Usually, investors in the United States have bought stocks they expected to keep for many years. Over the long-term, the stock market has always increased. Short-term price decreases only affect people who sell stocks at prices lower than they paid for them. That is why during bull markets, experts tell investors to keep their stocks rather than to sell.
Recently, however, short-term trading has become more popular, especially the one called day trading. Day traders seek to earn money from the daily changes in the price of a stock. Day trading is an extremely risky form of investing. It is possible to gain a large amount of money very quickly by day trading. Most day traders, however, lose money.
The performance of the stock market is measured by stock indexes. The Dow Jones Industrial Average follows the share prices of thirty leading industrial companies in the United States. The NASDAQ Composite Index is also a major stock index.
People usually have invested in companies that have strong earnings and a large share in their business market. But over the last few years, stocks of companies that promise future growth have had the greatest demand.
In a few years, investors should be able to trade stocks twenty-four hours a day. Seven days a week. And, in the future,
financial markets around the world are expected to be linked. We just have to be a little bit more patient.
My next lecture will focus on electronic dealing and broking, and their impact on the marketplace. Your attendance is most welcome.