1. Introduction
So that we can learn as much as possible from each other during this course, provide us with some background about yourself.
2. The Market
Explain why an investor should not expect to outperform the stock market
on a consistent basis. In addition, explain the advantages and risk
associated with buying stock on margin.
Hello class ! Welcome to the May Term 2014.
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ReplyDelete2. The Market:
ReplyDeleteIndividual investors consistently underperform the market. People love making investment decisions and being actively involved in trading. If an individual makes their own investment decisions, there is a method for handling these investments that reduces the overall risk at the same time increasing your chances of beating the market. Investors have neither the time nor the drive to make their own investment decisions. Research is one of the ways to get a jump on the market, and it is used for information gathered from advertisements that boast on recent good performance. It is impossible to predict in advance who the successful fund managers will be this (or any) year. There are risks and rewards to investing.
Buying stock on margin can boost your returns dramatically, which allows you to increase the amount of shares you buy, while decreasing the amount of cash you put out. Margin accounts offer faster and easier liquidity, and can access cash quickly On the other hand, you can lose much more money than you initially invested. A loss of 50 percent or more from stocks bought on margin equates to a loss of 100 percent or more, plus interest and commissions
Jennifer,
DeleteI agree with your statement of investors being eager to actively trade and invest. Sometimes this can lead mistakes and losses. It has been said that a passive approach is sometimes best for an investors; closely following market trends and making the safest investments possible. This means risking as little as possible. As you mentioned, not taking risks will usually only produce small gains.
my name is Marie Roger major in business administration focus on healthcare management I'm in my last two terms here at Westwood can't wait to graduate and focus on getting a better position paying more money.
ReplyDeletein my opinion I think an investors should not expected to outperform the stock market because the stock market is not really stable enough to invest all your money there. I also think it is good to invest but you have to careful enough how much you are investing in and how you are gain from it in return.
ReplyDeleteI do agree with you investors should not expect to out perform the market but if it was stable it would be a bad idea to invest in one particular stock I would like to spread it out
DeleteHello everyone, my name is Corey Tse and I am a Marketing major and I have two terms left. My interests are music and traveling. And I will be graduating in January.
ReplyDeleteAs for why investors should not expect to outperform the stock market in a consistent basis, I believe it is because the future is not set in stone. For example, if Company A makes bad decision then investors would not invest in Company A and the stock prices falls or if there is a disaster that affect Company A then the stock price might also falls.
Some advantage to buying stock on margin is that an investor would be able to buy stocks he couldn't normally afford, as for the disadvantage, it would be that the investor would have to pay more if the stock doesn't work out
That true that investors should not expect to outperform but the market it has happened. Buying stock on the margin also allow an investor to invest more when they get a return.
DeleteThanks for the input Brenda
DeleteHello All,
ReplyDeleteThis is Adelina Sanchez. I'm in the business Marketing program and in my 3rd term. My interest is Learning!
The Market:
-An obvious reason why an investor should not expect to consistently outperform the stock market is because, like in life, all is a risk and nothing is guaranteed...
- An advantage in buying stock on margin is the ease to leverage their buying power and the potential for greater profits. on the other hand, the losses and risk are higher!!!!
Hello I'm Brenda Boakye, I have less than a year before I graduate with my Bachelors for the School of Business.
ReplyDeleteAn investor should not expect to outperform the stock market because with any investment there are risk. For example in the book noted that when Boston Chicken went public their stock opened up at $20 and closed with a 28.5 increase but do the rapid expansion of Boston Market restaurants the company began losing money and stock prices went down meaning stockholder sold shares for pennies per share (pg 41) forcing the organization to file bankruptcy. The advantages of buying stock on a margin is that allows you to pay a portion of the stock price and the balance is then finance by a stockbroker. this allows an investor to purchase more stocks by using the assets they already have as collateral on the loan for additional stock. The risk that are involved with buying stock on a margin is that an investor can lose more than what they have invested. If the stock value goes down the equity in the margin account would be lost and the investor must put more money in the account to maintain the equity of the account itself.
Hello my name is Barbara I will be graduating next year in March with my Bachelors in Marketing.
ReplyDeleteAn investor should not expect to outperform the stock market because with any investment there is risk of losing money. Even on margin the stock price you can lose money on an investment the use of the margin could increase the brokers risk exposure
1.Hello my name is William Young and this is my last term and I will be December is my expected graduation date with my Bachelors in marketing
ReplyDelete2. The truth is that individual investors, on average, consistently underperform the market. Most investors who make their own investment decisions overestimate their results. And if asked their methods produce record breaking results year after year. They would fail to tell the truth and most believe they can and should consistently outperform the market
Congrats on the short time left that you have in school. I can't wait until I could say my last term.
Delete1.Hello my name is William Young and this my last term and my expected graduation date is December 20, with my Bachelors in Marketing.
ReplyDelete2. The investor should not be expected to outperform the stock the reason with various investments there is always the risk of losing money. Also with margin you lose money on the investment and usage of the margin increases the broker's risk.
Yes you're right, because most of the time people believe that their money will always make an profit, but how can they make an profit from a particular stock decreasing rapidly.
DeleteThat's true Myron how can you profit from a failing stock?Investors have to be careful with how they invest their money so they wont lose it.
DeleteYou probably could make a profit from a stock that is falling. If the investors just holds on to the stock. The company may just need to reevaluate their strategic plan.
DeleteIt's true that you could lose money but isn't the gain what makes everyone want to "play" the stock market?
DeleteHey everyone!!!! I will be graduating in October. I will have a bachelor's degree in Marketing and sales. I'm excited because this is a big step in my life. I hope to make my kids and those are me proud.
ReplyDeleteHello Class my name is Janette Bess Business Marketing
ReplyDeleteWelcome to introduction to finance!
DeleteHey Janette nice to meet you! :)
DeleteHello all, my name is Patricia Meredith, I am a Healthcare Management major and currently work as a health care manager.
ReplyDeleteHey Patricia, that's a great field you're pursuing I'm thinking about furthering another career in the HealthCare field, due the marketing field being a harsh and cruel field to pursue. I mean the marketing field is weird because the only way we'll make money if someone else is benefiting from what we bring to the public's eye.
DeleteThe medical field is one of the most secure fields to venture into in regards to careers
Delete1. My name is Renita Oliver. This is my last term here and grauate with my Bachelors in Business Adminstration with a minor in Healthcare Mangement. I graduate in AUGUST and work at a clothing store.
ReplyDelete1. Hello Class,
ReplyDeleteMy name is Richard Avila. You can call me Rick. I am a business marketing major and this will be my last term at Westwood College.
Hi rick this my last term too, we will be walking across in august!
Delete1) Hello my name is Myron and I have about 6 classes left until I have a Bachelor's Degree in Marketing.
ReplyDelete2) I believe that an investor shouldn't out perform the stock market because the stock market in one of the reasons why that investor will make money. In order to invest in something you have to have enough money to do so, however investing can be tricky if you invest in the wrong stock. It's always important that you do your research on the particular stock before investing, or you might lose the money you invested. You can only lose what you invest.
6 classes those will fly by good luck on your degree!
DeleteIf you buy the stock at the IPO you are going to make a profit. If it don't flop right out the door
DeleteYou could lose more than what you invested....if you don't have enough money to cover what you invested
Delete2. They should not expect to out perform the stock market on a consistent basis because companies always have ups/lows when it comes to money in any company. Every company has some type of person or something that will be there down fall. Whether it is known or not known. An advantage in stocks is having a fore sum of money in tact because you invested into those companies. A risk would be losing all of your money you puy into a stock because the company is not doing so well at the moment.
ReplyDeleteThe market is not designed for investor to out perform it. If an investor have that type of information they are doing something that's misconstrued. Long term investments are the best ones to me you go along with the market for a while you have to pull out at the correct time.
ReplyDeleteThere are times when an investor will outperform the market, however, the occurrence is few and far between. The reasons why few investors outperform the market is because of the uncertainty in the future. On the other hand, human error could be another reason why an investor underperforms the market, being that they don't carefully do research, or monitor the company's performance.
DeleteHello Everyone, Welcome again to Basic Finance Discussion board.
ReplyDeleteHave a wonderful term as well as summer !
Please be sure to actively participate throughout the term with at least 3 inputs/comments for each week. Also, please justify your professional* answer by using the right terminology, links, and explanation. Thank you.
I am not educated on stocks and/or the stock market, but I would assume that it would be impossible to outperform the stock market on a consistent basis as various markets are duplicated often. An example, Chipotle is a popular food service business, but there are other food servicing businesses that serve the same style of foods like Qdoba. Investing in Chipotle would have been a great stock investment at the onset of it being presented to the market, but investing in other restaurants just like it would be a bad investment.
ReplyDeleteI guess a risk to buying stock on a margin could be that there is a 50/50 chance of gains and losses, you could quite possibly make a lot of money and there is a chance you could lose all the money you gained. As far as the advantages, I would have to learn a little more about stocks to be able to answer that.
Most investors make their own investment decisions overestimate their results they think would their methods produce market-beating results every year. And if they didnt do well this past year they know their performance during the next few years will more than compensate for any recent underperformance. A lot of good investors don't have the time or inclination to make their own investment decisions.They feel comfortable depending on others, and there are many professional money managers eager to take their money and make those investment decisions.
ReplyDeletethis is a very good perception of how investors can not out do stocks every time
DeleteInvestors should not expect to outperform the stock market on a consistent basis because stock prices are not predictable and patterns can be accidental. Stock prices reflect known information of a firm and the price can adjust rapidly due to new information. Furthermore, it is impossible to accurately predict return on a stock price because no one has access to information that is not already available to someone else. Since stock prices are unpredictable, they are deemed as random. With random stock prices there come risk.
ReplyDeleteHello class this is Mauri Roberts student at Westwood. Business Administration since 1/9/13.
ReplyDeletehello Mauri, my name is ziggy nice to meet you
DeleteHow is everyone doing? This Randy Hegler Jr most all you already know me
ReplyDeleteHello Randy!!!
DeleteIt will be hard to keep up with the stock market because companies don't continually put up the same numbers ever quarter because of the ups and downs of the company. There might be times where they run short on man power or resources.
ReplyDelete1.hello class my name is ziggy stopka, this is currently my tenth term, I am very excited to keep learning and meeting new people along the way. I hope to have a good time with my fellow students in this class. my program is business majoring in marketing management
ReplyDelete2. a investor can not expect to out due the stock market every time because numbers and money fluctuate differently every period and changes happen every period
2.