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- Rapid Turnaround from Bull to Bear - Editor, 10 June 2008 - No Comments yet
- Understanding Reverse Stock Splits - Editor, 9 June 2008 - No Comments yet
- The Controversial Efficient Market Hypothesis - Editor, 6 June 2008 - No Comments yet
- Differentiating between Cyclical and Non-cyclical Stocks - Editor, 5 June 2008 - No Comments yet
- Lives Depend on Such Stocks - Editor, 4 June 2008 - No Comments yet
- A Free Business Management Lesson from the Gentle King in Riyadh - Editor, 3 June 2008 - No Comments yet
- Make Hay from Hydrogen Stocks - Editor, 2 June 2008 - No Comments yet
The optimism on Wall Street on Thursday 5 June 2008, brought about mainly by some retailers turning in surprisingly good sales figures, as well as strong worker productivity in the first quarter, resulted in the Dow Index climbing 214 points. This bullish outlook was abruptly turned around to become bearish on Friday when the rate of unemployment surged, speculation ran rife with regard to the possibility of Israel attacking Iran, and the biggest one day oil price increase in history (more than $10 per barrel) sent the Dow plummeting by 400 points. This dramatic change serves to remind investors of the extreme volatility of the current market.
A reverse stock split reduces the number of a company’s shares, which in turn increases the earnings per share, while the company’s market capitalization remains the same. This makes the stock appear to be more valuable than before the split, when in fact nothing has changed. There are a number of reasons why a company may choose to undertake a reverse stock split, let’s consider some of them.
The Efficient Market Hypothesis (EMH) asserts that stock market efficiency ensures that prices on traded assets – stocks, bonds and property – are a true reflection, at any given time, of all available and relevant information. This is to a great degree based on the argument that in an active market, which includes numerous intelligent and well-informed investors, stocks cannot fail to be a reflection of all available information and therefore will be appropriately priced. This being the case, according to EMH, it is impossible to use market timing or expert stock selection to outperform the overall market.
Although it is true that investors have no control over the cycles of a country’s economy, they are able to adjust their investing practices to cope successfully with the economy’s highs and lows. Having a well-balanced investment portfolio is dependent on an understanding of how industries are influenced by the economy before making stock market investments. For this reason it is important for investors to know the fundamental differences between cyclical and non-cyclical stock companies.
Does your portfolio have Biotechnology & Drugs Industry stocks? It seems to be a risky business for some. The industry stock price index is up just 1% for the 12 months ended mid-May 2008. This is against a 2.5% corresponding gain for the S&P500.
“Why should our browsers care?”
The editor was in a foul mood, inappropriate for the first signs of spring outside.
Does stock market volatility bother you? Are you worried about what recession can do to your portfolio? Would you like some dividend revenue to keep the inflation wolf from your door? Read on and share our gas stock idea.
Recent Videos
- Video: Night Talk: An Interview With Candace Bushnelli - Friday 21 November 2008, 3:02 am
- Video: Oil Reverses Course; Oil's Rollercoaster Ride - Friday 21 November 2008, 2:46 am
- Video: Memo To The President-Elect: Advice For Obama On Health Care - Friday 21 November 2008, 2:36 am
- Video: Congressional Clash - Friday 21 November 2008, 2:23 am
- Video: Following The Money; Congress And The Economy - Friday 21 November 2008, 2:13 am
Recent Articles
- Fannie Mae Faces Possible De-Listing From NYSE - Editor, Wednesday 19 November 2008
- U.S. Automakers Dilemma And Citigroup Job Cuts Negatively Impact Markets - Editor, Tuesday 18 November 2008
- G-20 Summit Agrees On Direction For Dealing With Global Financial Crisis - Editor, Monday 17 November 2008
- G20 Summit Aims For Agreement On Global Finance Regulations - Editor, Friday 14 November 2008
- U.S. Stocks Slump As Treasury Bailout Plan Changes Direction - Editor, Thursday 13 November 2008
Recent Comments
- 29 April 2008, 03:23 am: By Dhan - Take This Financial Planning Gift Horse...
- 25 April 2008, 12:58 am: By asiaconsult - The ‘No Comment’ Clue to Mortgage...
- 24 April 2008, 02:21 am: By Investa - How Your Financial Planning Can Benefit...
- 23 April 2008, 04:56 am: By Mint - A Stock on Which You Can Bank










