Stock Market: downward slope

November 17, 2010 § Leave a comment

“Honey! I don’t think I’m reading this right!”
Tuesday November 16 marked the seventh consectutive day for price plummets in stock trade.

DOW Jones Industrial Average fell 178.47 points, slightly dropping below 11,000 before closing at 11,023.50.

Standard & Poor’s index fell 19.41 points, from 1197.75.

Nasdaq fell 1.75 percent from 2513.82.

These numbers may seem pointless but it sort of works like this:

The Dow Jones is an index that measures how 30 companies trade their stock.

Standard and Poor’s is an index that measures how 500 companies price their stock.

Nasdaq monitors 3000 companies’ stocks.

The number of points is the sum of the component prices divided by the dividends of stock. The 11,000 is an important ciphre because it keeps track of how much stock prices have risen since or fallen since September of 2008, around the time the economic crisis began. The sharpest drop in the Dow occurred in May 2010, faling  998.50 points, an almost 10 percent loss.

Stock brokers all over the world are keeping an eye on the index. We have become so interdependent it has made the economy vulnerable, especially when money and jobs can be exported around the globe.

The tricky thing with stock is that the prices can change so rapidly, the investors scramble to rearrange their funds, all with the purpose of retaining strong investments, and high returns.

With the economic crisis stuck in neutral, the indexes are watching the rest of the world, praying for the best outcome while getting ready for the worse collapse.

In today’s slump, the main concern is the Federal Reserve’s plan to pump billions of dollars into the stagnated economy. There is fear that import prices will drop if America renews its interest in production. This could slow the development of countries like China, and possibly cripple the European Union even more.

My question is where is the Federal Reserve going to get the money to “stimulate” the economy?

I don’t understand how killing trees to print more paper that will represent a weakened currency in America will help float the sinking (and probably drowned) countries that are nowhere near as wealthy as the G8 or as powerful as the G20. I speak in terms of representation.

Given that these two groups branch off from the United Nations, there are allowed to make recommendations and vote on them. Enforcing these policies is a completely different story.

Is paper really worth anything? Is sovereignty?

For the New York Times story click here.

                                                                                     -Clesceri

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