Task: Explain what the US Trade Deficit is. Why did it go down in December 2007? What does the value of the US dollar have to do with the trade deficit falling? Why do you think that a large trade deficit is bad for the economy? In other words: why is it bad to import more goods than you export?
> The U.S. trade deficit is the difference between the cost of imports and the sales of exports that the U.S. has made rounded in billions of dollars and adjusted seasonally. The deficit fell in December of 2007 because the U.S. sold more exports and bought less imports. The reason behind the fall is that the U.S. dollar does not worth that much now and that means other countries will be after our low-price goods while our people will spend less on expensive overseas products. It is good for the economy of the US that it has a low trade deficit because if we imported more than we exported then we would be losing money.
Saturday, February 16, 2008
Friday, February 15, 2008
Opportunity Cost
Task: In your own words, explain what economists mean when they talk about opportunity costs. What are opportunity costs? Give some examples. And give some examples from your own life.
> Opportunity Cost simply means giving up something to get something else.
When economists talk about opportunity cost they mean that there is a decision made that they have to give up something then get something else.
For example, one would give up studying and just work and earn money, give up watching TV or playing video games and review for the Regents, etc. From my own personal experience, I gave up being with my brothers, other relatives and close friends and come here to America to continue my studies and get a decent stable job in the future.
> Opportunity Cost simply means giving up something to get something else.
When economists talk about opportunity cost they mean that there is a decision made that they have to give up something then get something else.
For example, one would give up studying and just work and earn money, give up watching TV or playing video games and review for the Regents, etc. From my own personal experience, I gave up being with my brothers, other relatives and close friends and come here to America to continue my studies and get a decent stable job in the future.
My Investment Strategy
Task: Why did you pick the stocks that you did?
> The way that I chose my stocks is the fact that I work in a drug store and I have seen hundreds of people who buy all the stocks that I have chosen and since I know that these items are really selling right now. Another thing that helped me pick my stocks is looking at the company's stock charts over five days, a month and a year or two timelines on NYTimes.com.
> The way that I chose my stocks is the fact that I work in a drug store and I have seen hundreds of people who buy all the stocks that I have chosen and since I know that these items are really selling right now. Another thing that helped me pick my stocks is looking at the company's stock charts over five days, a month and a year or two timelines on NYTimes.com.
Tuesday, February 12, 2008
Intro to the Stock Market
1. What exactly is a stock and why do companies sell stock in the first place?
> A stock is a share of a particular company or corporation, companies sell stocks to raise capitol without the obligation to repay borrowed money.
2. What is the difference between a public and a private company?
> A public company sells shares to the public and has more than 50 shareholders, while a private company does not sell their shares to the public and has less than 50 shareholders.
3. What is the Dow Jones Industrial Average?
> The Dow Jones Industrial Average is simply the average value of 30 large industrial stocks. Big companies like General Motors(GE), IBM and Exxon are the kinds of companies that make up this index. These are "market averages" designed to tell you how companies traded on the stock market are doing in general. If the economy is doing well then the prices of stocks as a group tend to rise. If it is doing poorly, prices as a group tend to fall.
4. What is a blue chip stock?
> A "blue chip" stock was a nickname given to a stock that was thought to be safe. They are thought to be in financial shape. Blue chips generally pay dividends and are favorably regarded by investors. They are also referred to as bellwether issues.
5. What is the New York Stock Exchange and the NASDAQ?
> The New York Stock Exchange is a corporation operated by a board of directors, responsible for listing securities, setting policies and supervising the stock exchange and its member activities. The NYSE also oversees the transfer of members' seats on the Exchange, judging whether a potential applicant is qualified to be a specialist. And NASDAQ which stands for National Association of Securities Dealers Automated Quotations System is a general rule of thumb, it is where most technology stocks are traded. Also a computerized system that facilitates trading and provides price quotations on some 5,000 of the more actively traded over-the-counter stocks. High-tech companies are typically traded on the NASDAQ, such as Microsoft, Intel, Dell and Cisco.
6. What is a mutual fund?
> A mutual fund is a company that brings together money from many people and invests it in stocks bonds or other assets. The combined holdings of stocks, bonds or other assets the fund owns are known as its portfolio. Each investor in the fund owns shares, which represent a part of these holdings.
7. What are some of the biggest companies on the stock market, how much is their stock?
> Some of the biggest companies on the stock market are McDonalds, Walt Disney Company, Home Depot, and Ebay. McDonalds stock is 8.9M, Walt Disney company stock is 10.5M, Home Depot's stock is 210M and Ebay's stock is 10M.
8. What is the PE ratio of a stock?
> A PE ratio of a stock is calculated by dividing the market price per share by the current or a projected annual earnings per share. It measures the market's expectations regarding earnings growth potential and risk.
9. What is a stock dividend?
> A stock dividend is a dividend paid to stockholders in shares of stock, often used in place of or in addition to a dividend paid in cash.
> A stock is a share of a particular company or corporation, companies sell stocks to raise capitol without the obligation to repay borrowed money.
2. What is the difference between a public and a private company?
> A public company sells shares to the public and has more than 50 shareholders, while a private company does not sell their shares to the public and has less than 50 shareholders.
3. What is the Dow Jones Industrial Average?
> The Dow Jones Industrial Average is simply the average value of 30 large industrial stocks. Big companies like General Motors(GE), IBM and Exxon are the kinds of companies that make up this index. These are "market averages" designed to tell you how companies traded on the stock market are doing in general. If the economy is doing well then the prices of stocks as a group tend to rise. If it is doing poorly, prices as a group tend to fall.
4. What is a blue chip stock?
> A "blue chip" stock was a nickname given to a stock that was thought to be safe. They are thought to be in financial shape. Blue chips generally pay dividends and are favorably regarded by investors. They are also referred to as bellwether issues.
5. What is the New York Stock Exchange and the NASDAQ?
> The New York Stock Exchange is a corporation operated by a board of directors, responsible for listing securities, setting policies and supervising the stock exchange and its member activities. The NYSE also oversees the transfer of members' seats on the Exchange, judging whether a potential applicant is qualified to be a specialist. And NASDAQ which stands for National Association of Securities Dealers Automated Quotations System is a general rule of thumb, it is where most technology stocks are traded. Also a computerized system that facilitates trading and provides price quotations on some 5,000 of the more actively traded over-the-counter stocks. High-tech companies are typically traded on the NASDAQ, such as Microsoft, Intel, Dell and Cisco.
6. What is a mutual fund?
> A mutual fund is a company that brings together money from many people and invests it in stocks bonds or other assets. The combined holdings of stocks, bonds or other assets the fund owns are known as its portfolio. Each investor in the fund owns shares, which represent a part of these holdings.
7. What are some of the biggest companies on the stock market, how much is their stock?
> Some of the biggest companies on the stock market are McDonalds, Walt Disney Company, Home Depot, and Ebay. McDonalds stock is 8.9M, Walt Disney company stock is 10.5M, Home Depot's stock is 210M and Ebay's stock is 10M.
8. What is the PE ratio of a stock?
> A PE ratio of a stock is calculated by dividing the market price per share by the current or a projected annual earnings per share. It measures the market's expectations regarding earnings growth potential and risk.
9. What is a stock dividend?
> A stock dividend is a dividend paid to stockholders in shares of stock, often used in place of or in addition to a dividend paid in cash.
Tuesday, February 5, 2008
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