Causes Of Twenty First Century Stock Market Volatility Essay

In Michael Lewis’s Flash Boys, Lewis expands upon the issues related to high frequency trading, and argues that there are built in inequalities and issues in the financial markets after the emergence of regulations and technology within the stock markets and exchanges. Lewis predominantly focuses on the United States stock markets and how inequalities are being created by High Frequency Traders (also known as HFTs). The essential questions are whether High Frequency Traders are weakening the market and creating inequalities or hardships, and, if they are, who is primarily affected? Extensive research proves how high frequency trading has a negative effect on the market and potential

America’s Great Depression is believed as having begun in 1929 with the Stock Market crash, and ending in 1941 with America’s entry into World War II. In order to fully comprehend the repercussions and devastating effects of the Crash of 1929, it is important to examine the factors that contributed to the catastrophic event which led to The Great Depression. The Great Depression was the worst economic slump in U.S. history, and it spread to most of the industrialized world. Many factors played a role in bringing about the depression; however, the main cause for the Great Depression was the combination of the greatly unequal distribution of wealth throughout the 1920s, and the

The stock market is always fluctuating. While watching the stock market for the last three months I have noticed that it’s a continuous guessing game. One day your stock might gain several point then the very next it could drop. Luckily enough my stocks never dropped tremendously, the outcome of my stocks wasn’t as great as I would have hoped but I also didn’t lose any money. Each stock varied a little different than the other.

Regulation of financial markets is very significant for investors in the stock markets, policy-makers, practitioners, and academicians who explore the topic very rigorously. This paper contributes to the field by examining the volatility among stock returns for firms in different segments of the financial services industry. My findings are useful to investors and have significant implication for policy-makers and federal regulators in the United States.

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.

Markets are places which people come together to trade stuffs, and stock market is an exchange where investors come together to buy and sell shares of publicly-treaded companies. (“The Financial Importance of the US Stock Market”) It’s good for our society in a great many ways, but it also can be harmful since people’s desire of money are fully exhibited in stock market. The Great Crash, happened in 1929, was not the event of one day but a series of events stretched initially across the week from October 23 through October 31. (Klein 326) This crisis had seriously impacted the U.S. by losing nearly 90 percent of the value of the stock market at that time. (Bierman) However, different from other events happened in the history, both government and normal people tended to blame the speculators at that time and avoid further investigations of it, but is the cause

Virtually all of Ameritrade’s revenues were directly linked to the stock market. Investors generally curtailed trading activity and their borrowing in response to sustained downward movements in the stock market. For example, trading activity declined more than 20% in 1988 following the stock market crash of October 19, 1987. A substantial decline in the stock market could therefore lead to a steep decline in Ameritrade’s brokerage commissions and net interest revenues.

The stock market is like a playground for business. Business’s either collapse or succeed when stock prices go up or down depending on the market at the time; it’s like gambling. The stock market is a medium for business’s and investors who want to be part

The world of stock investing has seen drastic changes since its popularization nearly two-hundred years ago. Currently, with the rise of big data in the age of information, one is better able to predict and understand the financial successes of certain companies and individuals in the stock market. One such advancement came from the introduction of value investing and the idea of intrinsic value – the underlying fair value of a stock based on its future earning power (Harper). One man, Warren Buffet, led to the rapid growth of value investing due to both his exceptional success and extreme transparency. This combination of success and transparency has given those interested in investing in the stock market a clear, yet successful path forward. His influence on investors, as well as the stock market itself, can be seen through the swift advancement of ‘Buffettology’, the study of Warren Buffett’s investing strategies, as well as the ‘Warren Buffett Effect’, an impact felt in the markets when Warren Buffett announces a change in his current position regarding stocks (Hyman).

Equity prices capture investors’ perceptions of the future profitability of corporate entities. Periodically, there can be a disconnection between such expectations and what the real economy can truly deliver to facilitate corporate profits growth. Over the long run, the boundaries of corporate performance are firmly imposed by the global economy. In the interim, however, there can be company/sector specific factors that produce profits growth in excess of the aggregate economy. An elevated level of stock market capitalisation to GDP is often an indication that investors have become somewhat too exuberant. In the US, the current level is running at 170%, very close to the all-time high of 183% in March 2000. This would, therefore, suggest that the US market has reached vulnerable territory. Valuation measures are not, however, without their critics and three critiques have been levied against this particular measure. Firstly, the ratio does not supposedly adjust for the impact of technological innovation on operating margins, as well as lower interest expenses. Secondly, the geographic origin of US corporate profits is diverse. Nearly 50% of S&P500 revenues are derived from overseas economies, implying that US GDP is an inappropriate valuation measurement gauge. Finally, the sector composition of the S&P500 is substantially different to the real economy. My thoughts on

Therefore, with the mania which swept the dotcoms came a massive amount of short term expectations which fuelled the bubble, or the “gold rush.” Overall, according to the Wall Street Journal, expectations are considerably market-based (Wall Street Journal). With the introduction of dot.com businesses, many rules were changed in the way global financial professionals used indicators to foreshadow the future prosperity of companies and shares. The old-style economy players were already trying to play the “internet game” by shifting their standard of e-commerce. An important investigation of the Wall Street Journal found that a strong belief and faith in the dot.com companies would be the blue-chip of the future and eventually helped spread the bubble. The old economy rules were not applicable anymore to the Dot.com bubble situation of financial markets, where most of the principles got lost and forgotten (White C. & Schreb, 2000).

The aim of this article is to investigate the dynamic behavior of daily returns of Microsoft stock prices from 21/03/2005 to 21/03/2015, which are downloaded from the NASDAQ website and include 2514 observations

Only a few decades ago, stock markets were discarded as insignificant with little importance in an economy, but recently have boomed into powerful

The reasons that led to the Wall Street Crash can be put into two main

The purpose of this composition is to supply, in a form suitable for laymen, guidance in developing a better understanding of the meaning behind financial market anomaly and its implications on the established assumption that markets are rational. It is vital for an investment bank client to be aware of the large amount of controversial evidence challenging traditional hypotheses of asset-pricing bahaviour and, primarily, to become sensitive to investment strategies predicting likely abnormal returns. In order to participate intelligently in the equity market, one should, in any case, be forearmed with an adequate knowledge of how one recognized and persistent financial market anomaly has evolved over time and influences