Stocks Article

When the term "stock market" is introduced in a conversation today, it seems to elicit many different responses and emotions, dependent upon the age of those involved. For the general public who are over 80 years old, it elicits it's share of bad commentary. The boomers and their adult children have seen the entire gamut of the market...The good, The Bad and The Ugly! 

The Great Depression

 As children, adults  in their 80's well remember the havoc and devastation the great depression inflicted on our society.  They also remember the trigger as being the collapse of the stock market on (black) Tuesday October 29^th, 1929. Coast to coast bank failings were soon to follow. All western industrialized countries experienced foundering economies for the next 10 years. It is interesting to note that although only 16% of American households had any investments in the stock market at the time, the crash of the market is the first thing reflected on  when contemplating  the devastation and subsequent depression our country faced during those years. In actuality, the Great Depression of the 1930's was due to a convergence of many economic factors.

As is normal during any bubble, the vast majority of investors were convinced that the flourishing market of the twenties would go on forever. During the prior 6 years the market had increased 500% to peak at over 380 points by September 3^rd of that year. The market lost 17% of its' value between September 3^rd and a week before the crash. Whipsawing, it then regained half the loss, which it then again lost during the week before the crash. The signs of impending catastrophe, in retrospect were indeed ominous. 

Most today are unaware that the crash that occurred on the 29^th of October, 1929 was not the worse loss for the market during that week.  Thursday, October 31^st, only 2 days after the notorious Black Tuesday another accelerated freefall began. There were almost 13 million shares traded that day. A new record for trading in a day that would not be eclipsed for another 39 years.  (Today, 13, 000, 000 shares are a mere drop in the bucket. NYSE daily trades normally run between 1 and 4 billion shares.) The market then continued in a freefall for the next month.

Enter The Baby Boomers

Those memories of the crash most likely contributed to the lackluster market throughout the next 50 years. The hardships those generations endured created a total distrust in the stock market for many, and even distrust for banks for a large number of survivors of that era.   Regardless, the baby boomers were beginning to flex their investment muscle in the eighties. They were in their mid-thirties at the turn of the decade and not burdened with the memories that their parents had to endure. The current recession they were experiencing was coming to an end and the coming result was a market boom not seen previously in our history. 

The boomer investors of today seem to be in one of two camps. Either shell shocked by the money they have lost by market trends and the scams perpetuated by numerous companies and individuals, or riding high with the profits they are attaining by astute and sometimes lucky trading decisions. 

Coming out of an economy worse than anything we have seen today, (contrary to what the politicians and news media would have you believe), the boomers in 1981 were ready to get back to spending and jump into the stock market with both feet.   

They  watched as the prime lending rate soared to an unprecedented 21.5%, inflation to over 14%, the Dow down to a low of 760 in April of 1980,  and the unemployment rate at around 12%. The shell shocked business community and public in general were natural players for a soon to arrive rock and roll economy.   

Boom

Between 1980 and 1987, the Dow soared to over 2700 points. However, by the day of the October 19^th 1987 market crash, it had ebbed to around 2250. The day of the crash, the Dow lost over 22% of its' value and fell to just over 1700 points. It took the next two years to surpass the 2700 point peak it had attained in August of 1987.  

After that, it was Katy bar the doors, save for a temporary downward blip in 1990. The high flying tech business of the 1990s was to push the market to new extremes once again. Extremes that pushed the Dow to over 11, 700 points by January of 2000. A bubble was created that would burst in 2001, as a result of the internet business crash and Y2000 scare. The Dow plummeted to around 7300 by October of 2002. This time however, it was off to the races again a mere 5 months later.  

This bull market run essentially lasted until October 2007. The Dow had increased to a staggering 14, 164 points. Unfortunately, that same quarter triggered another recession with a GDP growth of -1%. Those analysts who forgot to pay attention to history, were predicting a run into the 35, 000 area during the next few years. OOPS! 

The failure of Bear Stearns coupled with a drop of the Dow to 11, 000, led many to believe the recession was over. However, after the failure of Lehman, the market continued to fall to 7500 points. A short lived rally to over 9000, preceded another freefall to 6600 points. Over 17 months, the market had lost 50% of its' value. Once again though it showed stubborn resiliency. Within 6 months it was back over 9000.  

Then during May of 2010, we saw the Dow once again crest 11, 000. Today, (May 13th, 2010), it sits at just shy of 10, 800 points.  

The market machinations of today as compared to 20 years ago have little resemblance to each other. Between the 80's and today, the masses have earned and lost trillions of dollars in the stock market. Investment houses have had to adjust to the new breed of investors, created with the advent of the internet. Broker fees have plummeted to accommodate those who feel they have no need for broker interaction. Day Trading, previously practiced by only a few, is an entire industry in itself. This phenomena was the result of trade fees being slashed, the internet, online brokerages, and in some cases, the get rich quick dream. Rather than getting rich quick, some investors have day traded themselves into the poor farm.

Many long term investors have been bilked out of their life saving by the likes of Enron and Bernie Madoff.  Still others have earned millions with astute short term trading. Some have succeeded with long term strategies. Options are now a vehicle of choice for many traders. Traders are learning of and profiting from the leverage afforded by options. Like Stocks, option trade prices  have been slashed, making trading more affordable than ever.  

Because of all the huge market swings, the corporate scams, corporate failures and individual market ideologies, there never seems to be a scarcity of high spirited conversation whenever the subject of discussion among friends turns to the stock market. We would like to think at StockTraderPros.com,   that you will find an abundance of helpful information regarding the stock market and investments in general. We will be sharing information about The Good, The Bad and The Ugly stock brokers. Option brokers will be reviewed as well.

We look forward to being your go to stock market reference site of choice. We will have a ticker to keep you appraised of current stock prices shortly.