Market Basics & Insights for LEADERS

How The Stock Market Works

2012-03-10T12:07:00.007-06:00

This is an awesome cartoon from the 1940's discussing in a fun way how the stock market works and why companies go public. Of course, its electronic now but the basics are still the same!

How Oil Prices Are Affected By The Economy And Vice Versa

2012-02-14T12:06:00.001-06:00

Oil is a commodity and as such, its price is determined by supply and demand. Demand is slowly increasing around the globe but so is supply so that won't really lead to higher oil prices.

What does increase the price of oil is demand when the economy is growing. The US is still the #1 consumer of oil and gas so when the US economy grows, the demand for oil and gas increases which in turn increases the price of oil and gas.

There is point of equilibrium where usage slows at a certain price and that price has slowly risen over the years. The average consumer has to give up spending when the cost of gas at the pump begins to squeeze him. Rule of thumb is that a one cent increase in the price of gas takes $1 Billion out of the rest of the economy.

So when you hear that oil prices are going up and you see gas prices increase at the pump, realize that is a sign that the economy is growing.

VIX

2012-01-25T09:25:00.001-06:00

The VIX is the ticker symbol for the Chicago Board Options Volatility Index and is a measurement of volatility in the S&P 500. It was developed in 1993 and options traded in 2006 so it is relatively new.

A low number in the VIX implies less movement likely in the S&P 500 in the short term future and a high number implies more movement.

VIX is synonymous these days with fear and is often referred to as the fear index. It rises when there is fear of the stock market declining or an actual decline takes place.

How Bonds and Interest Rates Work

2011-12-02T12:48:00.003-06:00

There are plenty of people who do not understand the relationship between the fed (federal reserve), interest rates and bonds so here is a quick overview.

The federal reserve sets the interest rate that banks and others can borrow from them. This effectively sets the rates in a tight range only to be altered slightly by traders on a day to day basis given news of the day.

The rate set by the fed acts as a guide to which most entities including banks follow.

The fed lowers rates when the economy is weak to spur growth and raises rates when the economy is too good (which is an inflation risk). Raising rates makes it more expensive to borrow slowing growth.

When the fed lowers rates, currently held bonds increase in value because the going rate on newly issued bonds would be lower than the bond you have now.

Conversely when the fed raises rates, currently held bonds decrease in value because an investor can buy a brand new fresh bond paying more than the one you have now.

Keep in mind that bond funds act somewhat similarly but there are very important differences you must know.

Welcome

2011-11-23T09:49:00.000-06:00

Welcome to my blog.

I deliver workshops to many companies and organizations through my company, Learning LLC and I found after a number of years, that I had written a books worth of material in white papers, content for the workshops and otherwise so I figured why not put it all together in one book!

This book, blog and my workshops are designed for non-financial professionals and will arm you with the knowledge you need to be ahead of the competition.

Learn how the bond market affects your companies bottom line, why a commodities increase could hurt your companies sales and how stock and currency fluctuations affect you and your company.

Learn how to gain back valuable employee time and productivity as well as how to use the markets to motivate employees.