described as 'listed' is a stock that meets the requirements of the top tier exchange/market. Other stocks that are bought and sold on a second- or third-tier market are not described as listed, but often simply referred to as being 'traded' or 'quoted' on that exchange. (Technically, all public stocks are quoted/traded.) If I ...


0

XYZ can make a secondary offering (create more outstanding shares) to raise additional capital. There is a limit to how many additional shares (how much dilution) the market can easily absorb, so more money can be raised when the stock price is higher. XYZ can attract and retain employees with stock bonuses more effectively with the stock at $200 than at $10,...


0

I am looking for an example of a stock that has shown little or no growth over a time period of at least 2 years, ie the price has essentially leveled out and appears to hit some sort of cap. I'll tell, not an example of a stock, but a sector where you'll find plenty of such stocks: electric utilities. Many traditional electric utilities create electricity ...


1

are these holdings due to ETFs or instead "private" investments of public companies (money from Vanguard that do not belong to Mutual Funds/ETFs)? ETFs and mutual funds would be a large part of this, but they're not the only "institutional investors". Pension funds and endowments would be other examples. Basically anything other than individual investors. ...


4

Stock prices are not tied to current performance, they are tied to future performance that may be tied to current (and future) market conditions. So if the market thinks that a company will perform poorly going forward based on the current environment, then it's likely that it's stock price will suffer. The financial (i.e. ignoring voting rights) value of a ...


0

Consider an individual company. Or, a portfolio of companies. At discount rate of 10%, and growth rate of 4%, one dollar of yearly income is worth 18.3 USD. (If you want the formula, open GNU Octave or Matlab and type sum(1.04.^[0:1000] ./ 1.10.^[0:1000]) into it). Now, if this year, income drops by 20%, instead of getting 1 USD, you get 0.8 USD, the ...


4

Is it possible to trade these commodities on the stock market? No. Commodities are traded in a commodities market. Stock markets are for stocks. Please do a lot of research prior to executing trades it is akin to options investing. However you can trade companies that benefit from increasing prices in oil and gas. For example Exxon or for a more ...


-2

So, right now Brent Crude is at 28.16$ (it was above 70$ this time last year, and it hasn't ever gone below 30$ since at least 2016). For various reasons I'm 100% sure that the oil price will go up in a timeframe of years, and the same will happen with natural gas. There's a fair likelihood that oil price is going to be more expensive in the future. But, it ...


1

Norbert's Gambit only saves you on the one-time transaction fees. It does not help you "lock-in" an exchange rate over a period (e.g. a year). To prevent the exchange rate from moving, you need Leveraged Forex or Canadian Dollar Futures. The concept is like this. Suppose 1 USD = 1.45 CAD. Before Stock Purchase: Stock (USD) 0 Cash (USD) 0 ...


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 ...


7

What are good areas for me focus on that are likely to see eventual high gains without requiring too high an effort or understanding in trading from me? A low-cost stock market index fund. Preferably one that is internationally diversified. If you can't find an internationally diversified stock market index fund for low cost, buy market-specific funds to ...


2

Since I want to exploit the current low market I assume that would mean targeting areas hit worse by the Corona fears, but I honestly don't know what industries those are or how to target them with minimal investment experience. A popular brokerage firm provides a large group of sector mutual funds which depict the sectors hardest hit by coronavirus. The ...


0

Find companies that have a large loss of revenue and a large amount of debt and those companies are at risk of re-organization in bankruptcy. The lower debt companies in recent history have been the newer technology companies. One measure to consider is the debt-to-equity ratio. And certainly consider revenue.


-1

I would personally recommend Airline industry. Airline stock prices have dropped drastically in the past couple of weeks, and they had a good probability of climbing back up after this passes. I wouldn't go all-in at once, but definitely airlines. Some Examples: DAL (Delta Air Lines) JBLU (JetBlue) BA (Boeing) (more risky kinda) AAL (American Airlines)


0

There are at least 3 possibilities: No transaction will happen until the bid volume at $100 meets or exceeds 1000 shares. This will happen if you placed a "Do Not Reduce" limit sell order. You'll sell 500 shares to the waiting buyer, and wait for a new buyer willing to pay $100 each for shares. This will happen if you placed a limit sell order without ...


5

Read the prospectus. It will give information about this scenario. For example, in the prospectus for VOO it says The Fund reserves the right to substitute a different index for the index it currently tracks if the current index is discontinued, if the Fund‘s agreement with the sponsor of its target index is terminated, or for any other reason ...


1

First, nothing. The index content doesn't change so much every day, so the ETF still represents about the correct mix, for weeks if not months to come. Any further action depends on the company that offers it: If the IP of the index is free, they could just grab it, and run it from now on. they can offer all owners of shares to transfer the shares to a ...


1

USAC options are normally fairly illiquid. You can see that from the low open interest. That's even more pronounced in strikes near current price. Price has dropped maybe 75% in the past month so it's been at it's current price (under $4) for only a short time and not much option trading has occurred at current strikes. When price gets that low, a ...


1

The price of a stock [or the cumulative price of many stocks, which form the overall price of an index] is based purely on the latest price change. If I own shares in an airline, and that airline shuts down operations due to, say, a global pandemic, I will no longer expect to receive the 'old price' when selling them. So I will lower my expectations. ...


1

RWP's answer outlined what would theoretically happen when the stock market suspended. Here I give an actual example of what actually happened when a stock market was suspended for a few days. On 1987's Black Monday, Hang Seng Index dropped by 11% (3,783.2 to 3,362.4). Afterwards, New York's stock market continued to plunges for 22% during their daytime (...


0

Here's one reason nobody raised yet! NYSE has a continued listing requirement of 300 shareholders and 200,000 shares. If a company still wants be traded on a stock exchange and not get de-listed, they can't buy so many shares that they fall short this requirement, let alone all shares.


0

The oil price is a symptom not a cause. The real sequence is Coronavirus Near complete shutdown of airline, travel and leisure industries, severe supply chain difficulties impacting on international shipping and all manufacturing, etc. etc. Emergency bank base rate cuts leading to Decimated profitability of many banks and insurers, and Worries about ...


0

It would be bad for the economy to shut down the market. First, trading financial products is big business. With most trading electronic why shut the market and directly harm economic output? Second, functioning markets are important to companies conducting business with one another. By shutting the market you're harming that process and making it more ...


11

This idea of an extended "market holiday" is a completely normal idea. A lot of people have had this idea, especially today, and I'll tell you below why it's terrible. Just flat-out bad. I once had this idea during the GFC when I was also new-ish to the market, so don't feel bad. I believe one of the CNBC hosts was touting this idea this morning. A ...


0

But why should I care if the stock markets drop 10% on one day and rise 5% the day after? Because if you are actively investing into stocks, that opens you to a very great purchase window. Think like this: if there's something you have for long wanted to buy and you see -10% discount on it, will you buy it? Most probably. Similarly, if you are planning to ...


1

There are some great answers already like nanoman's and machavity's, but there's an additional worry, especially if you own individual stocks: stocks can drop to zero. For instance down 25% back up 28% for a 3% net only works, crucially, if the drop didn't wipe you out and you are still in the game to bounce back. This worry is in addition to all the ...


1

You are absolutely right. If you are long-term investor, you mostly do not care about day2day changes. The least-sized scale you trade is basically 1 month candle or 20% price change. You are also would be working mostly with fundamental information, ignoring stock price history at all. BUT. Even while you do not trade on low scales does not mean that you ...


3

It's 13% from the previous day's close.


5

Like earthquakes, it depends how large the shift is. Minor changes don't generally matter The stock markets tend to bounce around inside a small window. I'll pick 5% to be safe (I rarely hear of the stock markets over a 5% drop). So if the market goes up or down 5% in a week's time, that's not a very big deal. Yes, that's impactful to someone, but it's a ...


9

For long term investors, daily stock market fluctuation is noise. However, the market falling 25% in less than two months has a much greater implications than daily noise or the affects on some specific groups of people (tourism workers, transportation companies, etc.). The consequences of a deep global recession affects every industry. Apart from job ...


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 ...


7

First understand that when the stock market drops like this, it absolutely can impact you, even if you aren't "in the stock market", because when stock prices decrease that's an indication that the market believes those companies are going to be performing worse. ie:if Apple shares drop 10%, the market believes (to be simplistic) that the total foreseeable ...


6

Circuit breakers are measures approved by the Securities and Exchange Commission (SEC). This to ease panic selling. Under 2012 rules. kick in when the S&P 500 index drops Level 1 @ 7% = halt trading for 15 minutes Level 2 @ 13% = halt trading for 15 minutes Level 3 @ 20% = halt trading for the day But your question is why the 20%? This would be ...


2

In addition to the fact that stock markets do not like sudden changes, the nature of the American oil industry could result in a negative impact to the financial sector as well. Unlike many countries, the American oil industry has a large number of smaller companies. Many of these companies are highly leveraged (i.e. a lot of debt) and will struggle to be ...


1

Oil does not provide profits only for the oil industry. Oil provides a lot of profits also for those involved in the mediation. A big chunk of the financial sector gets a cut on the oil sales and in the western world the tertiary sector matters more than the industry.


2

GSK is quoted on the London and New York stock exchanges. The company’s shares are listed on the New York Stock Exchange in the form of American Depositary Shares (ADSs) and these are evidenced by American Depositary Receipts (ADRs), each one of which represents two ordinary shares. https://www.gsk.com/en-gb/investors/share-price-analysis/


3

Oil prices is often used as short-hand for economic activity, e.g. oil used in the transport of things made by companies, often in other countries. If the oil price decreases it may be seen as a result of decreased demand (of transported things) and thus a decrease in demand in general for things. Thus share prices decrease because companies selling fewer ...


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 ...


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 ...


1

The regular market may be currently closed but stocks trade during the pre-market (4-9:30 AM EST) and during after hours (4-8 PM). Your Yahoo chart is only displaying regular session information. Right this minute, the real time quote is: $276.50 x 100 $276.88 x 800 That means that someone is looking to buy 100 shares at $276.50 and other(s) are ...


Top 50 recent answers are included