August Effect On The August

The weekly performance of IBM stock presented a contestant growth. One highlight of the falling of stock price in the 6th week in the investment period was when IBM presented the 3rd quarter financial report. The investors weren’t satisfied with the profit report which they expected to be better especially when other IT companies were doing well in the 3rd quarter. One mistake I made was that I didn’t follow closely to the financial report of the company; therefore, I missed the peak of the stock price. From this experience, I learned that financial reports and current news are important indicators of the stock price. By following closely to the current event and analyzing the financial report, investors can maximize the profit and also become more familiar to the market.

Capital markets provide a function which facilitates the buying and selling of long-term financial securities to increase liquidity and their value, Watson & Head (2013). Hence, the Efficient Market Hypothesis (EMH) explains the relationship that exists with the prices of the capital market securities, where no individual can beat the market by regularly buying securities at a lower price than it should be. This means that in order to be an efficient market prices of securities will have to fairly and fully reflect all available information, Fama (1970). Consequently, Watson & Head (2013) believe that market efficiency refers to the speed and quality of how share price adjusts to new information. Nevertheless, the testing of the efficient markets has led to the recognition of three different forms of efficiency in which explains how information available is used within the market. In this essay, the EMH will be analysed; testing of EMH will show that the model does provide strong evidence to explain share behaviour but also anomalies will be discussed that refutes the EMH. Therefore, a judgment will be made to see which structure explains the efficient market and whether there are some implications with the EMH, as a whole.

The research shows that the earnings announcements of firms within an industry can impact the share prices of other firms in the same industry. This effect has been labelled as the ‘information transfer effect’. The ‘information transfer effect’ highlights the belief that share prices react to public information emanating from various sources—including

The three-year SAIC stock price data and its corresponding SSE index are obtained from finance.yahoo.com, as it provides dividend-adjusted closing prices. The two data are ordered in time in Excel (Sort Ascending). It is found that 46 SAIC daily stock prices are missing due to suspension of trading, therefore; 46 corresponding SSE daily index are removed in order to match up dates on the two data series.

Moreover, the New York Stock Exchange on Wall Street has a significant economic influence as it known to be the leading financial center of the world. Following the attacks of 9/11, it was forced to close down due to security reasons, and wasn’t opened again until September 17. The week that it had opened back, many of the market’s stocks such as DJIA had decreased considerably. All of the markets that people had invested in had to be gradually brought up again as business wasn’t in circulation in the aftermath of 9/11. In 2001 revenue, U.S. stocks lost $1.4 trillion in valuation for the week after its initial opening. The U.S government provided $11.2 billion in immediate assistance to the Government of New York City along with $10.5 billion in early

A great number of studies further identified several factors which particularly concerns market capitalisation, effective of stock market, etc., which explains the dynamic forces of stocks returns during the earnings announcements date in an organised manner. For instance, Atiase (1985) found that unexpected information pass on to the market by actual earnings report is inversely correlated to the company’s capitalisation. Grant (1990) observed that the market in which a company’s securities are traded often determined the behaviour of stocks return around the earnings announcements. Several other studies have aimed to organise for synchronise factors by using time series data such as intra-day and daily data. However, a fairly number of more robust studies has examined the information content of macroeconomics news releases. Elsharkawy and Garrod (1996), Pope and Inyangete (1992).

The crash of the stock market in October brought the economic expansion of the 1920s to an emblematic end. Wall Street’s tremendous crash caused billions of dollars in equity to dissolve into thin air. On October 24, 1929 a reported 12.9 million contributions were exchanged and that day became known as “Black Thursday”. On October 29th agitated traders sold off 16,400,000 shares of stock, this became known as “Black Tuesday”. The government came to a realization that investors in the markets had lost approximately 40 billion dollars.

The United States stock market has experienced many interesting events this year, testing the nerves of millions of people around the world. The market started the year with the worst two-week performance in its history, creating a lot of uncertainty for the year to come. A severe decline in oil prices caused many firms within the energy industry to suffer. However, despite these negative events, gold saw its best quarter in 30 years, the market had a large reversal, and oil has been recovering. These volatile movements provided an amazing opportunity to make money for investors, relief for those who had holdings during this time, and a better outlook for firms. Two firms that have had an interesting year so far are ExxonMobil Corp. and Apple Inc. Exxon has experienced the effects of macroeconomic variables, while Apple has had some internal issues that lead to some stock price fluctuations.

In this article, “Is the efficient market hypothesis day-of-the-week dependent,”, Stephen Pop reveals significant evidence that the efficient market hypothesis is day-of-the-week-dependent. Overall, for only 62% of firms, the unit root null hypothesis is rejected on all the five trading days. He also discovers that when investors do not account for unit root properties in devising trading strategies, they obtain spurious

Large percentage of revenues are recorded in the fourth quarter: Compare with previous years, compare with other firms in the same industry to see if an industry norm, query sales by customers, and so on.

This document is authorized for use only by Yen Ting Chen in FInancial Markets and Institutions taught by Nawal Ahmed Boston University from September 2014 to December 2014.

Efficient capital market “It was generally believed that securities markets were extremely efficient in reflecting information about the stock market as a whole” (Fama 1970). To extent that when there is new information about stock rise, the news was dispersed immediately and it affects the security 's price at that time.

Over the past year both Tesla and BMW have taken severe losses to their share prices. overall Tesla has reported a lower loss percentage in its share price, -25% compared to BMW’s reported loss of -33%. However since October 2015 BMW has reported an over loss percentage than Tesla. The six month report of the two groups shows that BMW has traded at a higher price and therefore reports a lower loss percentage of -21% compared to Tesla’s -29%. Even more recently BMW’s share prices have increased by 1% whereas Tesla’s share prices have dropped by -11%. By reporting this gain it shows that BMW stock is in greater demand meaning that investors have

The weak-form efficiency cannot explain January effect. In semi-strong-form efficient market, to test this hypothesis, researchers look at the adjustment of share prices to public announcements such as earnings and dividend announcements, splits, takeovers and repurchases. As time goes, later tests tend to be not supportive to EMH. For instance, semi-strong-form efficiency cannot explain the pricing/earning effect. In strong-form efficiency, the highest level of market efficiency, Fama (1991) pointed out the immeasurability of market efficiency and suggested that it must be tested jointly with an equilibrium model of expected. However, perfect efficiency is an unrealistic benchmark that is unlikely to hold in practice.

The wealth effect has helped power the US economy over 1999 and part of 2000, but what happens to the economy if the market tanks? The Federal Reserve has reported that for every $1 billion in increase in the value of equities, Americans will spend an additional $40 million a year. The wealth effect has become a growing concern because more and more people are investing; furthermore the Federal Reserve has very little direct control over stock prices. The numbers are staggering.