It's no secret that big institutional investors have a lot of advantages on Wall Street. They get the first chance to buy hot initial public offerings. They get to meet in person with companies' managements.
Volatility may be rising simply because investors must digest more information every day.
Electronic communications networks match trades between investors directly, without using a market maker or specialist as an intermediary.
To finance deficits, the government must sell bonds to investors, competing for capital that could otherwise be used to invest in stocks or corporate bonds. Government borrowings raise long-term interest rates, stifling economic growth.
For value investors, General Motors is a tempting target. The company's share of the North American auto market has steadily declined for two decades, and analysts say the company suffers from weak management and unexciting cars.
To economists, prices serve as crucial signals to producers and consumers. In a regulated market, the state sets prices high enough for private companies to cover their costs and earn a guaranteed profit for their investors. But in a deregulated market, prices should vary with demand and supply.
In a Ponzi scheme, a promoter pays back his initial investors with money he has raised from new investors. Eventually, the promoter can no longer find enough new investors to pay off the people who have already put up money, and the scheme collapses.
The lower spreads mean lower costs for investors, because Nasdaq investors generally do not trade directly with one another. Instead, they usually buy and sell from market-makers, brokerage firms that flip shares between buyers and sellers and keep the spread for themselves.
Publicly traded United States companies report sales and profits to investors every quarter.
Investors have been too willing to buy stocks with strong reported earnings, even if they do not understand how the earnings are produced.
