Thursday, July 23, 2009

How do you sell a stock short?

Selling Stock Short Explained
from Blain Reinkensmeyer

Alright, so you’ve always heard of someone going, “hey, I would short that sucker next week, there is no way it is going up.” You understand the main idea that you are betting a stock will go down, but how does it actually work? Selling short straight forward as is means you are selling stock you do not own to a broker, the broker pays you for those shares, then you buy back those shares (hopefully at a lower price) and pay the broker back. Let’s break it down now.
The short selling process can be broken down like this: Full-text:

What is arbitrage?

Arbitrage is the purchase of a security from one market in order to quickly sell in another market for a profit capitalizing on price discrepancies. It can also be the purchase of a stock that is soon to be bought out with the view of reselling to the buy out company.

Tuesday, July 21, 2009

What are the actual mechanics of the stock market?

Market Mechanics: A Guide to U.S. Stock Markets

Although the inner workings of the stock market are fascinating,
few introductory texts have the space to describe them
in detail. Furthermore, the U.S. stock markets have been changing
so rapidly in recent years that many books have not yet
caught up with the changes. This quick note provides an up-todate
view of how the U.S. stock markets work today. This note
will teach you about:

• The functions of a stock market;
• Stock markets in the United States, including Nasdaq
and the NYSE;
• The difference between limit and market orders;
• How stock trades take place; and
• Lots of other interesting tidbits about the stock market
that you wanted to know, but were afraid to ask.

Source & full-text:

Saturday, July 18, 2009

What is Elasticity

What is Elasticity?

The degree to which a demand or supply curve reacts to a change in price is the curve's elasticity. Elasticity varies among products because some products may be more essential to the consumer. Products that are necessities are more insensitive to price changes because consumers would continue buying these products despite price increases. Conversely, a price increase of a good or service that is considered less of a necessity will deter more consumers because the opportunity cost of buying the product will become too high. Continued here:

Saturday, July 11, 2009

What does caffeine do to the brain

What does caffeine do to the brain?

Caffeine is an example of a stimulant, which is a type of drug that speeds up the action of your brain and also makes you more alert. More here:

What makes a stock move up or down

What makes a stock move up or down?

The answer is in how much demandand supply there is for a stock at a given time. If there are more investors for a stock than is for sale at a given moment, then the available stock shares price rises to a higher level. If there are not enough stocks for sale available at the higher price, then the price of that stock goes up again. The same is true if the demand for a stock at a price decreases at a given moment. If there are fewer buyers than sellers than can agree on a given price, then the price of that stock goes down until the supply and demand of that stock stabilizes. If everyone that owned a stock wanted to sell that stock at market all at the same time, the value of that stock would plummet. If everyone wanted to buy more of the same stock at market price at the same time. The value and price of that stock would go up.

This article is written to the best of my knowledge. Please post a blog if you have any corrections to make.