Up today and down tomorrow. The stock market seems to be constantly reacting to good news and bad news, sometimes “because of” the news and other times “despite” the news. In this research, we explore the portion of days that the market is up compared to the number of days it is down. Over the past five decades, through secular cycles, decades, and individual years, the range of up-days versus down-days is relatively close to 50%.
Financial Physics represents the interconnected relationships among several key elements in the economy and the financial markets that determine the stock market’s overall direction. This section and its presentations will provide a highly provocative and insightful perspective on the relationship of the economy ('the source of wealth') and the equity markets ('the measure of equity wealth'). Whereas other sections present analyses of historical data to provide perspectives, this section is dedicated to exploring the fundamental factors and economic relationships that drive trends and valuations in the financial markets.
Although the term market efficiency to economists is also a broadly known term referring to operational efficiency, this paper concentrates on the efficiency of stock markets or to be more precise the informational efficiency of the stock market....
"The corporate abuses and fraud that Enron exemplified, while not a first in the financial markets, they were certainly a first in terms of the magnitude of the losses to stockholders and the confidence the public reposed in the financial sector (Bequai 2003)." As a result of the stock market crash of 1929 regulations such as the Securities Act of 1933 and Securities Exchange Act of 1934 were established to prevent such practices as those that contributed to the downfalls of Enron an...
The history of the stock market dates back several centuries. Its origin is often linked with the creation the government securities market in XV-XVI centuries. During this period, states began to produce and place securities both domestically and abroad to raise additional funds needed to cover the shortfall of funds for state needs. For example, in 1556, there was an exchange in Antwerp, where states could place their securities. At the beginning of the XVI century, the evolution of trade has led to the emergence of the stock exchanges.
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Furthermore, another strategy that is applied to the modern business world is to link the economic globalization such as in order to become a listed company on the stock market.
Returns depend upon the starting and ending point. This series of charts presents the compounded annual returns for an investor who began investing during any start year since 1900 and ending with any subsequent year. The versions presented reflect returns for taxpayers and for tax-exempt or deferred investors, as well as returns on a nominal and real (after inflation) basis. The charts are scaled for printing on a single sheet of 11″ x 17″ paper or on two 8 1/2″ x 11″ pages for subsequent alignment. See the assumptions and legends for important details.
The first non-government securities in the form of shares appeared in the XVII century on the Amsterdam stock exchange. The beginning of shares trading on the stock exchange was due to the East India Trading Company, which announced a subscription to participate in the profits of the company. The East India Company was given the right to trade in India, as well as all the rights that had the Dutch Republic in India. This caused a general interest in the securities of the company, and the Amsterdam Exchange became the central market of the East India Company shares. At the stock exchange in Amsterdam securities transactions were not only in cash but also in futures, which marked the formation of the speculative stock market.
Although the Stock Market crashing had a huge effect on the beginning of the Great Depression, there are still factors to consider when looking for a source to blame.
The long-term view of the stock market reflects extended periods of surge and stall. These periods, known as secular bull markets and secular bear markets, are not optical illusions; rather they are extended periods when market valuations (i.e. price/earnings ratios: P/Es) are either multiplying the effect of rising earnings or mitigating them. Secular bull market periods have always started when P/Es were below average, and secular bear markets have never ended when P/Es were above average.
The stock market has demonstrated longer-term secular bull and bear cycles. Secular cycles are extended periods with a common trend. In the stock market, these secular cycles are driven by trends in the P/E ratio. This chart presents the secular stock market cycles since 1900, based upon Crestmont’s research and analysis of P/E ratios, inflation, and other factors. The cycles correspond with peaks and troughs in P/E ratios, often over extended periods of years. The P/E ratio cycle corresponds with inflation rate cycles as they move toward and away from periods of price stability (low inflation). A version of the secular chart overlaid with detailed explanations of its key features is also available: .