15 Things to Know About the Stock Market
Many investors turn to CNBC stock market live for daily updates on the companies they're watching. Read on for 15 things to know about the U.S. stock market.
Earnings are the long-term driver of stock prices, as reported by CNBC.com. Pro-business policies including tax cuts boosted the epic earnings growth in 2018.
When S&P 500 earnings decline on a year-over-year basis during two consecutive quarters, industry experts call it an earnings recession. The S&P 500 index historically reflects the GDP, or gross domestic product, in the United States, as stated in Business Insider.
For investors with the benefit of long-term investing horizons, the stock market is a wise tool. For investors concerned they may be buying at the top of the market, taking a long-term view can bring success, as stated in Business Insider.
Dollar-cost averaging is a stock-market strategy that can help decrease the risks that come with an asset falling in price, as claimed by Business Insider. The basic concept is to invest a set amount of money in an asset once every set period of time.
Efficient Market Hypothesis
Proponents of the Efficient Market Hypothesis claim that you can't beat the market with stock picking, but the market can't beat you either. This tenet posits that the stock market reflects all available information, as stated in Business Insider.
In August 2015, worries about the health of China's economies created sharp price moves that caused more than 1,000 trading halts in stocks and exchange-traded funds, as reported in Business Insider. The Securities & Exchange Commission later proposed changes that would prevent such chaos from repeating.
Stop Orders and Market Orders
Stop orders give instructions to buy or sell a stock once it reaches a certain price, as claimed in Business Insider. Market orders buy or sell a stock at any price.
The risk cycle examines the broader psychology of participants in the stock market, as claimed in the website seekingalpha.com. The risk cycle is a way to measure the collective mood and subsequent actions of investors in the stock market and the economy in general.
Superstar investor Warren Buffett says interest rates are the most important factor when determining stock values, as reported by CNBC.com. If interest rates are low, Buffet says, any stream of earnings from investments will make more money.
How To Choose Stocks
Stock market experts suggest using five criteria to evaluate investments: asset utilization, current and projected profitability, earnings momentum, capital structure and intrinsic instead of market value. Investors without an adviser should perform their own due diligence, as claimed in CNBC.com.
Public Company Review
Investors must research the enormous amount of data available on public companies to determine whether they are suitable for their portfolios, as claimed by CNBC.com. The overriding consideration for bonds is credit quality.
The Internet offers free, real-time access to stock data at your fingertips, as reported in CNBC.com. Consider whether a company's industry, sector and enterprise is consistent with your asset allocation.
A Reagan Administration policy in the 1980s introduced a higher federal funds rate to break the U.S. economy out of spiking inflation, as stated in CNBC.com. The rate sparked an economic recession that lasted from July 1981 to November 1982.
The Dow Theory forecasts the market is in an uptrend when the Dow Transportations Average and Dow Industrials make a higher high either at the same time or one after the other, as reported in CNBC.com. The market is in a downtrend when the opposite is true, as well.
The Upstart 100
Every year, CNBC releases its Upstart 100, an exclusive list of promising startups. This diverse group of companies is breaking barriers and building brands, as claimed on CNBC.com.