Pros And Cons Of A Stock Market

Understanding the nature of the stock market, including its pros and cons, doesn't have to be confusing one. Many people fear that in order for them to know the nature of the stock market, they have to understand a gamut of stock and marketing terms and all that jazz.

On the other hand, some people saw behind the veneer of all these economic gibberish, and saw the potentials of what they could get from investing in the stock market.

In a nutshell

Simply put, the stock market is the market to buy and sell stocks and shares. This is where company stock gets traded. The term is also used to describe the totality of all stocks in one country. That is why we hear reporters talking that "the stock market was up today" or that "the stock market went down after the dollar fell to the euro."

What are the pros and cons of the stock market?

One of the reasons why we need the stock market is because it is an important factor for the US economic system to operate. Through the stock market, US companies improve their financial viability and expand their operations by raising funds from selling stocks. Without the stock market, our companies become slower in their growth and might falter in the increasing competition in the US as well as against international companies.

Another reason for the existence of the stock market is that it also has role in personal financial planning. This is because many individuals buy stock shares as part of their personal financial strategies. More importantly, most Americans have a stake in the stock market because retirement programs invest in stocks. It has shown that retirement programs earn a lot more by investing in common stocks than other options such as saving the funds in banks.

Of course, the stock market also has its downsides. Remember that the stock market is not a tool for instant success. True, there are cases of one getting wealthy by investing in the market, but this involves having shares in various company stocks, which means a lot of research, time, and money. One also gets rich when some stocks become "hotter" such as the "dot-com" bubble in the nineties, but when the initial buzz around these stocks falter, the value of these stocks tend to crash.

By Russ Lie

Pros And Cons Using Your Credit Card On The Internet

With today’s technology and the E-commerce, using credit cards on the Internet is now more practiced and favored by consumers and online businesses alike.

For people who are not familiar with shopping on the internet using their credit cards, here is a list of the pros and cons that you must be adept with before considering using your credit card in the internet.

1) As a buyer and owner of the account, there are pros and cons in using your credit card on the internet:

* Online, you don't have to wait on a queue to purchase anything with your credit card. On the other hand, you might get ripped off since you don't know the seller.

* Shopping in the internet with your credit card gives you a wider selection of products with low prices. In contrast, shopping in the internet would not give you a chance to examine the product more thoroughly.

* Using your credit card online gives you the advantage of purchasing products anywhere in the world. However, some sellers may not be trustworthy enough to really deliver what you bought.

* Accessibility of shops 24 hours a day could be provided for you when using the internet. Also, 24 hours a day somebody out there could just be lurking waiting for you to key in your credit card number for him or her to use.

* Although there is a large selection of products to supply the needs of the customer, records have it that there is only an average of 1/10 stocks obtainable on the internet.

2) As a businessman using the internet to sell products and services, there are pros and cons in using your credit card on the internet:

* In using the internet to sell to customers that use credit cards, the company’s market sales would increase. But, purchasing hardware and software to support these transactions would cost the company a large amount of money. Also, regular maintenance is required to ensure that all transactions happen smoothly.

* Because customers make use of credit cards through the internet, the company would be able to expand their sales globally. On the other hand, a company must make sure that the stocks are enough to supply the global market when the demand suddenly spikes.

*Through the large number of consumers using their credit cards online, the company's profits won't be that hard to increase. But this entails keeping up with the competition since there a lot of other companies vying to get the most out of the credit card phenomenon.





By Russ Lie

Problems With The Stock Market

This tendency to panic and depend on the direction of others is among the real causes of problems with the stock market.

There are two actions arising from this mentality:

a.) panic buying
b.) panic selling

Of the two, panic selling causes the most harm since it causes a steep and quick drop in the value of shares.
"Investors often cause stock market problems"

With the advent of online banking and online trading, the stock market has opened its doors to virtually every person willing enough to grow their money.

And yet, despite this, not everyone has joined the bandwagon. The biggest factor being the potential risk involved in trading stocks.

The stock market is among the most volatile financial institutions in business. And it’s this volatility that tends to be the biggest problem with the stock market.

Almost any reason, real or imagined can cause these extreme fluctuations that often affect the stock market’s credibility.

Real factors such as the weather, political instability, political decisions, war, terrorist threats, boycotts and strikes, economic trends and international trade or even company scandals also become factors to the stock market problems.

Bad weather such as hurricanes affects certain industries such as oil production. This then drives the cost of petroleum products higher as production gets limited. This causes a cascading effect that drives stocks of oil companies higher.

Political instability in a country can affect investor confidence thus lesser investing is done. This causes the shares of local companies to slide downwards.

Boycotts, strikers and terrorist threats have also proven to be the bane of the airline industry. Shares of airliners have tumbled throughout the years with every terrorist attacks all over the world.

But aside from uncontrollable factors such as natural disaster (or war), the common underlying link that allows these other reasons to affect the stock market so significantly is investor psychology.

Humans are prone to herd mentality. Often, people confirm with the actions and directions of other people.

This is a common mistake in investing.

An example of this is during the early 90s when dozens of dot com companies sold their stocks in the stock market. It created an artificial demand for stocks of companies that did not even provide real and concrete services.

These stocks soared in value as more and more enthusiastic investors bought them. This happened up until the time it was realized that these companies did not actually post any considerable profit to sustain the value of the shares.

The stocks then tumbled and virtually lost value as investors frantically sold their shares.


The best way to avoid causing these problems is to practice due diligence and to keep a level head while investing.

By Russ Lie