Standard 3: Understand Economic Systems EQ 3.03 Explain the Stock Market

Stocks are... you raise money from selling those "pieces" of your business which can be used to build new plants and facilities, pay down debt, or acquire another company. smart owners will keep at least 51% of the stock, which will allow them to retain control of the day to day activities (controlling shareholder) Stock is ownership in a company. (Equity) If you were to divide your business up into small pieces and sell those pieces, you would essentially have issued stock. Stocks help...

What is the Dow Jones Industrial Average? An index of thirty, blue chip stocks that are traded in the United States. A “blue chip stock” is stock in a corporation that has a national reputation for quality, reliability, and the ability to operate profitably in good times and bad. It is believed that by looking at the companies on the list, a person can get a general picture of how the market as a whole is performing. The DJIA is the most quoted and followed index in the world, and dates back to May 26, 1896.

The Dow Jones Industrial Average™ Updated as of: Oct 26, 2:37 pm ET The use of "bull" and "bear" to describe markets comes from the way in which each animal attacks its opponents. That is, a bull thrusts its horns up into the air, and a bear swipes its paws down. These actions are metaphors for the movement of a market: if the trend is up, it is considered a bull market. And if the trend is down, it is considered a bear market. Bear or Bull Market?

Bear Market A prolonged period in which investment prices fall, accompanied by widespread pessimism Bear markets usually occur when the economy is in a recession and unemployment is high, or when inflation is rising quickly 1929 Crash most famous crash in U.S. history Dow Industrials hit a high of 386 in September, It did not get back to that level until November, 1954 Dow dropped 89% 1987 – The Market fell dramatically the start of the Great Recession caused by the failure of the financial markets.

Bull Market long term uptrend (months to years) price movement in any market An extended period of generally rising prices characterized by optimism, investor confidence and expectations that strong results will continue.