March 31, 2011

America 19th Century

America 19th Century
The Nascent American economy of the 19th century moved forward for this relatively new but determined nation. Transportation networks created to facilitate trade and travel, expanded the economy and caused commerce to grow. Americans wanted to get from place to place rapidly and cheaply. As spending on transportation infrastructure spurred development, The economic development of the United States continued growing, largely helped by the system river networks. Commerce was able flow from the farms to the ports and coastal areas allowing farmers to grow what was profitable and could be traded. Farmers had a larger market now and took out larger loans to finance their expanded farming operations. Bankers and creditors began to find themselves full of customers, needing finance to expand their operations. The added circulation of money, increased the growth of the economy even further. Bankers reaped profits while farmers increased production and supplied the markets with goods.

In the 19th Century, the use flatboats and emergence of steamboats revolutionized the distribution of goods. The steamboat made traveling upstream possible (something not often seen before that) and greatly enhanced how people and goods were transported back and forth along rivers. The Ohio-Mississippi river had a system which made possible access to agricultural areas where crops, staples, or commodities could regularly be loaded and transported across much of the country. The steamboat revolutionized the commerce capabilities of the new America and the added benefit of upriver navigation, only created more demand to travel the rivers. Costs of transporting goods were reduced using the network of water ways and the speed which goods were transported, allowed flourishing two-way commerce on the Ohio and Mississippi rivers.

America in 19th century fashion, built a system of canals intricately linking the seaboard cities to the Midwestern states also allowing for an efficient and stable system for shipping western farm products directly to the growing urban markets of the seaboard states. Commerce flowed more freely and did so at reduced rates. Along with the River Networks, the investment and expansion of railroads, also increased the capacity to trade at cost effective rates to move goods across the nation by land. The combination of expanded trade by land and sea, created a sense of opportunity, causing some investors and entrepreneurs to join the market that was filled with new technologies and real possibilities. The expansion of trade contributed to the economy and new means of transportation heralded a new era of commerce and economic expansion for a young nation whose economy was growing. Investing in transportation networks where beginning to pay off. As the economy grew, so did American's Standard of Living for many Americans.

March 30, 2011

Effects of the Great Depression

The effects of the Great Depression took its toll on the health and welfare of the United States. Systematic bank failures, a credit crunch, and a crashing stock market, all contributed to the fall from a standard of living that millions of Americans had taken for granted. Unemployment hit over 25% as factories and industry cut back on production. Falling stock prices throughout the decade, had already put pressure on Farmers profit margins. With shuttered businesses, crop prices fell even more throughout the Great Depression, forcing many farms into foreclosure. As Credit became scarce, Businesses were not able to raise capital for expansion. Mass lay offs both in the private and public sector, left the Majority of American people, bewildered and confused. Roughly 1 in 4 Americans lost their entire life savings. Poverty rose as many Americans found themselves standing in long breadlines to get a meal. Many owners of automobiles, could not afford gas and would pull them using mules. These were named after the President, known as "Hoover Wagons.

Americans Who Benefited

The Great Depression period also included Americans who profited greatly from the stock market collapse and economic turmoil. Men like Bernard Baruch would "short" the market, increasing the value of their position as the market fell. The duration and severity of the Stock Market fall during 1929-1932 created opportunities for a market operator to take a position short selling. Jesse Livermore was said to be worth $100 million dollars after the market crashed in 1929. The President during the great depression was Herbert Hoover. Americans wanted to see results, accountability, and opportunity again. President Hoover pressed for an inquiry into the short selling as a cause of the market fall. In the end, it turned out to be much more complex than just heavy short selling. The fall also was a result of bank issues securities that ended up being worthless. This over leveraging of the market, was the ingredient necessary to have such a steep sell off that resulted in the great market decline. The effects of the Great Depression lasted for years on families.

President Hoover had adamantly spoken out against poverty in his inauguration speech, and know his name was becoming synonymous with it. As the market bottomed out, new leadership was assembling in Washington on March 4th, 1932 - President Franklin D. Roosevelt's Inauguration day. The real life Effects of the Great Depression left millions of Americans feeling so despondent and desperate, they were deeply and psychologically in need of a leader that could breath life back into their souls. They were willing to work hard to bring the U.S. back to prominence, they just needed to believe. As Roosevelt was sworn in, the country held its breath, listening to a new leader take charge.

March 28, 2011

Forecasting Stock Market Movements

The stock market has been described before as a game of numbers. Prices of stocks and commodities fluctuate based on supply and demand. If a drought destroy acres and acres of wheat, that is less wheat that will go onto the market. If the effect is large enough, investors may begin to buy wheat futures anticipating the rising wheat prices from future demand and lower supply. This is true for stocks as well. If some news or event impacts the mindset of stock holders of a particular company, collectively their actions could be enough to drive the stock in a certain direction. Some investors may believe the rise in wheat prices will mean a potential squeeze on restaurant's profits, due to higher cost of supplies for wheat, flour, grains, etc.. This could result in restaurant stocks being sold off and the prices falling. The smart money managers want to be ahead of the curve. They want to operate in the future based on their analysis and judgment of an investing move. Some may even watch for the fall of these type of stocks and decide they may look like a good short sale. Whichever direction these stocks move and the trades go, there are only three possible directions: Up, Down, and Horizontal. That means stocks will be moving in those directions at some point. Trying to locate a cycle or pattern is important in seeing the whether rises are upward trends, or simply an upward movement of a stock trading in a range.

Investing for Beginners Moves Forward

Investing for Beginners Website
The Investing for Beginners site is about a quarter of the way done. It has been plenty of research and hours of writing, editing, and designing. I have thoroughly enjoyed the research and the creativity that goes into making a website. Some of the pages I have come back to and re-written. Throughout the day, I begin to get ideas for what type of content to write or what pages to add, edit or change. I wanted to create a captivating feel with my home page. Investing is exciting, trading is exhilarating and I love the challenge. I wanted to reflect those passions on my home page. I like the new look better as it speaks more to what this investing world is really about, mysterious and fascinating. I continue to read the newspapers each morning and will try to blog more often. Working on the website has kept me away from both blogging or tweeting but I plan to apply more time to these areas as I enjoy sharing knowledge and collaborating with others interested in the field of investing.

March 27, 2011

Stock Market History: Great Depression Era

During the Great Depression, President Herbert Hoover and his administration were under fire from the American public. The Stock Market Crash of 1929 wiped out the entire life savings of Americans across the country. Many had bought stocks on margin which meant they borrowed from their brokers to buy even more shares. When stock declined, the losses were amplified by brokers selling out a customers position to make up for the losses on the borrowed money. This selling created even sharper declines in stock prices. There were a few savvy investors who "Shorted" stocks and made fortunes during the Declining markets of 1929-1933. President Hoover targeted the "short sellers" as unpatriotic and urged for an investigation to be conducted connecting, them to the Crash.

The Currency and Banking Committee was tasked with this assignment. Led by South Dakota U.S. Senator Peter Norbeck, the Committee would go further than Hoover wanted and investigate large securities issuers, Stock Pools, and fraudulent investing practices. The Committee appointed several lawyers to act as chief counsel but would settle on Ferdinand Pecora. Mr. Pecora and his ensuing investigations brought to light the unscrupulous business practices carried out by major commercial banks including the largest, National City Bank. His prosecution mastery battled head on with the wits of men like J.P. Morgan, Charles Mitchell, and New York Stock Exchange President, Richard Whitney. Pecora's work and thorough investigation gave congress the anecdotal evidence they had been seeking to begin to lay the groundwork for establishing the foundation for the federal governments future involvement in the securities markets. The federal securities laws, establishment of the SEC, and Federal Insurance Corp. largely was due in part to Pecora's work. See More about: the effects of the great depression.

March 22, 2011

Jesse Livermore and Stock Trading Quotes

Jesse Livermore was a Trading Genius from the early 20th Century. He was able to master the movement of stock and commodity prices and with this unique and gifted ability, he was able to make millions in the Stock Market. Of course when inflation is factored in, Mr. Livermore would have been the equivalent of a Billionaire at the height of his trading career. The man was enigmatic and extremely private. He gave interviews to the newspapers but his trading style remained a mystery. In 1940, Mr. Livermore published a book, "How to Trade in Stocks." We find a lot of his trading wisdom laid out in this classic investing book. His blueprint for trading in the stock market applies today in so many ways. He was under the impression that Humans were the ones that moved markets. Emotions like fear and greed could cause major sell offs or major bull markets. The mastery of knowing which side of the market to play, and when to enter or exit a trade, was sheer genius on the part of Mr. Livermore. Learn more about Jesse Livermore On the Investing for Beginners website or reading his quotes on trading the right type of stocks: Jesse Livermore Quotes