Oil broker drunk trading economics
The stock market crash is conventionally said to have occurred on Thursday the 24 th and Tuesday the 29 th of October.
At the end of the market day on Thursday, October 24, the market was at On this day the market fell 33 points — a drop of 9 percent — on trading that was approximately three times the normal daily volume for the first nine months of the year.
By all accounts, there was a selling panic. By November 13,the market had fallen to By the time the crash was completed oil broker drunk trading economicsfollowing an unprecedentedly large economic depression, stocks had lost nearly 90 percent of their value.
The events of Black Thursday are normally defined to be the start of the stock market crash ofbut the series of events leading to the crash started before that date.
This article examines the causes of the stock market crash. While no consensus exists about its precise causes, the article will critique some arguments oil broker drunk trading economics support a preferred set of conclusions.
It argues that one of the primary causes was the attempt by important people and the media to stop market speculators. A second probable cause was the great expansion of investment trusts, public utility holding companies, and the amount of margin buying, all of which fueled the purchase of public utility stocks, and drove up their prices.
Public utilities, utility holding companies, and investment trusts were all highly levered using large amounts of debt and preferred stock. These factors seem to have set the stage for the triggering event. This sector was vulnerable to the arrival of bad news regarding oil broker drunk trading economics regulation. In Octoberthe bad news arrived and utility stocks fell dramatically.
After the utilities decreased in price, margin buyers had to sell and there was then panic selling of all stocks. Thus, the common viewpoint was that stock prices were too high. There is much to criticize in conventional interpretations of the stock market crash, however. Even the name is inexact. The largest losses to the market did not come in October but rather in the following two years. In Decembermany expert oil broker drunk trading economics, including Keynes and Irving Fisher, felt that the financial crisis had ended and by April the Standard and Poor composite index was at There are good reasons for thinking that the stock market was not obviously overvalued in and that it was sensible to hold most stocks in the fall of and to buy stocks in December admittedly this investment strategy would have been terribly unsuccessful.
From to the third quarter ofcommon stocks increased in value by percent in four years, a compound annual growth of The fact that the stock market lost 90 oil broker drunk trading economics of its value from to indicates that the market, at least using one criterion actual performance of the marketwas overvalued in John Kenneth Galbraith implies that there was a speculative orgy oil broker drunk trading economics that the crash was predictable: The mass escape into make-believe, so much a part of the true speculative orgy, started in earnest.
Compare this position with the fact that Irving Fisher, one of the leading economists in the U. Paul Samuelson quotes P. Sergeant Florence another leading economist: Samuelson admits that: The stock price increases leading to Octoberwere not driven solely by fools or speculators.
There were also intelligent, knowledgeable investors who were buying or holding stocks in September and October Also, leading economists, both then and now, could neither anticipate nor explain the October decline of the market. Thus, the conviction that stocks were obviously overpriced is somewhat oil broker drunk trading economics a myth. The s were, in fact, a period of real growth and prosperity.
For the period ofwholesale prices went down 0. Oil broker drunk trading economics the manufacturing situation in the United States prior to the crash is also informative.
What Fisher saw was manufacturing efficiency rapidly increasing oil broker drunk trading economics per worker as was manufacturing output and the use of electricity. The financial fundamentals of the markets were also strong. Duringthe price-earnings ratio for 45 industrial stocks increased from approximately 12 to approximately It was over 15 in for industrials and then decreased to approximately 10 by the end of Values in this range would be considered reasonable by most market analysts today.
The rise in stock prices was not uniform across all industries. The stocks that went up the most were in industries where the economic fundamentals indicated there was cause for large amounts of optimism. They included airplanes, agricultural implements, chemicals, department stores, steel, utilities, telephone and telegraph, electrical equipment, oil, paper, and radio.
These were reasonable choices for expectations of growth. Industrial bonds of investment grade were yielding 5. Consider that an interest rate of 5. Inthe Federal Reserve Bulletin reported production in at an index of This is an annual growth rate in production of 3. During the period commodity prices actually decreased.
The production record for the ten-year period was exceptionally good. Factory payrolls in September were at an index of an all-time high. In October the index dropped towhich beat oil broker drunk trading economics previous months and years except for September The factory employment measures were consistent with the payroll index. The September unadjusted measure of freight car loadings was at — also an all-time record.
Kendrick shows that the period had an unusually high rate of change in total factor productivity. The annual rate of change of 5. Farming productivity change for was second only to the period Overall, the period easily took first place for productivity increases, handily beating the six other time periods studied by Kendrick all the periods studies were prior to with an annual productivity oil broker drunk trading economics measure of 3.
This was outstanding economic performance — performance which normally would justify stock market optimism. In the first nine months of1, firms announced increased dividends. Inthe number was only and init was In September dividend increased were announced by firms compared with the year before. The financial news from corporations was very positive in September and October The August issue showed that for firms the increase for the first six months of compared to was In September, the results were expanded to firms with a The earnings for the third quarter for firms were calculated to be This is evidence that the general level of business activity and reported profits were excellent at the end of September and the middle of October Barrie Wigmore researched financial data for firms.
However, the return on equity for the firms using the year-end book value was a high The dividend yield was 2. Article after article from January to October in business magazines carried news of outstanding economic performance. Leinbach, two staff writers of the Magazine of Wall Streetwrote in June There was little hint of a severe weakness in the real economy in the months prior to October There is a great deal of evidence that in stock prices were not out oil broker drunk trading economics line with the real economics of the firms that had issued the stock.
Leading economists were betting that common stocks in the fall of were a oil broker drunk trading economics buy. Conventional financial reports of corporations gave cause for optimism relative to the earnings of corporations.
Price-earnings ratios, dividend amounts and changes in oil broker drunk trading economics, and earnings and changes in earnings all gave cause for stock price optimism.
Table 1 shows the average of the highs and lows of the Dow Jones Industrial Index for to Using the information of Table 1, from to stocks rose in value by The price increases were large, but not beyond comprehension. The price decreases taken to were consistent with the fact that by there was a worldwide depression.
If we take the high of September and the year end value of Most of us, if we held stock in September would not have sold early in October.
In fact, if Oil broker drunk trading economics had money to invest, I would have purchased after the major break on Black Thursday, October I would have been sorry. Although it can be argued that the stock market was not overvalued, there is evidence that many feared that it was overvalued — including the Federal Reserve Board and the United States Senate. Bythere were many who felt the market price of equity securities had increased too much, and this feeling was reinforced daily by the media and statements by influential government officials.
My research minimizes several candidates that are frequently cited by others see Bierman,and Barsky and DeLongp. In Septemberthe market value of one segment of the market, the public utility sector, should be based on existing fundamentals, and fundamentals seem to have changed considerably in October While the and financial press focused extensively and excessively on broker loans and margin account activity, the statement by Snowden is the only unique relevant news event on October 3.
The October 4 p. The stock market went down on October 3 and October 4, but almost all reported business news was very optimistic. The primary negative news item was the statement by Snowden regarding the amount of speculation in the American stock market.
The market had been subjected to a barrage of statements throughout the year that there was excessive speculation and that the oil broker drunk trading economics of stock prices was too high. There is a possibility that the Snowden comment reported on October 3 was the push that started the boulder down the hill, but there were other events that also jeopardized the level of the market.
On September 26 the Bank of England raised its discount rate from 5.
No one knows exactly how or when coffee was discovered, though there are many legends about its origin. Oil broker drunk trading economics grown worldwide can trace its heritage back centuries to the ancient coffee forests on oil broker drunk trading economics Ethiopian plateau. There, legend says the goat herder Kaldi first discovered the potential of these beloved beans.
The oil broker drunk trading economics goes that that Kaldi discovered coffee after he noticed that after eating the berries from a certain tree, his goats became so energetic that they did not want to sleep at night. Kaldi reported his findings to the abbot of the local monastery, who made a drink with the berries and oil broker drunk trading economics that it kept him alert through the long hours of evening prayer.
The abbot shared his discovery with the other monks at the monastery, and knowledge of the energizing berries began to spread. As word moved east and coffee reached the Arabian peninsula, it began a journey which would bring these beans across the globe. Coffee cultivation and trade began on the Arabian Peninsula. By the 15th century, coffee was being grown in the Yemeni district of Arabia and by the 16th century it was known in Persia, Egypt, Syria, and Turkey.
Coffee was not only enjoyed in homes, but also in the many public coffee houses — called qahveh khaneh — which began to appear in cities across the Near East. The popularity of the coffee houses was unequaled and people frequented them for all kinds of social activity. Not only did the patrons drink coffee and engage in conversation, but they also listened to music, watched performers, played chess and kept current on the news.
European travelers to the Near East brought back stories of an unusual dark black beverage. By the 17th century, coffee had made its way to Europe and was becoming popular across the continent.
He decided to taste the beverage for himself before making a decision, and found the drink so satisfying that he gave it papal approval. Despite such controversy, coffee houses were quickly becoming centers of social activity and communication in oil broker drunk trading economics major cities of England, Austria, France, Germany and Holland.
Those who drank coffee instead of alcohol began the day alert and energized, and not surprisingly, the quality of their work was greatly improved.
We like to think of this a precursor to the modern office coffee service. By the midth century, there oil broker drunk trading economics over coffee houses in London, many of which attracted like-minded patrons, including merchants, shippers, brokers and artists. Many businesses grew out of these specialized coffee houses. Though coffee houses rapidly began to appear, tea continued to be the favored drink in the New World untilwhen the colonists revolted against a heavy tax on tea imposed by King George III.
The revolt, known as the Boston Tea Party, would forever change the American drinking preference to coffee. As demand for the beverage continued to spread, there was fierce competition to cultivate coffee outside of Arabia. The Dutch finally got seedlings in the latter half of the 17th century. Their first attempts to oil broker drunk trading economics them in India failed, but they were successful with their efforts in Batavia, on the island of Java in what is now Indonesia.
The plants thrived and soon the Dutch had a productive and growing oil broker drunk trading economics in coffee. They then expanded the cultivation of coffee trees to the islands of Sumatra and Celebes. Ina young naval officer, Gabriel de Oil broker drunk trading economics obtained a seedling from the King's plant. Despite a challenging voyage — complete with horrendous weather, a saboteur who tried to destroy the seedling, and a pirate attack — oil broker drunk trading economics managed to transport it safely to Martinique.
Even more incredible is that this seedling was the parent of all coffee trees throughout the Caribbean, South and Central America. The famed Brazilian coffee owes its existence to Francisco de Mello Palheta, who was sent by the emperor to French Guiana to get coffee seedlings. The French were not willing to share, but the French Governor's wife, captivated by his good looks, gave him a large bouquet of flowers before he left— buried inside were enough coffee seeds to begin what is today a billion-dollar industry.
Missionaries and travelers, traders and colonists continued to carry coffee seeds to new lands, and coffee trees were planted worldwide. Plantations were established in magnificent tropical forests and on rugged mountain highlands. Some crops flourished, while others were short-lived.
New nations were oil broker drunk trading economics on coffee economies. Fortunes were made and lost. By the end of the 18th century, coffee had become one of the world's most profitable export crops. After crude oil, coffee is the most sought commodity in the world. Sustainability Showcase Coffee Gives Back. The History of Coffee No one knows exactly how or when coffee was discovered, though there are many legends about its origin.
An Ethiopian Legend Coffee grown worldwide can trace its heritage back centuries to the ancient coffee forests on the Ethiopian plateau. Coffee Comes to Europe European travelers to the Near East brought back stories of an unusual dark black beverage.
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