Talk:Stock market/Archive 1

If this encyclopedia showed what it does for the citizens it would help greatly. Why didn't you write that, person who wrote this extremely long, boring, and useless article?

no it is not -- I don't think the article is neither too long, nor too boring, nor useless. But it certainly avoids dealing with the basic question: What good the stock market systems do for the society as a whole? That companies be privately owned is not necessarily bad, that owners sell and buy their properties ("stocks") is OK, but that hundreds of thousands of people make their living out of giving the service of dealing with stocks, or just of profiting by buying low and selling high, seems very abnormal and non-desirable.

Also, if a company makes a decent profit in an honorable way, why should it be concerned at all because people sell their stock at a lower price? -- R.E.T.

Because it is a public company's responsibility to maximize shareholder value, and shareholders elect a board of directors to make sure that management is pursuing that goal-or they get fired. Second, stock markets benefit society by providing companies with a large amount of capital to make long-term investments in growth. Without a stock market, companies would be completely dependent on debt and there wouldn't be anywhere near the level of innovation and job creation that a stock market allows.

---

But there is also a limit to growth, which the stock market does not accept. The stock market puts a continuous pressure on companies to grow, despite their existing size or giant earnings. Society cannot tell the companies which types of jobs or innovations are beneficial to humans as a whole; instead they are the ones which maximize profits, regardless of social cost.

I also find this quote on the page odd: "Really, a stock exchange is nothing more than a super-sophisticated farmers' market providing a meeting place for buyers and sellers." There are so many problems with this gross over-simplification. However, I think it very aptly illuminates the blindness and P.O.V. of an economist.

-- A.Z.

Helpful basic info

The information found in this article I think is helpful if you need to understand the basic elements of the stock market and introduce yourself to the financial instruments of the market. It helped me understand for my economics project.

• I disagree. This page has a smattering of things relevant to stock markets but nothing like a history, reason for existing, description of markets around the world, varying rules of markets, description of migration from manually traded securities to electronic trading, listings of many top exchanges, etc. Stock markets are businesses. Why aren't there descriptions of their profit models? Consider Newspaper

• This article discusses the stock market generically; the world's many stock exchanges have their own articles, or should. I explicitly omitted any mention of the NYSE's beginnings as a bunch of speculators trading shares under a buttonwood tree, because it doesn't belong here. And if you see anything missing from the Wikipedia, you're free to add it. Blair P. Houghton 20:13, 26 Mar 2005 (UTC)
• I got a login. In the [Stock Exchange] discussion page, they say that Stock Market is like a stock exchange but also involves private trading of equity. This page doesn't seem to reflect this difference. -- flangazor.
  • Someone came in and clarified quite a lot. Thanks. Flangazor 22:39, 20 September 2005 (UTC)

cool :)

International markets section

I removed the following sentence from the international markets section:

Because global stock-market indices suggest the state of the global universe of stock opportunities, may shape the choices made by buyers and sellers.

First, it doesn't make any sense. If the point supposed to be that global indices are a representation of the feelings of global buyers and sellers? The second part, that it "may shape the choices made by buyers and sellers" can be used to describe any market, let alone a stock-market or even a global stock market. --Ricky81682 (talk) 22:02, May 14, 2005 (UTC)

This section was almost inexistent. I moved the two sentences there into the history section. -- Typewritten 10:22, 22 May 2006 (UTC)

Investment strategies

I started the investment strategies section. It's really messy right now but I'll clean it up in a moment (I'm a little new to MediaWiki syntax).

Do you think it fits with the style of the rest of the article? I think it is an appropriate to be connected with the stock market, but I wonder if it should be it's own article? The same question goes for CANSLIM, Foolish Four, and Technical/Fundamental Analysis.

• Update: Fixed the links. It turns out that Technical analysis and Fundamental analysis are already articles. I'm a little unsure whether I should mention the Foolish Four or not, since it is dependent on an American stock exchange, and this article tries to stay away from talking about specific stock markets, such as the NYSE.
  • Second update: Foolish four is fundamental, not technical. (though it is a very rudimentary fundamental method) After removing the comment saying that the foolish four was technical, the subheading became too small to be worth being a subheading

Securities vs derivatives

This article was almost exclusively about Stocks, i.e. equity securities, (which a stock market article should be), but other products kept creeping in - bonds, and equity-linked derivatives. I have now deleted these direct references, as for instance bonds are traded in the bond market, and stock options in the derivatives (or options) market. All derivatives mentioned in the article are in fact traded on futures exchanges such as Euronext.liffe, CBOT, etc., not on stock exchanges, and I think we have to make that difference quite clear. I did add a small piece about Derivatives on stocks. - DocendoDiscimus 10:05, 24 September 2005 (UTC)

All derivatives mentioned in the article are in fact traded on futures exchanges such as Euronext.liffe, CBOT, etc., not on stock exchanges,

You are behind the times! ETFs are derivatives and now trade on all exchanges. Warrants are derivatives that trade on exchanges. Moreover, now the the NYSE has gone electronic, I think you will see all types of securities traded on all exchanges. I think you just have to bite the bullet and accept that the stock market is now just a synonym for securities market."I think that the stock market will be good in the future. The economic around in most country are good and we have economic growth in mostly country. I think that the market in Norway is an exciting case and espesially in in the oil sector. The oil price today is high 70 dollar. In Norway the oilsector on the stock market are good because of the high oilprice. I think the price will increase in the next year. Maybe the oilprice will be at 100 dollar in 3 years. Sow by norwegian oilstocks now".

Check out the definition of securities which is correct. It encompasses all of those bits of paper traded for money.

—>normxxx_talk—> email 23:20, 14 January 2006 (UTC)

I have amended the article to quantify the 100 trillion outstanding amount noted for derivatives. This amount does not actually exist anywhere (it is notional - you typically pay interest over the notional amount, etc.) so you cannot just compare it. 28 July 2006.

Securities vs Wealth

What are the opinions out there : Should it be clarified in this article that securities do NOT represent actual wealth, rather only potential wealth. When everyone tries to realize the potential wealth of a given security at the same time, the security collapses; when everyone tries to realize the potential wealth of all their holdings, the stock market collapses, as it did in 1929. These truths should be made clear and emphasized, for many people apparently do not think thru these ideas clearly.

I think that is a salutory suggestion. I am not sure that most people have any notion of the fact that, lacking a buyer, a stock certificate is worthless— even if the underlying company is raking in the money hand over fist and the stock, therefore, has great (potential) value!

—>normxxx_talk—> email 23:25, 14 January 2006 (UTC)

This statement is false, insofar as securities are wealth just as much as is ownership interest in a house or cash is wealth, but in fact even more so. A house is only worth (in terms of money) what someone is willing to pay for it at any moment in time. A security represents both interest in the properties that the company might own plus its cashflows, so even if people value the company at zero and refuse to buy it from you you still can get the profits from the company. Both house ownership interest and securities ownership interest are predicated on the legal system being in place, so if there was none or anarchy a security would be worthless and a house would be worthless insofar as others can barge in and kill you for your house.

Are Derivatives Part of the 'Stock Market?'

I added derivatives to the intro definition for 'stock market.' However; I am not sure what the consensis is on that. The phrase 'stock market' seems to be rapidly devolving into a synonym for securities market. (The phrases are certainly used interchangeably.) Is there any virtue in keeping the phrase stock market pure? —>normxxx_talk—> email 23:20, 14 January 2006 (UTC)

Is investing money through stock markets really a win-win proposition?

Please educate me for both individual and institutional investors.

It's no different than buying (or selling) anything else, such as your house or your car. If your house or car (or stock) appreciates, you can call that a win-win (if the previous owner also made a profit). If not, not.

However, this is quite different than the sale or purchase of a derivative (such as a PUT or CALL). That is a zero-sum game where there has to be a winner and loser for every derivative since there are always two parties involved with such a transaction— the holder of the option and the guarantor of the option— only one can make money; the other must lose. Although, it is possible for both to lose. And both can lose, although the loss to the option buyer can never exceed the cost of the option in the first place. This is not unlike buying a (CALL) option on a parcel of land for 6 months. If the value of the land goes up, you are legally entitled to the increased value which the owner of the property can no longer claim; he must be content with the price you promised him and the money you paid for the option (if you exercise or sell the option). If the value of the land goes down, you are out only the cost of the option; the owner is out the loss of the value of the property that he could have obtained by selling it outright 6 months ago, less the price you paid him for the option. In other words, you are paying the property holder (or seller of the CALL) for taking the risk of an adverse change in value over 6 months. ⇒ _normxxx| ^talk ⇒ email 19:06, 9 February 2006 (UTC)

Thank you, Normxxx. Please vote my poll at http://ictreligion.blogspot.com/2006/02/investing-in-stocks.html

Actually many would contest this. For example, Warren Buffet says that the stock market only adds wealth based on the continuing and future profits of the companies it represents, any outsize gains by trading stocks is thus a zero sum game. Also, derivatives are not necessarily a zero sum game, as they are used very much like insurance, which gives one side of the trade peace of mind and stability (by locking in an interest rate, locking in a sales price for a stock, etc.) "I think that he stock market is a interesting subject to invest money in. But is is also a difficult task, it is importent to know what you are doing. I think that the norwegian market has a exiting future with increasing stockprices. I think it can be good to invest in the oilsector because of the high oilprice. The oilprice is today 70 dollar and i think the price can increase to 100 dollar the next two, three years. So by norwegian stock now"

But did it really teach me anything about stock markets?

I admit, I know little to nothing about economics, which is why I looked at this page. I wanted to know more, and what I found was that I learned very little. (Very little that I could use, anyway.) I recommend the addition of a section that summarizes the general mechanics of stock trading, emphasizing the price determination of a share and how that works, explained clearly and succinctly. This is what I think most people who would come to this page would be looking for.

⇒⇒Check out the newly expanded "Trading" section. ⇒ _normxxx| ^talk ⇒ email 06:39, 18 March 2006 (UTC)

Section 6, the Importance of stock markets for the global economy, while interesting in its own right, detracts from the overall quality of the article. It reads like an undergraduate essay. It's long, takes up most of the bulk, and even has a thesis attached to it (that has little to do with the importance of stock markets in their relationship to the global economy). I would remove it, except I wouldn't know what to replace it with.

I think this article needs to be cleaned up and fleshed out.

Section 3, Market Participants, should be cleaned up too. It sounds far too partisan, too political, like it has too much of an agenda.

Again, I don't know myself what to contribute, just that I'd like to be reading something of a higher standard, and believe very much in the wiki.

Nevertheless, those are good comments! I have moved most of the material under "Market Participants" to Corporate governance, where it belongs. And, I am now in the process of editing "the Importance of stock markets for the global economy." Either it will be further broken up or it will be provided with subheadings.

I recommend the addition of a section that summarizes the general mechanics of stock trading, emphasizing the price determination of a share and how that works, explained clearly and succinctly.

That is an outstanding suggestion, and it will be done! (Currently, there is not even a mention of the fact that stock markets are 'auction markets' and the worth of a share is only what someone is willing to pay for it— in the absence of any buyer, the share is worthless, though the corporation may be doing gangbuster business!) ⇒ _normxxx| ^talk ⇒ email 20:27, 8 March 2006 (UTC)

Worldview Tag (though not limited to this problem).

This article appears to be limited to the functions of the U.S. stock market and/or economic model, though I applaud the author for including histories of other exchanges. I should also point out also that the references don't appear to follow the Wiki format requirement of hyperlinked ISBN numbers.

Second, the author uses false analogy when equating the (purportedly-U.S.) market with a "farmers' market" (a term with which not audiences of this article may recognize). It would seem to me that if the author is to keep within the confines of Wiki format, they should follow definitions all ready found on Wikipedia. In the referent article (Farmer's market) the author defines this type of micro-market as one which cuts out the middleman. Despite how the author defines a "middleman," it is clear that there are, most likely, more agents between the average stock holder and the Board of directors. Furthermore the Valuation of goods is less in the hands of those outside the corporate or speculative realm in the stock market. Within a farmers' market speculation could be said to be more limited in nature (or relative to the U.S. and worldwide exchanges).

Despite my call for a complete overhaul of this article, I would like to add that this also assumes that the audience accepts a Capitalist model. It could be argued that not all governments participate fully within the frame of a capitalist model and furthermore do not benefit from a stock exchange in the way the author mentions. The "Importance" section is the most pointed of this disregard for other economic models, as it seems to assume a kind of universalism in terms of financial mechanisms.

There is no doubt that the U.S. economy seems to steer economic trends on the global level, but it does not give the author grounds to apply a U.S. model in a ostensibly objective definition of "stock market."

I am not familiar with the subject at all, but if the systems tend to vary alot of country to country (Such as the U.S. and Canada) or region to region (Such as North America and the European Union) then maybe specific pages for the English countries (UK, US, Australia, NZ, Canada..) could be done. Or if systems are somewhat similar but do have key differences, at least make a page, say for the U.S. such as this one, note that the page is U.S. centric and also note in certain sections the differences between the U.S. stock market and those of the other English countries. I would expect the Japanese article to be Japanese centric, et cetera, but because there is a number of English countries, I do find that grouping them as one is not ideal. I would expect English Wikipedia to be a bit more U.S. centric though, just like French Wikipedia is France centric (When there is Canada too). --A Sunshade Lust 21:07, 6 May 2006 (UTC)

So you think it's right to assume a U.S. audience for all English articles? That seems a blatant disregard for the spirit of Wikipedia. If the article is about the U.S. Stock market and not stock markets in general, then I suggest you write a new article. Have you read any of the other Wiki regional articles dealing with this subject? Again, I am not trying to dissuade anyone from using the U.S. exchanges as models, but I would hope that the scope of this article is more holistic, otherwise we may limit understanding of the subject as a whole.JuniorMuruin 17:20, 10 May 2006 (UTC)

I agree on the worldview tag. Also: it does not make much sense to organize the article around "countries". It would be more useful to use market microstructure criteria, such as differences between (1) order-driven markets (stock exclanges, bourses), (2) quote-driven markets (i.e. markets with market makers or dealers, such as NASDAQ) and (3) OTC markets ("over-the-counter", not centralized). Another criteria: distinction between (1) open-outcry markets and (2) electronic markets (simplistic divide, but something to start with). -- Typewritten 10:22, 22 May 2006 (UTC)

Tone of the Article

The article is well written, however, I have noticed that a number of sentences speak "directly" to the reader, which I find unencyclopedic. Here are examples:

(You've probably seen pictures of a trading floor, in which traders are wildly throwing their arms up, waving, yelling, and signaling to each other.)

Just imagine how difficult it would be to sell shares (and what a disadvantage you would be at with respect to the buyer) if you had to call around trying to locate a buyer, as when selling a house.

Although there is human contact in this process, don't think that the NYSE is still in the Stone Age'; computers do play a huge role in the process, especially for so-called "program trading".

I could edit those myself but I just want to make sure that it's not just me that feels that these kinds of sentences should be rephrased, for example, the third one I noted could remove the "don't think ... Stone Age" and be fine. There are also those like the first sentence which I'm unsure how it would be edited. --A Sunshade Lust 20:58, 6 May 2006 (UTC)

You are Right

Yeah I found them to be unsuitably phrased as well. Maybe someone could rephrase them and convey the information contained in a more suitable format Vijeth 14:32, 9 May 2006 (UTC)

This article reads like a college essay, which it very well could be.

What it, or at least a large part of it, reads like to me is the dreaded original research. 81.159.61.96 03:09, 11 September 2006 (UTC)

yes, needs some work

Definition section

This section goes into information about bond and commodity trading, which appears to be out of place. Robertknyc 02:41, 4 December 2006 (UTC)

History section

The paragraphs that discuss the 11th and 12th centuries appear to have nothing to do with stock exchanges and should probably be eliminated. Robertknyc 02:59, 4 December 2006 (UTC)