Stock Market

How does the stock market work? This is a question that most novice investors ask their financial advisors. If you want to know the answer to this question then you should first learn what the stock market is. The stock market, simply put, is a market where companies and entities can finance their operation by offering shares of company stocks, bonds and derivatives to the public. Currently there is a huge worldwide investment market valued at over $350 trillion U.S. This market is made up of about $300 trillion in derivatives, $45 trillion in bonds and $22.5 trillion in worldwide stocks.

The next thing that you will need to learn about when you learn how the stock market works is how stocks, bonds and derivatives are offered to the public. There are several national and international markets that you can find investment product listings. One of these markets is the NASDAQ. When you view the listings of a particular stock market you will see that each stock, bond or derivative will be represented by a trade symbol. Next to each symbol will be the products current share price and a number that represents its movement for the current trading day, and possibly its movement for the week or year. You can use this information to make decisions on what stocks to buy and what stocks to sell.

The final step in this stock investment guide is how to buy and sell stocks, bonds and derivatives. First you will need to set up an investment account with a stock broker or with an online investment site. After your account is established you will need to fund it. After your investment account has been funded you will need to place your buy order. This order will need to include how much money you want to invest and what stock, bond or derivative you are interested in. Your stock broker, or investment site manager, will take your purchase order and try to purchase as many shares as possible with the amount of money you have allotted for your investment. You should note here that you will need to budget for commissions and transactions fees when you are writing out your purchase orders. To sell a stock you simply place a sell order with your broker. They will then try to sell your shares for the highest price possible.

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Beginning investing

Investing is a big step in your personal finance management. Investing is taking a risk to better your financial situation. Not everyone invests, but those that do often are glad they took the risk. Investing does not have to be a major risk, though. You just have to understand it in order to be comfortable with it.

Risk is a major part of investing. With every investment there is almost a guarantee that there will be some risk you could lose money instead of gain money. However, there are varying risk levels to investing. Some investments, like savings accounts, involve little to no risk, while other investments, like stocks, involve higher risks.

You should get to understand the different types of investment options that you have. There are a wide range and each has its own advantages and disadvantages. You should learn as much as possible about each type of investment before ever sticking a penny in one.

You should have someone you can turn to for advice and help with your investments. This could be a broker who you hire to make investments on your behalf or you could join an investment club where you work together with a group of other investors. Do what makes you the most comfortable.

You should also decide just how much money you are going to use for your investing. This will involve looking over your personal finances to see how much you can afford to tuck away into investments. Do not put yourself or your finances at risk by investing. You should figure investment funds into your budget along with expenses and savings. Make sure you can afford your investments.

Lastly, your investment strategy should involve careful monitoring. Rarely is someone rich enough to just let their investments be without monitoring them and ensuring they are doing good. You should either keep an eye on them yourself or hire someone to do it for you.

Investing is a big step in your personal finance management. It is a way to take what you have and grow it into what you need for your future, be that college for the kids or your own retirement. Just as with anything else in your personal finances, investing requires care and management. You can not expect to become a super investor overnight. It takes work and dedication, but the payoff can be amazing.

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What is the secret to being successful at stock investing as a beginner? Nearly everybody has heard stories about people making millions overnight using the stock market. In reality, there are many myths about investing in stocks. It is not always straightforward, sometimes even professional investors need to rely on a hunch. Stock investing can be, however, very rewarding and a lot of fun if you're prepared to take the time to learn about stock market investing.

To make money on the stock market, you are going to need patience, practice, skills, experience and education. It is vital to research the companies you are planning to invest in and find out everything you can about them. To do this there are several sources of information available to you. You can use the media, magazines or browse online for information.

Look for information on mergers, new product launches and acquisitions which might affect the stock price of the company in question. Knowing about such things beforehand can help you to avoid risky stock investing. Check how the company has been performing on the stock market over the past few years, not just how it is performing right now. Make sure you use reliable sources for information and avoid friends with "hot tips" - this is your money, after all and when you are on investing on the stock market you want to make sure you're acting from a position of knowledge. It is a bad idea to just invest in stocks at random. This is like going to a roulette table and putting every dollar you have on red.

You should begin with very small investments. If you start off with a large investment and immediately lose it, this might put you off stock investing for life. Learning the basics, increasing your confidence and getting experience is vital, some people recommend paper trading but in reality if you have not actually risked any money then you do not get a true feeling of stock market trading.

It can be a good idea to invest in a company you have some knowledge about. This will not only make it more interesting to you but you will be able to understand the way the company works and the factors that cause fluctuations in that industry.

Diversity can be a good idea when it comes to investing in stocks. You might not want to risk all your money on one company's shares. Maybe you will want to buy stocks in drug companies, electrical companies and entertainment - or a different combination. Putting all your eggs in one basket might result in losing all your investments overnight. Spreading the investment spreads the risk when it comes to stock market investment.

Do not base your purchasing solely on price. Perhaps a $3 stock may seem like a good idea if the company is doing well and expanding. But a stock costing $300 might bring you better returns. Of course, this does depend on how much you are willing to invest.

You might wish to seek advice from a stockbroker. Stockbrokers can offer good advice and obviously have much more experience than the average stock investing beginner. They do, however, charge fees, so it is up to you whether you want to use a broker or not. They can be useful but are not compulsory.

Perhaps the most important advice for the stock investing beginner is never to risk more money than you can afford to lose, no matter how safe the potential investment seems. There is always a degree of risk involved in stock investing and nothing is 100 percent guaranteed.

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Hedge Funds

Like many large banks on wall street Goldman Sachs offers several hedge funds. A few of these took big losses this summer and in one case with the Goldman Global Opportunities Fund the firm had to inject $3B into the fund to keep it running ($2B of their own money). "Given the market dislocation, the performance of GEO has suffered significantly," Goldman said. "Our response has been to reduce risk and leverage." In other words their losses mostly came from using too much leverage in the first place.

"Many funds employing quantitative strategies are currently under pressure as recent conditions have resulted in significant market dislocation," Goldman said. "Across most sectors, there has been an increase in overlapping trades, a surge in volatility and an increase in correlations. These factors have combined to challenge many of the trading algorithms used in quantitative strategies. We believe the current values that the market is assigning to the assets underlying various funds represent a discount that is not supported by the fundamentals."

Other Goldman Sachs Hedge Funds

The two other funds that have recently come under fire include the multi-strategy fund Global Alpha and the North American Equity Opportunities Fund (NAEO). Goldman has said "The market dislocation impacting equity quantitative strategies has adversely affected NAEO's performance and has been a key contributor to Global Alpha's disappointing performance. We have reduced risk and leverage in these funds as well. At their current levels of equity capital, we believe the funds are positioned to actively pursue market opportunities."

Will Goldman Sachs Leave the Hedge Fund Business?

Never. Doesn't listen to journalists who predict Goldman's flagship fund going down in flames as an end to their play in this industry. The most recent trend with Goldman Sach's strategy towards hedge funds has been to invest and take partial ownership in dozens of medium to large sized hedge funds. This allows them to help grow these hedge funds while also participating in the upside of a diverse ray of hedge fund managers and strategies.

The Richard Wilson Hedge fund Blog (http://richard-wilson.blogspot.com) is a content rich source for hedge fund industry white papers, trends, articles and professional interviews. I also share lessons I learn in my investment marketing and sales (third party marketing) career and earning a graduate degree at Harvard. I live in Cambridge, MA and can be reached at 503.789.7901 or Richard@RichardCWilson.com. This post came from the Richard Wilson Hedge Fund Blog online at: http://richard-wilson.blogspot.com/2007/10/goldman-sachs-hedge-fund.html

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China Hedge Fund Industry Trend

As their capital markets become stronger and more mature the average person in China is saving 15% more of what they earn every year. Equities have been on a rally increasing almost 75% so far in 2007 but eventually the market will be mature enough and equities growth outlook choppy enough that diversification into alternative assets will become more important. If you are a hedge fund there may be opportunities to sell and market your products through Chinese-based but American owned banks or financial networks. The WSJ reports that in 2006 there were over 60 hedge funds currently investing in China and according to Eurekahedge this makes up over $4B in assets.

Hedge Fund Third Party Marketing in China

If you are a third party marketer you may be able to differentiate yourself by building those relationships or traveling to China twice a year to get a lay of the land and introduce yourself to important contacts you have there. You could also find a few Chinese hedge funds and offer to represent them here in the United States. Most hedge fund managers in China do speak English but very few have full time marketing and sales support based here in the United States.

Chinese Hedge Funds Resources

The US-China Business Council has more information on statistics related to Chinese hedge funds and investors in China. Other resources include the All About Alpha blog, the hedge fund blog, Albourne Village, and the Fierce Finance newsletter. I also continue to post more articles within the Richard Wilson Hedge Fund Blog on Chinese hedge fund trends.

- Richard

Richard Wilson runs the Richard Wilson Hedge Fund Blog (http://richard-wilson.blogspot.com) He is an investment marketing/sales expert who works with hedge funds. Richard is a Harvard graduate student, author of investment sales book Rainmaker, and has 7,000 professional contacts and 800 connections on http://www.Linkedin.com Richard Wilson resides in Cambridge, MA. He may be emailed at Richard@RichardCWilson.com or called (503) 789-7901.

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