MANAGING YOUR TIME

Perhaps the greatest single problem that people have today is “time poverty.”
Working people have too much to do and too little time for their personal lives. Most
people feel overwhelmed with responsibilities and activities, and the harder they
work, the further behind they feel. This sense of being on a never-ending treadmill
can cause you to fall into the reactive/responsive mode of living. Instead of clearly
deciding what you want to do, you continually react to what is happening around
you. Pretty soon you lose all sense of control. You feel that your life is running you,
rather than you running your life.
On a regular basis, you have to stand back and take stock of yourself and what
you’re doing. You have to stop the clock and do some serious thinking about who
you are and where you are going. You have to evaluate your activities in the light of
what is really important to you. You must master your time rather than becoming a
slave to the constant flow of events and demands on your time. And you must
organize your life to achieve balance, harmony, and inner peace.
Taking action without thinking is the cause of every failure. Your ability to think
is the most valuable trait that you possess. If you improve the quality of your
thinking, you improve the quality of your lifesometimes immediately.
Time is your most precious resource. It is the most valuable thing you have. It
is perishable, it is irreplaceable, and it cannot be saved. It can only be reallocated
from activities of lower value to activities of higher value. All work requires time.
And time is absolutely essential for the important relationships in your life. The very
act of taking a moment to think about your time before you spend it will begin to
improve your personal time management immediately.
I used to think that time management was only a business tool, like a calculator
or a cellular telephone. It was something that you used so that you could get more
done in a shorter period of time and eventually be paid more money. Then I learned
that time management is not a peripheral activity or skill. It is the core skill upon
which everything else in life depends.
In your work or business life, there are so many demands on your time from
other people that very little of your time is yours to use as you choose. However, at
home and in your personal life you can exert a tremendous amount of control over
how you use your time. And it is in this area that I want to focus.
Personal time management begins with you. It begins with your thinking through
what is really important to you in life. And it only makes sense if you organize it
around specific things that you want to accomplish. You need to set goals in three
major areas of your life. First, you need family and personal goals. These are the
reasons why you get up in the morning, why you work hard and upgrade your skills,
why you worry about money and sometimes feel frustrated by the demands on your
time.
What are your personal and family goals, both tangible and intangible? A tangible
family goal could be a bigger house, a better car, a larger television set, a vacation,
or anything else that costs money. An intangible goal would be to build a higher
quality relationship with your spouse and children, to spend more time with your
family going for walks or reading books. Achieving these family and personal goals
are the real essence of time management, and its major purpose.
The second area of goals are your business and career goals. These are the
“how” goals, the means by which you achieve your personal, “why” goals. How can
you achieve the level of income that will enable you to fulfill your family goals? How
can you develop the skills and abilities to stay ahead of the curve in your career?
Business and career goals are absolutely essential, especially when balanced with
family and personal goals.
The third type of goals are your personal development goals. Remember, you
can’t achieve much more on the outside than what you have achieved on the inside.
Your outer life will be a reflection of your inner life. If you wish to achieve worthwhile
things in your personal and your career life, you must become a worthwhile person
in your own self-development. You must build yourself if you want to build your life.
Perhaps the greatest secret of success is that you can become anything you really
want to become to achieve any goal that you really want to achieve. But in order to
do it, you must go to work on yourself and never stop.
Once you have a list of your personal and family goals, your business and career
goals, and your self-development goals, you can then organize the list by priority.
This brings us to the difference between priorities and posteriorities. In order to get
your personal time under control, you must decide very clearly upon your priorities.
You must decide on the most important things that you could possible be doing to
give yourself the same amount of happiness, satisfaction, and joy in life. But at the
same time, you must establish posteriorities as well. Just as priorities are things
that you do more of and sooner, posteriorities are things that you do less of and
later.
The fact is, your calendar is full. You have no spare time. Your time is extremely
valuable. Therefore, for you to do anything new, you will have to stop doing
something old. In order to get into something, you will have to get out of something
else. In order to pick something up, you will have to put something down. Before
you make any new commitment of your time, you must firmly decide what activities
you are going to discontinue in your personal life.
If you want to spend more time with your family, for example, you must decide
what activities you currently engage in that are preventing you from doing so.
A principle of time management says that hard time pushes out soft time. This
means that hard time, such as working, will push out soft time, such as the time you
spend with your family. If you don’t get your work done at the office because you
don’t use your time well, you almost invariably have to rob that time from your
family. As a result, because your family is important to you, you find yourself in a
values conflict. You feel stressed and irritable. You feel a tremendous amount of
pressure. You know in your heart that you should be spending more time with the
important people in your life, but because you didn’t get your work done, you have
to fulfill those responsibilities before you can spend time with your spouse and
children.
Think of it this way. Every minute you waste during the waking day is time that
your family will ultimately be deprived of. So concentrate on working when you are
at work so that you can concentrate on your family when you are at home.
There are three key questions that you can ask yourself continually to keep your
personal life in balance. The first question is, “What is really important to me?”
Whenever you find yourself with too much to do and too little time, stop and ask
yourself, “What is it that is really important for me to do in this situation?” Then,
make sure that what you are doing is the answer to that question.
The second question is, “What are my highest value activities?” In your personal
life, this means, “What are the things that I do that give me the greatest pleasure
and satisfaction? Of all the things that I could be doing at any one time, what are
the things that I could do to add the greatest value to my life?”
And the final question for you to ask over and over again is, “What is the most
valuable use of my time right now?” Since you can only do one thing at a time, you
must constantly organize you life so that you are doing one thing, the most
important thing, at every moment.
Personal time management enables you to choose what to do first, what to do
second, and what not to do at all. It enables you to organize every aspect of your
life so that you can get the greatest joy, happiness, and satisfaction out of
everything you do.

By: Brian Tracy

UNDERSTANDING FINANCIAL MARKET


Mutual Funds, including those sold at banks, are very different from fixed-rate investments such as CDs. A CD buyer is guaranteed a specific rate of return by a certain date. In contrast, mutual fund prices can go up or down every day and you may lose your principal. Mutual funds (including money market mutual funds) sold by banks are not insured by the federal government. Money market mutual funds must not be confused with interest bearing “money market accounts,” which are bank deposits insured by the FDIC. Advertising brochures sometimes blur the line between a bank’s insured and uninsured products. Be sure you know which type of “Money Market” you're considering.
Always comparison-shop for mutual funds. Look “under the hood” of any mutual fund you're considering. Read and understand the fund’s prospectus. If you ask, a “Statement of Additional Information” will also be provided.
Ask for clarification of unfamiliar terms and abbreviations. An investment professional who is unwilling to take the time to answer your questions is one you probably don't want to entrust with your investment future.
Make sure that you know all fees and charges associated with your mutual fund.

• Front-end loads charge a percentage fee when you purchase the fund
  
• Back-end loads charge a percentage fee when you sell your fund
  
• No-load funds don't charge a fee when you buy or sell, but do charge a management fee.

Be aware of “breakpoint selling.” Most mutual funds reduce the sales charge, or load, after a certain dollar amount is invested or number of shares are bought. The point at which this happens is called the “breakpoint.” Ask your investment professional what the breakpoint is of the fund you're considering. In your prospectus, this information is found under the heading “Sales Charge.”
Some brokerage firms offer mutual funds and other investments that are sponsored by the firms themselves. These “proprietary products” are the property of the issuing firms and may not be sold by other firms or transferred into accounts at other firms. Often they carry a higher sales charge than other “outside” mutual funds. They may be recognized by their names, which often include the firm's name, such as “XYZ Brokerage Global Income Fund.” Ask your investment professional why a proprietary product is recommended over an outside fund with the same investment philosophy or performance. Before making a decision, ask for information on a variety of funds, both proprietary and non-proprietary, that meet your investment objectives.

Main Types of Mutual Funds

Stock Funds

Stock funds typically offer the highest returns, but also involve more risk than money market or bond funds.  Stock funds vary in purpose as well.  Some stock funds focus their portfolio of stocks in a particular industry segment, such as technology or healthcare, or the portfolio may be designed to generate a particular financial outcome, such as growth or income.

Bond Funds

Bond funds may have higher risks than money market funds, but also seek to pay higher yields. There are many different types of bonds, so funds of this type can vary dramatically in both risks and rewards. Typically, bond funds are suitable for those seeking income and preservation of capital. Have your broker explain the inverse relation of the price of bond prices to interest rates because this makes a big difference should you need to cash out your investment.

Money Market Funds

Compared to other mutual funds, money market funds have relatively low risks. Money market funds are limited by law to high quality, short-term investments. The money market fund pays a fluctuating interest rate on your funds. They look much like a checking account, but they're an investment in a pool of securities, and like all investments, losses are possible.

WHAT YOU MUST KNOW ABOUT THE STOCK MARKET

A stock market or equity market is a public entity (a loose network of economic transactions, not a physical facility or discrete entity) for the trading of company stock (shares) 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 at the beginning of October 2008. The total world derivatives market has been estimated at about $791 trillion face or nominal value 11 times the size of the entire world economy, 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 capitalization, is the New York Stock Exchange (NYSE). In Canada, the largest stock market is the Toronto Stock Exchange. Major European examples of stock exchanges include the Amsterdam Stock Exchange, London Stock Exchange, Paris Bourse, and the Deutsche Börse (Frankfurt Stock Exchange). In Africa, examples include Nigerian Stock Exchange, JSE Limited, etc. Asian examples include the Singapore Exchange, 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. Market participants include individual retail investors, institutional investors such as mutual funds, banks, insurance companies and hedge funds, and also publicly traded corporations trading in their own shares. Some studies have suggested that institutional investors and corporations trading in their own shares generally receive higher risk-adjusted returns than retail investors.


Trading The London Stock Exchange

The New York Stock Exchange 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 of buying or selling. 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

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. 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) has 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. 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.
Market participants Market participants include individual retail investors, institutional investors such as mutual funds, banks, insurance companies and hedge funds, and also publicly traded corporations trading in their own shares. Some studies have suggested that institutional investors and corporations trading in their own shares generally receive higher risk-adjusted returns than retail investors. A few decades ago, worldwide, buyers and sellers were individual investors, such as wealthy businessmen, usually with long family histories 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.

However, corporate governance (at least in the West) has been very much adversely affected by the rise of (largely 'absentee') institutional 'owners'. [Citation needed] History Established in 1875, the Bombay Stock Exchange is Asia's first stock exchange 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 disbelieve 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; 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. Italian companies were also the first to issue shares. Companies in England and the Low Countries followed in the 16th century.

The Dutch East India Company (founded in 1602) was the first joint-stock company to get a fixed capital stock and as a result, continuous trade in company stock emerged on the Amsterdam Exchange. Soon thereafter, a lively trade in various derivatives, among which options and repos, emerged on the Amsterdam market. Dutch traders also pioneered short selling - a practice which was banned by the Dutch authorities as early as 1610. There are now stock markets in virtually every developed and most developing economies, with the world's largest markets being in the United States, United Kingdom, Japan, India, China, Canada, Germany (Frankfurt Stock Exchange), France, South Korea and the Netherlands. Importance of stock market 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 financial capital for expansion by selling shares of ownership of the company in a public market. The liquidity that an exchange 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.Some companies actively increase liquidity by trading in their own shares.

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'être 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 possibly employment. In this way the financial system is assumed to contribute to increased prosperity. Relation of the stock market to the modern financial system The financial system in most western countries has undergone a remarkable transformation. One feature of this development is dis intermediation.
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 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 is that financial portfolios have 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 United States S&P stock market returns (Assumes 2% annual dividend) Years to December 30 2011 Average Annual Return % Average Compounded Annual Return % 1 2.0 2.0 3 14.3 8.1 5 2.3 4.4 10 5.1 3.9 15 7.7 3.6 20 9.6 4.6 30 11.7 6.2 40 10.2 7.0 50 9.3 7.3 60 10.5 7.5 The behavior of the stock market NASDAQ in Times Square, New York City 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 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) 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. 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. 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.) 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 counter reaction 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.

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. Crashes Main article: Stock market crash Further information: List of stock market 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.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." Price-Earnings ratios as a predictor of twenty-year returns based upon the plot by Robert Shiller (Figure 10.1, source).

The horizontal axis shows the real price-earnings ratio of the S&P Composite Stock Price Index as computed in Irrational Exuberance (inflation adjusted price divided by the prior ten-year mean of inflation-adjusted earnings). The vertical axis shows the geometric average real annual return on investing in the S&P Composite Stock Price Index, reinvesting dividends, and selling twenty years later. Data from different twenty year periods is color-coded as shown in the key. See also ten-year returns. Shiller states that this plot "confirms that long-term investors—investors who commit their money to an investment for ten full years—did do well when prices were low relative to earnings at the beginning of the ten years. Long-term investors would be well advised, individually, to lower their exposure to the stock market when it is high, as it has been recently, and get into the market when it is low." 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 % drop time of drop close trading for 10 before 2 pm one hour halt 10 2 pm – 2:30 pm half-hour halt 10 after 2:30 pm market stays open 20 before 1 pm halt for two hours 20 1 pm – 2 pm halt for one hour 20 after 2 pm close for the day 30 any time during day close for the day Stock market index Main article: 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.

Derivative instruments Main article: Derivative (finance) 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.
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 sales. Short selling Main article: 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 and 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. Margin buying Main article: 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). 

History of Wall Street Profitability


Financial advisors and market analysts consistently warn investors that past performance is no guarantee of future performance. Whatever price increases a stock has posted throughout its market history, there is no assurance that the increase will be sustained over time, or that the stock can move even higher. Nevertheless, when discussing stock market performance over the decades, and back to the beginning of the 20th Century, experts also cite the fact that despite numerous sharp declines, generally the market has moved steadily upward through the last century and into the 21st Century, although there was a long period of little upward movement between 1929 and 1954. Will that profitability continue in the face of the many domestic and global financial crises now facing the United States and the international community? For a reasonably reliable answer, although there's no guarantee, let's look at U.S. stock market history and the performance of the Dow Jones Industrial Averages (DJIA) through the decades. TUTORIAL: Market Crashes Measuring the Stock Market The Dow Jones Industrial Average was created in 1896 by Charles Dow, the founder of Dow Jones & Company and editor of the Wall Street Journal, and statistician Edward Jones. It is a means of measuring the trading range and market close of 30 major publicly held companies on a given day. The 30 stocks currently in the DJIA are not all industrial issues, but instead range across a variety of business sectors and industries, reflecting a general picture of stock market value and economic health. Over the previous century, the 30 stocks that have made up the DJIA have changed several times. The DJIA number calculated at the end of a trading day is the sum of all stocks in the index divided by the number of stocks in the index, with revisions in the divisor made for dividends and stock splits. (For more on the DJ, read An Introduction To The Dow Jones Industrial Average.) Big Wins, Big Losses, but the Trend is Up A look at some of the highs and lows of the stock market over the past 105 years reveals a predictable pattern, and an inevitable and relentless upward climb in the value of equities, despite recessions, depressions and long periods of stagnation. (For more on analyzing market movements, read Profit By Understanding Fundamental Trends.) Trade Forex and make big profits. Try Now! We can begin our examination with the close of trading on Jan. 12, 1906, when the Dow Jones Index stood at 100.25; the first close above 100 points. Continuing to move forward, the DJIA hit a high of 381.7 on Sept. 3, 1929. About eight weeks later the DJIA lost more than 70 points, between Oct. 28 and 29, 1929, declining to 230, a 23.6% loss. The so-called market "crash" set in motion the financial elements that led to the Great Depression, which hit bottom in 1932 and ended with the start of World War II. A variety of economic factors caused the 1929 losses, including wild stock and easy margin requirements that drove up stock prices well beyond their actual financial value. Falling prices for agricultural products, because of surpluses, also added to the decline. Most importantly, perhaps, were the meager earnings of some 60% of the American population, which was less than $2,000 annually. Economists estimated than basic living costs were $2,000 at minimum. On July 8, 1932, the DJIA hit bottom at 41.22, a loss of 89.2% of its value two-and-a-half years earlier. This was the low point of the Great Depression in which some 12 million people were unemployed, some 20,000 companies went bankrupt, 1616 banks had gone bankrupt, and one in 20 farmers were evicted from their land. After the War It took almost 15 years for the DJIA to double its previous high of 1,003.16 on Nov. 14, 1972. On Jan. 8, 1987, the DJIA hit a record high of 2,002.25. Driving stocks upward were a record previous year for automobile sales, a strong U.S. dollar and a string of record DJIA highs that inspired investor optimism and were expected to bring new, profit-seeking investors into the market, which was expected to elevate even further. On Oct. 19, 1987, the DJIA took another historic hit, falling 508 points, marking it as the biggest single one-day decline since the index was created. Some 22.6% of market value, about $500 billion, was lost in the day's trading. A combination of investor fear, panic and a perception that the price-to-earnings ratios (P/E) of many stocks were too high, began a selling trend. As the market declined, a large number of automated sell programs kicked in as stop orderlevels were hit by falling stocks, triggering even more sales. The program trading sales were typically comprised of large blocks of shares and were sold by major brokerage and financial firms. Not long after the market hit that low, however, it began a quick recovery and resumed a bullish climb. Breaking through the 10,000 barrier, the Dow closed at 10,006.78 on March 29, 1999. Leading the market were tech stocks, including microchip maker Intel, and Financials such as J.P. Morgan Chase. On March 16, 2000, the DJIA ran up its biggest gain in history, with a 499.19 point increase, an almost 5% spike. A number of high-tech and Internet-based start-ups issued IPO during this period and their share prices rose far in excess of their net profits, which in many cases did not exist. The phenomenon of soaring market prices for these often financially shaky companies was called the " Dotcom Bubble." That trading day of a historic high was followed shortly afterward by the April 14, 2000 sell-off, which produced the largest point loss in DJIA history, a decline of 617.78 points, about 5.66% of value. In Oct. 2006, the DJIA surpassed the 11,000 mark. In the last week of 2011, despite several previous trading sessions of steep declines followed by price recoveries, the Dow was trading above 12,000. Analysts attributed the apparent economic recovery to a slight decline in jobless claims, the bi-partisan congressional resolution of the payroll tax cut stalemate, and slightly higher than expected holiday consumer spending. (For more readings on the DJ, check out Why The Dow Matters.)

“You don't get what you want … you get what you ARE.”

Understand that God equipped every man He created with everything he needed to have a good and wealthy living; you have rich resources lying dormant within you. The development of what lies there inside you, will cause the manifestation of prosperity in your material world, the

Creation of healthy, giving relationships and successful endeavors in whatever you choose to do.

One sure way of creating the life you want; is operating the Law of attraction, the law of attraction when properly applied will makes you a creator of the life you want.

It states that you must be specific of what you want (decide what you want), ask for it, believe you will receive it, and gratefully receive it.

The first step to the grate life you are about to create for yourself is to take a personal responsibility of the result of your present life, don’t blame the circumstances outside you that you have no control over; In reality, You attract to you everything that is in harmonious vibration with you. And this has nothing to do with what happens around you that you cannot control.

Everything in life according to the law of vibration is in constant motion, from the least size of atom to the biggest object on earth. Even your body, then, is energy in a high speed of vibration fed by your thoughts and directives from the brain.

Understand that your brain as an object can never do the thinking for you but you do the thinking with your brain.

Our Vision

Wealthline is a vision from beyond this planet, and our core purpose is to build and raise world changers, and world most wealthy people!

Making available to them, reliable information for wealth building and wealth sustenance.

Following the steps of world most wealthy and powerful personnel's with clean financial records, and lasting wealth building principles and its applications to life.

 Poverty is not just lack of money but lack of wealth building information and its applications, lack of ideas and dreams, and inability to transform an idea into a reality.

If you follow what does work for wealth building, you will certainly become successful and you will become a rich person and one of the richest persons.

The richest people has what they do in common and a mindset that determines how they react to situations and things around them,

Mind you that life is not all about what happens to you but your reactions and response to what happens to you!

It’s all about the the mind, a wealthy mind will produce a wealthy man and a poor mind will produce a poor person.