Posts in category Stock Market →

Not long ago, national economies were more or less isolated from one another, and major shake-ups in one country – whether geopolitical (civil unrest, military coup, invasion) or natural (earthquake, tsunami) – rarely affected the economy of another.
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Two recent articles in Forbes.com speculated on the future of Apple and Google – the two darlings of the investing world.

Today’s article on Apple looked into its market valuation based on the high Price/Sales ratio, which drives its unique pattern of fast growth immediately after launching a new product, followed by a period of normalcy until the next new product comes along.
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Warren Buffett said in a recent interview (broken link) that the US is “already in recession”, even though “perhaps not in the sense that economists would define it”, and “it will be deeper and last longer than many think”.
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In the recent annual meeting of the Berkshire Hathaway shareholders held last Saturday, CEO Warren Buffett was asked about the best investment idea he would recommend to an investor in his 30′s. In his own words:

I would just have it all in a very low-cost index fund from a reputable firm, maybe Vanguard. Unless I bought during a strong bull market, I would feel confident that I would outperform…and I could just go back and get on with my work.

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In Part I, I discussed the two main and opposing theories of investing – efficient market theory (EMT) and fundamental analysis (FA). Here I talk about which one of these two can be thought as “correct”.
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(This post is a part of the series Basics of Finance and Investing.)

It did not surprise many when Warren Buffett, while recently hosting a group of business students for a two-hour question-answer session, began by pointing out the folly of the efficient market theory (EMT). After all, his objection to EMT is as legendary as his support for fundamental analysis (FA), as the foundation for smart investing.
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A scientist colleague of mine, a quiet 52-year old fellow with mind sharp as a tack in most earthly matters, has become caught up in the same affliction that many of us get in these uncertain financial times. He wanted to time the market, to make most of the up-down-up cycles of the ongoing fluctuations.
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Wall Street saw a brutal sell-off today, with the major market indexes – Dow Jones, S&P 500 and NASDAQ – dropping respectively 2.64% (367 points), 2.56% (39 points) and 2.65% (74 points). The slide reflects, among other things, a continued concern about credit and housing issues, rising oil prices, falling dollar value, and uncertainly on Fed’s next move.
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I generally avoid reading predictions of the government’s move every time the market hits a rough patch, as is happening now. Guessing the mind of Fed chief Ben Bernanke – if he will cut the interest rate again to soothe investor sentiment – has become as much a suspense as predicting the stock market.
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Since July 19 this year, when Dow Jones Index rose to a record 14,000 points, it is down to 12,845 at yesterday’s closing (even falling below 12,600 at one point). That is almost 10% drop in less than a month, nearing the official definition of a market correction. Is this a precursor to a bear market? Here are CNN Money’s 5 ways to know:
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