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Tip of the Day Don't try to Pick Stocks

Don't try to Pick Stocks - Some of us when we have extra money think that we can invest it in the stock market and earn some returns on...

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Stock Market Drop

All those fancy resorts lining the Strip and downtown Las Vegas weren't built on the income from conventioneers who went home with more money in their pockets than when they arrived. They were built on the hard luck of loser ... hard luck and an ingrained inability to accept the reality that the odds were mathematically stacked against them.

The stock market, as much a form of gambling as a crooked dice game (why do you think they call buying shares of common stock "playing the market) was, until the recent advent of low cost online low, fixed-cost trading services, almost as biased against individual investors as a Vegas poker table.

At the poker table players gamble against each other, not the house. The house makes its money off the "rake" -- a percentage of the total amount bet on each hand that is taken out of the pot and kept by the house.

Say the rake is 10 percent, which is typical. Eight people sit down at a poker table with $100 each, a total of $800. If they play even all evening, they will, when they eventually get up, each have $90, ten bucks out of each hundred will have gone to the house.

In the stock market, brokers commissions are like the rake. Every time the broker makes a trade in your behalf he rakes his percentage off the top. When brokers are constantly urging their more gullible clients to repeatedly buy and sell for no valid reason it's called churning and is supposedly illegal, though pitifully few brokers have ever been punished for it. What they have frequently done, however, is suck up the entire amount in a client's account via commissions on a series of trades that never end until the customer is broke.

There are, in fact, many reasons why the stock market drops. One of them happens to be that once in awhile a whole bunch of so-called investors wake up in the morning and realize that aren't investing in companies by playing the market, they're gambling in a casino where the cards are marked, the dice loaded and the slots stuffed full of lemons.

So they panic, sell at any price they can get, and the market drops.

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Definition of the Day General and Administrative Overhead

General and Administrative Overhead – These are costs related to the operation of a firm the stem form its general functions. It also applies to expenses related to any administrative functions. While these are necessary parts of a company’s overhead, it doesn’t necessarily mean any cost that are the result...

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