Easy ways to make money for kids

Stock Photography

There are numerous people out there such as designers and publishers that have a constant need to licensed photographs to use in the work that they produce. Stock Agency sites sell images to these kinds of people and are always on the lookout for photographers top join them and upload images to their ever increasing databases.

What this means for you is you are able to submit your photographs and every time someone want to use one of your images commercially you will get paid a small fee. Fees per image tend to be small (a few cents to a few dollars) but over time these amounts can build up.

Making money through stock photography is a numbers game. The more photographs you submit, the better the chances that people will want to use them. The beauty of this method is that the income is residual in that once you have uploaded a photograph if it gets used a lot it can bring you income for many years to come without any additional input from you.

Portrait Photography

Most people you know will have at some time paid for some family portraits. Once you start spreading the word that you can offer friends and families a good discount on family portraits you’ll probably be inundated with work. With only cheap equipment you can achieve great looking portraits with minimal effort that will keep your clients happy and your bank balance full!

Best of all this kind of work can be fitted around other work commitments and social arrangements making it a truly flexible way to earn money from photography.

Wedding Photography

Wedding photography provides the amateur photographer with perhaps the best way to earn some decent income. Couples pay big bucks to have a photographer for the day and if you have the equipment and skills this can be easy money.

It is not as easy as you think as successfully shooting a wedding can be a very time pressured job. To help you learn the art of wedding photograph and get some help with the planning i suggest you consider taking a wedding photography course.

Making money stuffing envelopes is probably one of the oldest work-at-home scams out there! Since 1997 Ive been warning moms about the dangers of sending money to companies who claim you can make money assembling crafts, getting lists of companies looking for home workers, and last but not least, stuffing envelopes.

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It seems so easy once you pay your money, youll get a list of companies who need people to stuff envelopes with their promotional material, invoices, you name it and because you feel you can make money at it, youll do it. Unfortunately, that isnt how the envelope stuffing scam works. Once you send in your cash, all youll receive is information on how to place ads, similar to the one you responded to, which scams more people out of their hard-earned money.

But what if you really want to make money this way. About a month ago I found something very exciting for those intrigued with the whole envelope stuffing business. I was amazed to discover that if this is your ideal home business, it really can work.

Katie Veseleny, author of Bizys Guide To Making Money With Direct Mail Services took time out to answer a few questions about this possible home-based envelope stuffing business.

Liz: Katie, what’s up here? Can you really make money stuffing envelopes?

Katie: Well, sure you can. But, don’t expect anyone to drop off boxes of envelopes and inserts and pay you a huge fee to put them together! This is something that will be most successful when you offer total service packages. I prefer to call it Direct Mail Services.

Liz: What exactly is a Direct Mail Service Business?

Katie: A Direct Mail Service Business is offering to take away a portion of the nuisance work for your client. Much the same as a business owner would hire an accountant, they will also hire companies (such as yours) to handle this kind of work. Direct mailing is just that you take the mailing responsibilities away from your client, and let them get back to business. You collect and maintain the mailing lists for them, send out their regular periodic mailings, as well as any sporadic mailings, and help with anything else that will make their business more successful.

Liz: How does one start a Direct Mail Service Business?

Katie: Start by looking into who your clients are, knowing their mailing habits and what they need. Put together service packages that really offer benefits. Also, rather than asking your client to provide the inserts, envelopes and mailing labels, you can actually create the inserts needed as well as creating and maintaining their entire mailing list database. I think you’ll find it’s more attractive to your potential client when you’re taking away the bulk of the nuisance work, and allowing the business person to get back to doing what they do best running their business.

Liz: How does this business differ from the envelope stuffing scam?

Katie: For starters, it’s your business. You know you’re legitimate. Plus, it’s a total service package. It’s not something that’s going to make you rich overnight you need to work at it by building a clientele and a biz reputation. I believe that if you do the math when looking at those advertisements, you’ll find it’s absolutely absurd to believe that you could make so much money with little or no work required.

Liz: What equipment do you need?

Katie: Your computer or a good word processor to print the labels and keep track of the mailing lists and databases. If you’re inclined to offer design services, you’ll need additional software to help with the designing of promotional material and other things. There are some frills and ‘wish for’ equipment, such as paper folders and automatic envelope folders, that will make things run more quickly, but you can do without them initially. Let the biz buy those extras later on.

Liz: What’s the total cost to get this business up and running?

Katie: This will vary with each person. It’s going to depend a lot on what you want to offer in your service packages and what you have at your disposal right now. You can start with only the cost of promotional materials (biz cards, flyers, brochures, etc.), or you can put together a portfolio of examples of your work if you’re planning to offer design capabilities. That will be a little more expensive.

Liz: What type of person would do best at this business?

I’m going to say, patient people. This is a great business for folks with little ones at home and those who have odd hours of availability. It’s something you can do in the evenings, early mornings, anytime. The most necessary skill is being able to ‘sell’ the idea to your clients. You’ll need to know how to present your service packages in a beneficial light.

Liz: How do you market this business?

Face-to-face conversation with your potential clients will work best. Talk about it with everyone and get some positive interest going for yourself. Talk with your friends and family members, they often know someone who owns a business or works in an organization that would appreciate your services. Talk with business owners you know and make appointments to discuss the benefits you can provide.

Liz: Any last tips or suggestions?

Katie: 1) Take a look at the mail you receive at home. How did you react to it? What changes would you suggest to generate a more positive reaction? Can you verbalize those suggestions to the sender? 2) Don’t call it “Envelope Stuffing” that sounds like a scam. It’s Direct Mail Services, which sounds more professional and definitely more credible. 3) Look at every business. Don’t cross anyone off the list until they say “no. Direct Mailing is not just sending out advertisements. Other possibilities include a businesses need to respond to requests for more information, sending acknowledgments when receiving resumes, sending greeting cards and appointment reminders, etc. They NEED someone to handle this for them!!

Ive always found that when you decide to do something, and put your mind to it anything can happen. If starting your own Direct Mail Service Business is something that interests you Katie Veselenys ebook, Bizys Guide To Making Money With Direct Mail Services gives you step-by-step instruction on how to make this business work.

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Make Money With Your Camera – Check out our Photography Money Making Ideas. “Genuine” Photography Money Making Ideas – Preface

Maybe it is easy for me to say as I have over 20 years experience, a huge stock of images and some fairly good contacts in the business. However, even for someone just starting out, there are many ways in which to get yourself seen and to also earn good money with your camera.

Please note: This site does not in any way encourage tacky “get rich quick” schemes. Any advice and tips that we give for earning money from photography will require some hard work and a little dedication from you.

This page will grow as we build All Things Photography, but we wanted to get it up and running now that we are receiving a fair amount of traffic through this site (5,000 photographers a day).

No matter what stage you are at or what experience you have, if you can take a half decent photograph, you are on the way to making money with your camera. It may take time to get started, but if it was that easy, EVERYONE would do it.

Now, obviously as a beginner, you won’t be going out and doing society weddings or anything (are you?) at this stage. You need to get to know your camera, how it works and then start to use it to your best advantage. The first thing you should maybe look at is selling your images as stock as detailed further down the page.

NEW Photography Money Making Ideas: Start Your Own Photography Business eBook

Learn how to start your own profitable, full or part-time photography business with nothing more than a DSLR and lens with our new Photography Business eBook.

NEW Photography Money Making Ideas: “How to Sell Stock Photos” eBook

Learn how to sell your photos and create a monthly, residual income with our new eBook on How to Sell Stock Photos.

NEW Photography Money Making Ideas: Earn Commissions and a Monthly Residual Income With Us!

Help us to promote the new private membership section to All Things Photography and you can earn generous one time commissions plus a small percentage of every members fee each month for the lifetime of their membership!

Just head on over to ATP Members, sign up as a free member (you must be a member whether paid or free to become an affiliate) and grab your affiliate code from the affiliate section, and start making money today…simple!

If you become a paid member, head for the brand new, no hold barred stock photography training section and start shooting stock!

Click Anywhere Above

Photography Money Making Ideas – Build Your Own Website That Actually Works, Quit Your Day Job and Work From Home!

Why pay a fortune for someone else to build your website only to hope that your beautiful looking pages eventually get found. Why not, for just $1 a day, teach yourself how to be the master of your own destiny and do it yourself knowing that you can get yourself and your business seen by thousands of people daily.

It doesn’t even have to be a photography site but this is who we use…

Photography Money Making Ideas – Photographing Properties

This is probably more for the more experienced Digital SLR user, but is by no means out of reach for newbies. If you are fairly confident with your camera and need new direction, motivation or guidance on how to start up your own photography business, this could be for you.

My main income from photography comes from Weddings, Commercial, Portraits and Stock as well as the one thing that actually brings me those jobs – Property Photography. Rather than battle it out with hundreds of other photographers for work, by learning a niche and specializing in something not many photographers do, you can grab so much of the action.

Rather than duplicate all the info on this page, you can learn more by following the link HERE!

Photography Money Making Ideas – Stock Libraries

Ok, I am new so where can I sell stock photographs? or Sell photographs for money? how do I compete with all the professionals and what do I do?

Many agencies require high quality, high standards of photographs taken by very expensive cameras and which are used by large advertising agencies. this maybe out of some peoples leagues for now, but there is hope…

Well, think about it. The large stock agencies sell high quality photographs by professional photographers like those above to large, wealthy companies! So who sells photos to the smaller businesses that can’t afford the large prices? You do! If you have any decent photographs on your computer or are willing to go out and take a few, I will show you where to send them.

You will need good photographs of everyday subjects that I will cover in a minute, but if you have a digital camera of 3 mega pixels or more…read on!

Now this is a system that I for one hadn’t looked at before, I have always put my stock photographs on with the large agencies and they make good money but not that often and the competition is fierce. Corbis have over 3,500,000 images on their files. How do you compete?

I came across a rapidly growing company that charges very low prices for its photographs (approximately $139 will get you 750 images in a month if you are buying). Now this means there are people constantly on this site downloading photographs and they need more…a lot more images to keep up with the growth.

As a submitting photographer, you only get 38 cents per photograph downloaded, but each buyer will download a minimum of 750 images each month therefore thousands of images are downloaded daily. If they are just sitting unseen on your PC, what do you have to lose?

When I started, I tested this site and referred a photographer to them and with just his 35 images of motocross bikes online; he had sold 9 images in the first 6 days. I tried it myself and uploaded a sunset picture and in 3 days I had sold 3 copies. The way I see it, and according to the company’s forums, if you have 1000-2000 images on their database, you should easily earn around $600 per month. All you need is 100 downloads a day and you have it for life! Or all the while the company trades.

One Year On Update – I now have just over 1,200 images with them and have sold over 23,000 photos. I am earning around the above figure every month and it just seems to be getting better.

Three Years On Update – I still have about the same amount of images online (but I have over 3,000 images waiting to be uploaded…busy, busy) and I have now sold around 50,000 images at shutterstock alone, countless video clips and the photographers that I have introduced to Shutterstock have sold a combined total of…wait for it…338,542 images!

This is the first image I uploaded

The great thing is that they have now started a new system and a bunch of new sites whereby you will earn up to $2.85 per “on demand” image downloaded so it just gets better. Your images get uploaded here automatically so there is less work for you!

Plus…If you sell an image with an “extended license”, you will earn $28!

I expect to hear from professionals saying this is bad for stock photography, but I disagree. This is just another sector of the market that caters for the beginner and amateur photographer, as well as the smaller business wanting to buy stock.

So, if you have any images of 4MB or more that would be suitable, and they are just sitting on your PC, you are wasting money. I uploaded 50 yesterday and am waiting for their approval. They are the same as the ones I have on with a larger agency and I will earn a lot less, but it is still more than I had before yes?

Click the links below to Shutterstock and two other popular, high selling agencies, sign up and registration is genuine and absolutely free so you have nothing to lose. The beauty is that once they are there, you have an income for life! Once you have registered, look at their “Best sellers” and other types of photos that they have and start uploading. Use the forums for advice and start earning. How much are your pictures earning you at the moment?

Click for Free Registration to Shutterstock

Dreamstime

Fotolia

You could also join our new private membership site at ATP Members and read our huge stock photography training section which goes into every detail you need to know to start earning with stock photography.

If you live in the UK, you could enrol on our 2 day stock photography course in Dorset.

Photography Money Making Ideas – Related Books

Profitable Photography by Roy Barker – How to easily start up and market a profitable photography business.

Make Money with your Digital Camera – Sell Photos, Images, Screensavers and more ways to profit.

Make More Money with your Digital Camera – For less than $40 and a money-back guarantee, what’s to lose?

Photography Money Making Ideas

Here’s why: there’s a little-known but extremely accurate stock market investment technique that actually eliminates the guesswork and uncertainty that accompanies online stock trading by telling exact stocks to buy, at what price you should buy them, and the exact price you should sell these stocks to ensure that you make a profit off of each and every trade that you make.

What’s this technique called? It’s called stock channeling and it may quite simply be one of the best ways to be truly successful at online stock trading.

Here’s how stock channeling works: When a stock repeatedly moves up and down in waves between two parallel lines it is said to be a channeling stock. The upper trend line, or high price point, acts as resistance, and the lower trend line, or low price point, acts as support. The area between the two trend lines is the channel.

So all an investor has to do is buy a channeling stock when its price is near the bottom of the channel and sell it when its price rises to near the top of the channel. And since channeling stocks repeat their movements, investors can buy and sell and profit from a stock over and over again.

So why is stock channeling such a reliable investment technique? Because it relies on the market’s natural tendency to trend. You see, when a stock starts to go up in price, some investors will always say that the stock price has gotten too high and they will sell their shares and take their profits. At the same time, other investors will also be inclined to say a stock is too high and they will decide to short the stock.

Then when a stock starts to go down, some investors will decide to start adding to their position and if it really goes down in price either the same people who were averaging down will load up on it or value investors will step in and say the stock is cheap, it’s time to buy. Also at this time, those who shorted the stock may cover their short and take their profits.

All of these types of investor behaviors often work together to keep a stock channeling back and forth in price. However, channels don’t last forever. Eventually a channel will be broken and probably a new one will be formed.

But until that happens, a channel can last for years and provide an investor with tremendous profits in the meantime. The key is finding stocks that are channeling so that you can invest in them and profit from them over and over again. Here is an example trade that shows the profit potential of investing in channeling stocks:

Let’s say that an investor knows the stock of ABC Company is currently channeling so he buys 100 shares at the low price of $15 and then sells it at the high price of $18. Then this investor waits for the price to go back down to $15, where he buys it again and then he sells it again at $18. He does this two more times and in no time he’s made a nice little profit of $1,200!

I’m sure I don’t have to tell you that greed and fear are two of an investor’s worst enemies and to be truly successful in the stock market you need to be able to keep your emotions out of it. Stock Channeling helps investors profit from the stock market by giving them strict buy and sell signals to follow for specific stocks that are channeling.

Stock channeling is by far one of the best ways to consistently profit from the stock market regardless of what kind of condition the market is in. It is the only investment strategy in existence that provides a clear and concise road map to exact stocks that you can profit from over and over again.

Making Money from Stock Market Tips for Beginners

Making money from stock markets requires trading in the stock market. Prudent buying, holding and selling of stocks generate profits and money. Stock trading is the function that interacts and organizes in the stock market.

This market involves buying and selling of millions of shares all over the world, and generates profit. A share of this profit comes to the successful trader in the stock market. That is how s/he makes money from the stock market.

It is a mystery how this large a volume and value of trade is accommodated in the system of trading. These financial markets are marvels of technological capacity. As a beginner, you must understand essentially how the market works. You dont have to know all of the technicalities of buying and selling stocks.

The first and foremost you need to know is the functioning of the exchange floor, irrespective of whether you trade through the floor or electronically.

When the market opens, hundreds of people are seen fast moving about shouting and gesticulating to one another, staring at monitors, and entering data into terminals, or busy on cell-phones on the exchange floor. It looks like a complete fiasco.

However, by the time the end of the day approaches, the market has worked out all the trades, and is all set for the next day.

These are the steps in a simple trade on the exchange floor of any major Stock Exchange: You instruct your broker to buy a number of shares of a company at the current market price.

The brokers order department passes the order on to their floor clerk, the dealing official, in the exchange.

From this person it goes to one of the firms floor traders whose task it is to find another floor trader wanting to sell that number of shares of the company you wanted. Each floor trader has particular knowledge of which floor traders deal in what stocks.

The two come together on a price and seal the deal. The notification process moves backward along the line and your broker gets back to you with the final price. You receive the confirmation notice in the mail after a few days.

For the individual investor, you frequently can get almost instant confirmations on your trades, if that is important to you. It also facilitates further control of online investing by putting you one step closer to the market.

Beginners should avoid complicating things trying to get rich in a day by venturing into every nook and cranny without knowing a thing or two about them. There are many types of trading like day trading, swing trading, futures and so on. Instead of trying to do a little bit of everything, it is profitable to concentrate on a single type that is simple to understand for you. To begin with, you need a broker to handle your trades individuals dont have access to the electronic markets. Your broker accesses the exchange network and the system finds a buyer or seller depending on your order. Choose the right broker rationally. This is a crucial point of money making from stocks.

You then need to anticipate the behavior of prices of stocks. Price is the immediate cost of a share and potential source of profits. And this price behavior is so dicey that it keeps everybody in the game quite excited. This is what generates the profits or losses that are made by investing in this market.

Dont worry if you find it very difficult to infer the price, because it really is difficult. It is frequently seen to be irregularly moving all along the day. Yet there are patterns to be figured out and expectations work quite often.

Depend on your comprehension and your broker, who must be a professional. Never bypass understanding fully the cause(s) behind a bad result when it occurs. Learn from your experiences, document them, and keep reading them once in a while.

I agree with the other reviewers that this book is an outstanding essay for those who want to learn how to select stocks for a value portfolio. Where we differ is that for the typical investor he does not have the resources to build a properly diversified portfolio- either financial or mental resources. Value stocks do provide returns in excess of broad market returns but in order to have adequate diversification you must assemble several hundred issues well beyond the resources of the average investor. Further one must have the time and skill to evaluate several thousand issues.

I can offer a solution to this problem. I want to recommend for you a book titled How to Make Money in the Stock Market-Buy 2,500 different stocks for $1000 – Pay no Commission This book is a must for those wanting to find out about indexing (passive investing) and why it is the superior method for the small investor (and big one too). This book is an outstanding guide to personal investing. It will be useful to all investors from novices to highly the highly experienced. This book prepares the reader to approach investing from the standpoint of the underlying science. It is the antithesis of a ‘get rich quick scheme’.

All aspects of Modern Portfolio Theory and passive (index) investing are explained in a through and easily understood manner. The aspect I like most is that as well as a solid theoretical foundation the book is very practical and shows the reader how to create (and more importantly) and manage over time a successful portfolio. This is a great book- for the beginning investor, it’s a great place to start and for the experienced investor there are many valuable suggestions.

It’s a shame to think of how much money investors have lost “investing” in the stock market over the years. I wish I had read this little book years ago. The chapter on automatic investing recommends a number of portfolios that follow modern portfolio theory and adjust risk as you age without any effort on the part of the reader at all. Had this book been written years ago and had I followed its directions I would be rich today of that I am certain. Nevertheless I will pursue one of the portfolios recommended and stick to my chosen asset plan. Piscaqua Research in a study covering the period 1987-96 found that only 10 out of 145 major pension funds, or just seven percent, out performed a portfolio consisting of a simple 605/405 mix of the S&P 500 index and the Lehman Bond index respectively.

Os it logical I ask for you to believe that you can predict which actively managed funds will out perform, or are you overconfident of your skills? If you are trying to find the great fund managers who will out perform in the future ask yourself: what am I going to do differently in terms of identifying the future winning fund managers, than did the pension plans and their advisors? And if you are not going to something different what logic is there in playing a game at which others with superior resources have consistently failed? If you a really serious in finding an investment technique that will provide you with reasonable return with less risk I suggest the following little book.I wrote this book Just click on the title to find the book. How to Make Money in the Stock Market-Buy 2,500 Different Stocks-Pay no Commission

From Wikipedia, the free encyclopedia It has been suggested that this article or section be merged with Stock exchange. (Discuss) This article needs additional citations for verification.
Please help improve this article by adding reliable references. Unsourced material may be challenged and removed. (July 2008) Financial markets

Public market

Exchange, organized market
Securities

Bond market

Fixed income
Corporate bond
Government bond
Municipal bond
Bond valuation
High-yield debt

Stock market

Stock
Preferred stock
Common stock
Registered share
Voting share
Stock exchange

Derivatives market

Securitization
Hybrid security
Credit derivative
Futures exchange

OTC, non organized

Spot market
Forwards
Swaps
Options

Foreign exchange

Exchange rate
Currency

Other Markets

Money market
Reinsurance market
Commodity market
Real estate market

Practical trading

Participants
Clearing house
Financial regulation

Finance series
Banks and Banking
Corporate finance
Personal finance
Public finance

v †d †e

A stock market or equity market is a public market (a loose network of economic transactions, not a physical facility or discrete entity) for the trading of company stock and derivatives at an agreed price; these are securities listed on a stock exchange as well as those only traded privately.

The size of the world stock market was estimated at about $36.6 trillion US at the beginning of October 2008.[1] The total world derivatives market has been estimated at about $791 trillion face or nominal value,[2] 11 times the size of the entire world economy.[3] The value of the derivatives market, because it is stated in terms of notional values, cannot be directly compared to a stock or a fixed income security, which traditionally refers to an actual value. Moreover, the vast majority of derivatives ‘cancel’ each other out (i.e., a derivative ‘bet’ on an event occurring is offset by a comparable derivative ‘bet’ on the event not occurring). Many such relatively illiquid securities are valued as marked to model, rather than an actual market price.

The stocks are listed and traded on stock exchanges which are entities of a corporation or mutual organization specialized in the business of bringing buyers and sellers of the organizations to a listing of stocks and securities together. The largest stock market in the United States, by market cap is the New York Stock Exchange, NYSE, while in Canada, it is the Toronto Stock Exchange. Major European examples of stock exchanges include the London Stock Exchange, Paris Bourse, and the Deutsche BÃ rse. Asian examples include the Tokyo Stock Exchange, the Hong Kong Stock Exchange, the Shanghai Stock Exchange, and the Bombay Stock Exchange. In Latin America, there are such exchanges as the BM&F Bovespa and the BMV.

• 1 Trading
• 2 Market participants
• 3 History
• 4 Importance of stock market
  • 4.1 Function and purpose
  • 4.2 Relation of the stock market to the modern financial system
  • 4.3 The stock market, individual investors, and financial risk
  • 4.4 United States Stock Market Returns
  • 4.5 The behavior of the stock market
  • 4.6 Irrational behavior
  • 4.7 Crashes
• 5 Stock market index
• 6 Derivative instruments
• 7 Leveraged strategies
  • 7.1 Short selling
  • 7.2 Margin buying
• 8 New issuance
• 9 Investment strategies
• 10 Taxation
• 11 See also
  • 11.1 Lists
• 12 References
• 13 Further reading
• 14 External links

[edit] Trading

Participants in the stock market range from small individual stock investors to large hedge fund traders, who can be based anywhere. Their orders usually end up with a professional at a stock exchange, who executes the order.

Some exchanges are physical locations where transactions are carried out on a trading floor, by a method known as open outcry. This type of auction is used in stock exchanges and commodity exchanges where traders may enter “verbal” bids and offers simultaneously. The other type of stock exchange is a virtual kind, composed of a network of computers where trades are made electronically via traders.

Actual trades are based on an auction market model where a potential buyer bids a specific price for a stock and a potential seller asks a specific price for the stock. (Buying or selling at market means you will accept any ask price or bid price for the stock, respectively.) When the bid and ask prices match, a sale takes place, on a first-come-first-served basis if there are multiple bidders or askers at a given price.

The purpose of a stock exchange is to facilitate the exchange of securities between buyers and sellers, thus providing a marketplace (virtual or real). The exchanges provide real-time trading information on the listed securities, facilitating price discovery.

The New York Stock Exchange is a physical exchange, also referred to as a listed exchange — only stocks listed with the exchange may be traded. Orders enter by way of exchange members and flow down to a floor broker, who goes to the floor trading post specialist for that stock to trade the order. The specialist’s job is to match buy and sell orders using open outcry. If a spread exists, no trade immediately takes place–in this case the specialist should use his/her own resources (money or stock) to close the difference after his/her judged time. Once a trade has been made the details are reported on the “tape” and sent back to the brokerage firm, which then notifies the investor who placed the order. Although there is a significant amount of human contact in this process, computers play an important role, especially for so-called “program trading”.

The NASDAQ is a virtual listed exchange, where all of the trading is done over a computer network. The process is similar to the New York Stock Exchange. However, buyers and sellers are electronically matched. One or more NASDAQ market makers will always provide a bid and ask price at which they will always purchase or sell ‘their’ stock.[4]

The Paris Bourse, now part of Euronext, is an order-driven, electronic stock exchange. It was automated in the late 1980s. Prior to the 1980s, it consisted of an open outcry exchange. Stockbrokers met on the trading floor or the Palais Brongniart. In 1986, the CATS trading system was introduced, and the order matching process was fully automated.

From time to time, active trading (especially in large blocks of securities) have moved away from the ‘active’ exchanges. Securities firms, led by UBS AG, Goldman Sachs Group Inc. and Credit Suisse Group, already steer 12 percent of U.S. security trades away from the exchanges to their internal systems. That share probably will increase to 18 percent by 2010 as more investment banks bypass the NYSE and NASDAQ and pair buyers and sellers of securities themselves, according to data compiled by Boston-based Aite Group LLC, a brokerage-industry consultant.[5]

Now that computers have eliminated the need for trading floors like the Big Board’s, the balance of power in equity markets is shifting. By bringing more orders in-house, where clients can move big blocks of stock anonymously, brokers pay the exchanges less in fees and capture a bigger share of the $11 billion a year that institutional investors pay in trading commissions as well as the surplus of the century had taken place.[citation needed].

[edit] Market participants

A few decades ago, worldwide, buyers and sellers were individual investors, such as wealthy businessmen, with long family histories (and emotional ties) to particular corporations. Over time, markets have become more “institutionalized”; buyers and sellers are largely institutions (e.g., pension funds, insurance companies, mutual funds, index funds, exchange-traded funds, hedge funds, investor groups, banks and various other financial institutions). The rise of the institutional investor has brought with it some improvements in market operations. Thus, the government was responsible for “fixed” (and exorbitant) fees being markedly reduced for the ‘small’ investor, but only after the large institutions had managed to break the brokers’ solid front on fees. (They then went to ‘negotiated’ fees, but only for large institutions.[citation needed])

However, corporate governance (at least in the West) has been very much adversely affected by the rise of (largely ‘absentee’) institutional ‘owners’.[citation needed]

[edit] History

In 12th century France the courratiers de change were concerned with managing and regulating the debts of agricultural communities on behalf of the banks. Because these men also traded with debts, they could be called the first brokers. A common misbelief is that in late 13th century Bruges commodity traders gathered inside the house of a man called Van der Beurze, and in 1309 they became the “Brugse Beurse”, institutionalizing what had been, until then, an informal meeting, but actually, the family Van der Beurze had a building in Antwerp where those gatherings occurred;[6] the Van der Beurze had Antwerp, as most of the merchants of that period, as their primary place for trading. The idea quickly spread around Flanders and neighboring counties and “Beurzen” soon opened in Ghent and Amsterdam.

In the middle of the 13th century, Venetian bankers began to trade in government securities. In 1351 the Venetian government outlawed spreading rumors intended to lower the price of government funds. Bankers in Pisa, Verona, Genoa and Florence also began trading in government securities during the 14th century. This was only possible because these were independent city states not ruled by a duke but a council of influential citizens. The Dutch later started joint stock companies, which let shareholders invest in business ventures and get a share of their profits – or losses. In 1602, the Dutch East India Company issued the first share on the Amsterdam Stock Exchange. It was the first company to issue stocks and bonds.

The Amsterdam Stock Exchange (or Amsterdam Beurs) is also said to have been the first stock exchange to introduce continuous trade in the early 17th century. The Dutch “pioneered short selling, option trading, debt-equity swaps, merchant banking, unit trusts and other speculative instruments, much as we know them”.[7] There are now stock markets in virtually every developed and most developing economies, with the world’s biggest markets being in the United States, United Kingdom, Japan, India, China, Canada, Germany, France, South Korea and the Netherlands.[8]

[edit] Importance of stock market [edit] Function and purpose

The stock market is one of the most important sources for companies to raise money. This allows businesses to be publicly traded, or raise additional capital for expansion by selling shares of ownership of the company in a public market. The liquidity that an exchange provides affords investors the ability to quickly and easily sell securities. This is an attractive feature of investing in stocks, compared to other less liquid investments such as real estate.

History has shown that the price of shares and other assets is an important part of the dynamics of economic activity, and can influence or be an indicator of social mood. An economy where the stock market is on the rise is considered to be an up-and-coming economy. In fact, the stock market is often considered the primary indicator of a country’s economic strength and development. Rising share prices, for instance, tend to be associated with increased business investment and vice versa. Share prices also affect the wealth of households and their consumption. Therefore, central banks tend to keep an eye on the control and behavior of the stock market and, in general, on the smooth operation of financial system functions. Financial stability is the raison d’Ã tre of central banks.

Exchanges also act as the clearinghouse for each transaction, meaning that they collect and deliver the shares, and guarantee payment to the seller of a security. This eliminates the risk to an individual buyer or seller that the counterparty could default on the transaction.

The smooth functioning of all these activities facilitates economic growth in that lower costs and enterprise risks promote the production of goods and services as well as employment. In this way the financial system contributes to increased prosperity. An important aspect of modern financial markets, however, including the stock markets, is absolute discretion. For example, American stock markets see more unrestrained acceptance of any firm than in smaller markets. For example, Chinese firms that possess little or no perceived value to American society profit American bankers on Wall Street, as they reap large commissions from the placement, as well as the Chinese company which yields funds to invest in China. However, these companies accrue no intrinsic value to the long-term stability of the American economy, but rather only short-term profits to American business men and the Chinese; although, when the foreign company has a presence in the new market, this can benefit the market’s citizens. Conversely, there are very few large foreign corporations listed on the Toronto Stock Exchange TSX, Canada’s largest stock exchange. This discretion has insulated Canada to some degree to worldwide financial conditions. In order for the stock markets to truly facilitate economic growth via lower costs and better employment, great attention must be given to the foreign participants being allowed in.[citation needed]

[edit] Relation of the stock market to the modern financial system

The financial systems in most western countries has undergone a remarkable transformation. One feature of this development is disintermediation. A portion of the funds involved in saving and financing, flows directly to the financial markets instead of being routed via the traditional bank lending and deposit operations. The general public’s heightened interest in investing in the stock market, either directly or through mutual funds, has been an important component of this process.

Statistics show that in recent decades shares have made up an increasingly large proportion of households’ financial assets in many countries. In the 1970s, in Sweden, deposit accounts and other very liquid assets with little risk made up almost 60 percent of households’ financial wealth, compared to less than 20 percent in the 2000s. The major part of this adjustment in financial portfolios has gone directly to shares but a good deal now takes the form of various kinds of institutional investment for groups of individuals, e.g., pension funds, mutual funds, hedge funds, insurance investment of premiums, etc.

The trend towards forms of saving with a higher risk has been accentuated by new rules for most funds and insurance, permitting a higher proportion of shares to bonds. Similar tendencies are to be found in other industrialized countries. In all developed economic systems, such as the European Union, the United States, Japan and other developed nations, the trend has been the same: saving has moved away from traditional (government insured) bank deposits to more risky securities of one sort or another.

[edit] The stock market, individual investors, and financial risk

Riskier long-term saving requires that an individual possess the ability to manage the associated increased risks. Stock prices fluctuate widely, in marked contrast to the stability of (government insured) bank deposits or bonds. This is something that could affect not only the individual investor or household, but also the economy on a large scale. The following deals with some of the risks of the financial sector in general and the stock market in particular. This is certainly more important now that so many newcomers have entered the stock market, or have acquired other ‘risky’ investments (such as ‘investment’ property, i.e., real estate and collectables).

With each passing year, the noise level in the stock market rises. Television commentators, financial writers, analysts, and market strategists are all overtaking each other to get investors’ attention. At the same time, individual investors, immersed in chat rooms and message boards, are exchanging questionable and often misleading tips. Yet, despite all this available information, investors find it increasingly difficult to profit. Stock prices skyrocket with little reason, then plummet just as quickly, and people who have turned to investing for their children’s education and their own retirement become frightened. Sometimes there appears to be no rhyme or reason to the market, only folly.

This is a quote from the preface to a published biography about the long-term value-oriented stock investor Warren Buffett.[9] Buffett began his career with $100, and $100,000 from seven limited partners consisting of Buffett’s family and friends. Over the years he has built himself a multi-billion-dollar fortune. The quote illustrates some of what has been happening in the stock market during the end of the 20th century and the beginning of the 21st century.

[edit] United States Stock Market Returns Years to Dec. 31, 2009 Average Annual Return % Average Compounded Annual Return % 1 25.9 25.9 3 6.1 12.1 5 4.8 8.0 10 4.4 5.0 15 5.3 4.0 20 6.5 3.9 30 8.1 4.3 40 8.8 4.9 50 9.0 5.3 60 9.2 5.6

[10]

[edit] The behavior of the stock market

From experience we know that investors may ‘temporarily’ move financial prices away from their long term aggregate price ‘trends’. (Positive or up trends are referred to as bull markets; negative or down trends are referred to as bear markets.) Over-reactions may occur—so that excessive optimism (euphoria) may drive prices unduly high or excessive pessimism may drive prices unduly low. Economists continue to debate whether financial markets are ‘generally’ efficient.

According to one interpretation of the efficient-market hypothesis (EMH), only changes in fundamental factors, such as the outlook for margins, profits or dividends, ought to affect share prices beyond the short term, where random ‘noise’ in the system may prevail. (But this largely theoretic academic viewpoint—known as ‘hard’ EMH—also predicts that little or no trading should take place, contrary to fact, since prices are already at or near equilibrium, having priced in all public knowledge.) The ‘hard’ efficient-market hypothesis is sorely tested by such events as the stock market crash in 1987, when the Dow Jones index plummeted 22.6 percent—the largest-ever one-day fall in the United States. This event demonstrated that share prices can fall dramatically even though, to this day, it is impossible to fix a generally agreed upon definite cause: a thorough search failed to detect any ‘reasonable’ development that might have accounted for the crash. (But note that such events are predicted to occur strictly by chance , although very rarely.) It seems also to be the case more generally that many price movements (beyond that which are predicted to occur ‘randomly’) are not occasioned by new information; a study of the fifty largest one-day share price movements in the United States in the post-war period seems to confirm this.[11]

However, a ‘soft’ EMH has emerged which does not require that prices remain at or near equilibrium, but only that market participants not be able to systematically profit from any momentary market ‘inefficiencies’. Moreover, while EMH predicts that all price movement (in the absence of change in fundamental information) is random (i.e., non-trending), many studies have shown a marked tendency for the stock market to trend over time periods of weeks or longer. Various explanations for such large and apparently non-random price movements have been promulgated. For instance, some research has shown that changes in estimated risk, and the use of certain strategies, such as stop-loss limits and Value at Risk limits, theoretically could cause financial markets to overreact. But the best explanation seems to be that the distribution of stock market prices is non-Gaussian (in which case EMH, in any of its current forms, would not be strictly applicable).[12][13]

Other research has shown that psychological factors may result in exaggerated (statistically anomalous) stock price movements (contrary to EMH which assumes such behaviors ‘cancel out’). Psychological research has demonstrated that people are predisposed to ‘seeing’ patterns, and often will perceive a pattern in what is, in fact, just noise. (Something like seeing familiar shapes in clouds or ink blots.) In the present context this means that a succession of good news items about a company may lead investors to overreact positively (unjustifiably driving the price up). A period of good returns also boosts the investor’s self-confidence, reducing his (psychological) risk threshold.[14]

Another phenomenon—also from psychology—that works against an objective assessment is group thinking. As social animals, it is not easy to stick to an opinion that differs markedly from that of a majority of the group. An example with which one may be familiar is the reluctance to enter a restaurant that is empty; people generally prefer to have their opinion validated by those of others in the group.

In one paper the authors draw an analogy with gambling.[15] In normal times the market behaves like a game of roulette; the probabilities are known and largely independent of the investment decisions of the different players. In times of market stress, however, the game becomes more like poker (herding behavior takes over). The players now must give heavy weight to the psychology of other investors and how they are likely to react psychologically.

The stock market, as with any other business, is quite unforgiving of amateurs. Inexperienced investors rarely get the assistance and support they need. In the period running up to the 1987 crash, less than 1 percent of the analyst’s recommendations had been to sell (and even during the 2000 – 2002 bear market, the average did not rise above 5%). In the run up to 2000, the media amplified the general euphoria, with reports of rapidly rising share prices and the notion that large sums of money could be quickly earned in the so-called new economy stock market. (And later amplified the gloom which descended during the 2000 – 2002 bear market, so that by summer of 2002, predictions of a DOW average below 5000 were quite common.)

[edit] Irrational behavior

Sometimes the market seems to react irrationally to economic or financial news, even if that news is likely to have no real effect on the fundamental value of securities itself. But this may be more apparent than real, since often such news has been anticipated, and a counterreaction may occur if the news is better (or worse) than expected. Therefore, the stock market may be swayed in either direction by press releases, rumors, euphoria and mass panic; but generally only briefly, as more experienced investors (especially the hedge funds) quickly rally to take advantage of even the slightest, momentary hysteria.

Over the short-term, stocks and other securities can be battered or buoyed by any number of fast market-changing events, making the stock market behavior difficult to predict. Emotions can drive prices up and down, people are generally not as rational as they think, and the reasons for buying and selling are generally obscure. Behaviorists argue that investors often behave ‘irrationally’ when making investment decisions thereby incorrectly pricing securities, which causes market inefficiencies, which, in turn, are opportunities to make money.[16] However, the whole notion of EMH is that these non-rational reactions to information cancel out, leaving the prices of stocks rationally determined.

The Dow Jones Industrial Average biggest gain in one day was 936.42 points or 11 percent, this occurred on October 13, 2008.[17]

[edit] Crashes The examples and perspective in this section may not represent a worldwide view of the subject. Please improve this article and discuss the issue on the talk page. (March 2009) Robert Shiller’s plot of the S&P Composite Real Price Index, Earnings, Dividends, and Interest Rates, from Irrational Exuberance, 2d ed.[18] In the preface to this edition, Shiller warns, “The stock market has not come down to historical levels: the price-earnings ratio as I define it in this book is still, at this writing [2005], in the mid-20s, far higher than the historical average. . . . People still place too much confidence in the markets and have too strong a belief that paying attention to the gyrations in their investments will someday make them rich, and so they do not make conservative preparations for possible bad outcomes.”

A stock market crash is often defined as a sharp dip in share prices of equities listed on the stock exchanges. In parallel with various economic factors, a reason for stock market crashes is also due to panic and investing public’s loss of confidence. Often, stock market crashes end speculative economic bubbles.

There have been famous stock market crashes that have ended in the loss of billions of dollars and wealth destruction on a massive scale. An increasing number of people are involved in the stock market, especially since the social security and retirement plans are being increasingly privatized and linked to stocks and bonds and other elements of the market. There have been a number of famous stock market crashes like the Wall Street Crash of 1929, the stock market crash of 1973–4, the Black Monday of 1987, the Dot-com bubble of 2000, and the Stock Market Crash of 2008.

One of the most famous stock market crashes started October 24, 1929 on Black Thursday. The Dow Jones Industrial lost 50% during this stock market crash. It was the beginning of the Great Depression. Another famous crash took place on October 19, 1987 – Black Monday. The crash began in Hong Kong and quickly spread around the world.

By the end of October, stock markets in Hong Kong had fallen 45.5%, Australia 41.8%, Spain 31%, the United Kingdom 26.4%, the United States 22.68%, and Canada 22.5%. Black Monday itself was the largest one-day percentage decline in stock market history – the Dow Jones fell by 22.6% in a day. The names “Black Monday†and “Black Tuesday†are also used for October 28-29, 1929, which followed Terrible Thursday–the starting day of the stock market crash in 1929.

The crash in 1987 raised some puzzles-–main news and events did not predict the catastrophe and visible reasons for the collapse were not identified. This event raised questions about many important assumptions of modern economics, namely, the theory of rational human conduct, the theory of market equilibrium and the hypothesis of market efficiency. For some time after the crash, trading in stock exchanges worldwide was halted, since the exchange computers did not perform well owing to enormous quantity of trades being received at one time. This halt in trading allowed the Federal Reserve system and central banks of other countries to take measures to control the spreading of worldwide financial crisis. In the United States the SEC introduced several new measures of control into the stock market in an attempt to prevent a re-occurrence of the events of Black Monday.

Computer systems were upgraded in the stock exchanges to handle larger trading volumes in a more accurate and controlled manner. The SEC modified the margin requirements in an attempt to lower the volatility of common stocks, stock options and the futures market. The New York Stock Exchange and the Chicago Mercantile Exchange introduced the concept of a circuit breaker. The circuit breaker halts trading if the Dow declines a prescribed number of points for a prescribed amount of time.

• New York Stock Exchange (NYSE) circuit breakers[19]

% drop time of drop close trading for 10% drop before 2PM one hour halt 10% drop 2PM – 2:30PM half-hour halt 10% drop after 2:30PM market stays open 20% drop before 1PM halt for two hours 20% drop 1PM – 2PM halt for one hour 20% drop after 2PM close for the day 30% drop any time during day close for the day [edit] Stock market index

The movements of the prices in a market or section of a market are captured in price indices called stock market indices, of which there are many, e.g., the S&P, the FTSE and the Euronext indices. Such indices are usually market capitalization weighted, with the weights reflecting the contribution of the stock to the index. The constituents of the index are reviewed frequently to include/exclude stocks in order to reflect the changing business environment.

[edit] Derivative instruments

Financial innovation has brought many new financial instruments whose pay-offs or values depend on the prices of stocks. Some examples are exchange-traded funds (ETFs), stock index and stock options, equity swaps, single-stock futures, and stock index futures. These last two may be traded on futures exchanges (which are distinct from stock exchanges—their history traces back to commodities futures exchanges), or traded over-the-counter. As all of these products are only derived from stocks, they are sometimes considered to be traded in a (hypothetical) derivatives market, rather than the (hypothetical) stock market.

[edit] Leveraged strategies

Stock that a trader does not actually own may be traded using short selling; margin buying may be used to purchase stock with borrowed funds; or, derivatives may be used to control large blocks of stocks for a much smaller amount of money than would be required by outright purchase or sale.

[edit] Short selling

In short selling, the trader borrows stock (usually from his brokerage which holds its clients’ shares or its own shares on account to lend to short sellers) then sells it on the market, hoping for the price to fall. The trader eventually buys back the stock, making money if the price fell in the meantime or losing money if it rose. Exiting a short position by buying back the stock is called “covering a short position.” This strategy may also be used by unscrupulous traders in illiquid or thinly traded markets to artificially lower the price of a stock. Hence most markets either prevent short selling or place restrictions on when and how a short sale can occur. The practice of naked shorting is illegal in most (but not all) stock markets.

[edit] Margin buying

In margin buying, the trader borrows money (at interest) to buy a stock and hopes for it to rise. Most industrialized countries have regulations that require that if the borrowing is based on collateral from other stocks the trader owns outright, it can be a maximum of a certain percentage of those other stocks’ value. In the United States, the margin requirements have been 50% for many years (that is, if you want to make a $1000 investment, you need to put up $500, and there is often a maintenance margin below the $500).

A margin call is made if the total value of the investor’s account cannot support the loss of the trade. (Upon a decline in the value of the margined securities additional funds may be required to maintain the account’s equity, and with or without notice the margined security or any others within the account may be sold by the brokerage to protect its loan position. The investor is responsible for any shortfall following such forced sales.)

Regulation of margin requirements (by the Federal Reserve) was implemented after the Crash of 1929. Before that, speculators typically only needed to put up as little as 10 percent (or even less) of the total investment represented by the stocks purchased. Other rules may include the prohibition of free-riding: putting in an order to buy stocks without paying initially (there is normally a three-day grace period for delivery of the stock), but then selling them (before the three-days are up) and using part of the proceeds to make the original payment (assuming that the value of the stocks has not declined in the interim).

[edit] New issuance

Global issuance of equity and equity-related instruments totaled $505 billion in 2004, a 29.8% increase over the $389 billion raised in 2003. Initial public offerings (IPOs) by US issuers increased 221% with 233 offerings that raised $45 billion, and IPOs in Europe, Middle East and Africa (EMEA) increased by 333%, from $ 9 billion to $39 billion.

[edit] Investment strategies

One of the many things people always want to know about the stock market is, “How do I make money investing?” There are many different approaches; two basic methods are classified as either fundamental analysis or technical analysis. Fundamental analysis refers to analyzing companies by their financial statements found in SEC Filings, business trends, general economic conditions, etc. Technical analysis studies price actions in markets through the use of charts and quantitative techniques to attempt to forecast price trends regardless of the company’s financial prospects. One example of a technical strategy is the Trend following method, used by John W. Henry and Ed Seykota, which uses price patterns, utilizes strict money management and is also rooted in risk control and diversification.

Additionally, many choose to invest via the index method. In this method, one holds a weighted or unweighted portfolio consisting of the entire stock market or some segment of the stock market (such as the S&P 500 or Wilshire 5000). The principal aim of this strategy is to maximize diversification, minimize taxes from too frequent trading, and ride the general trend of the stock market (which, in the U.S., has averaged nearly 10%/year, compounded annually, since World War II).

[edit] Taxation

According to much national or state legislation, a large array of fiscal obligations are taxed for capital gains. Taxes are charged by the state over the transactions, dividends and capital gains on the stock market, in particular in the stock exchanges. However, these fiscal obligations may vary from jurisdiction to jurisdiction because, among other reasons, it could be assumed that taxation is already incorporated into the stock price through the different taxes companies pay to the state, or that tax free stock market operations are useful to boost economic growth.

[edit] See also [edit] Lists [edit] References

1. ^ SeekingAlpha.com
2. ^ “Quarterly Review Statistical Annex – December 2008″. Bis.org. 2008-09-07. http://www.bis.org/publ/qtrpdf/r_qa0812.pdf. Retrieved 2010-03-05.
3. ^ CIA.gov
4. ^ “What’s the difference between a Nasdaq market maker and a NYSE specialist?”. Investopedia.com. http://www.investopedia.com/ask/answers/128.asp. Retrieved 2010-03-05.
5. ^ Ortega, Edgar, and Yalman Onaran. “UBS, Goldman Threaten NYSE, Nasdaq With Rival Stock Markets.” Bloomberg, 4 Dec. 2006. Web. 23 Dec. 2009.
6. ^ “16de eeuwse traditionele bak- en zandsteenarchitectuur Oude Beurs Antwerpen 1 (centrum) / Antwerp foto”. Belgiumview.com. http://www.belgiumview.com/belgiumview/tl1/view0002205.php4. Retrieved 2010-03-05.
7. ^ Murray Sayle, “Japan Goes Dutch”, London Review of Books XXIII.7, April 5, 2001
8. ^ World Federation of Exchanges Monthly YTD Data
9. ^ Hagstrom, Robert G. (2001). The Essential Buffett: Timeless Principles for the New Economy. New York: John Wiley & Sons. ISBN 0-471-22703-X.
10. ^ Retrieved January 24, 2010.
11. ^ Cutler, D. Poterba, J. & Summers, L. (1991). “Speculative dynamics”. Review of Economic Studies 58: 520–546.
12. ^ Mandelbrot, Benoit & Hudson, Richard L. (2006). The Misbehavior of Markets: A Fractal View of Financial Turbulence, annot. ed.. Basic Books. ISBN 0465043577.
13. ^ Taleb, Nassim Nicholas (2008). Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets, 2nd ed.. Random House. ISBN 1400067936.
14. ^ Tversky, A. & Kahneman, D. (1974). “Judgement under uncertainty: heuristics and biases”. Science 185 (4157): 1124–1131. doi:10.1126/science.185.4157.1124. PMID 17835457.
15. ^ Stephen Morris and Hyun Song Shin, Oxford Review of Economic Policy, vol. 15, no 3, 1999.
16. ^ Sergey Perminov, Trendocracy and Stock Market Manipulations (2008, ISBN 9781435752443).
17. ^ “News Headlines”. Cnbc.com. 2008-10-13. http://www.cnbc.com/id/27166818. Retrieved 2010-03-05.
18. ^ a b c Shiller, Robert (2005). Irrational Exuberance (2d ed.). Princeton University Press. ISBN 0-691-12335-7.
19. ^ Chris Farrell. “Where are the circuit breakers”. http://www.publicradio.org/columns/marketplace/gettingpersonal/2008/10/where_are_the_stock_market_cir.html. Retrieved 2008-10-16.

[edit] Further reading

• Hamilton, W. P. (1922). The Stock Market Baraometer. New York: John Wiley & Sons Inc (1998 reprint). ISBN 0-471-24764-2.
• Preda, Alex (2009). Framing Finance: The Boundaries of Markets and Modern Capitalism. University of Chicago Press. ISBN 9780226679327.

[edit] External links Wikiquote has a collection of quotations related to: Stock market Look up stock market in Wiktionary, the free dictionary.

• Stock exchanges at the Open Directory Project
• Stocks investing at the Open Directory Project

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