Tag: Stocks

Short Selling Stocks – Michael Michaud #short-selling #stocks


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Short Selling Stocks

May. 25, 2011 10:04 PM

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How to Trade in a Fast-Moving Bear Market
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July 11, 2011

How to Make Money Selling Stocks Short

There are two sides to everything, except the stock market. In the stock market there is only one side–the right side. In certain market conditions, selling short can put you on the right side, but it takes real knowledge and market know-how as well as a lot of courage to assume a short position. The mechanics of short selling are relatively simple, yet virtually no one, including most professionals, knows how to sell short correctly. In How to Make Money Selling Stocks Short, William J. O’Neil offers you the information needed to pursue an effective short selling strategy, and shows you–with detailed, annotated charts–how to make the moves that will ultimately take you in the right direction. From learning how to set price limits to timing your short sales, the simple and timeless advice found within these pages will keep you focused on the task at hand and let you trade with the utmost confidence.

More Short Selling Books

What Is Stock Short Selling?

The selling of a stock equity security that the seller does not own, or any sale that is completed by the delivery of a security borrowed by the seller. Short sellers assume that they will be able to buy the stock at a lower amount than the price at which they sold short.

Selling a stock short is the opposite of buying a stock long. Short sellers make money if the stock goes down in price. Short selling is an advanced trading strategy with many unique risks and pitfalls. Novice investors are advised to avoid short sales until they are properly educated in doing it.

Short selling has been around ever since the beginning of the stock market. But many people don’t think short selling is good for companies and the market. They think its un-patriotic or damaging to the economic health health of companies and the country they are based in. The reality is that stocks go up and they go down for a multitude of reasons. Fair equal treatment to buy or sell short a stock provides liquidity and the best balance of fair value for the price of the stock.

People who don’t invest or trade the markets at all, blame short sellers for some of the worst company failures in the world’s financial markets. Company executives have accused them of driving down their company’s stock prices. Governments have before and still do from time to time, temporarily halted short selling to help markets recover and have strengthened laws against some short selling techniques. Some governments have banned short selling completely. Some governments have even gone as far as proposing and implemeting strong legal actions against short sellers. This has happened throughout history in various countries and industries.

Bill O’Neil the founder of Investor’s Business Daily and the CANSLIM stock investing method . wrote about short selling in his book “How To Make Money Selling Stocks Short” . and concluded that “few investors really understand how to buy stocks successfully. Even fewer understand when to sell stocks. Virtually no one, including most professionals, knows how to sell short correctly.”

The fact is that if done proprerly, the risks of short selling are about the same to the risk of buying long stock positions.

In the stock options, futures and forex markets buying and selling short is normal practice. Let the free market have its freedom to do what it will. In the long term, all people will benefit much more than letting markets move parabolicly higher creating huge bubbles that end up in price collapses anyway.

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How to Start Investing in Stocks with Only $1, 000 #cheap #business #cards

#investing in stocks


Start Investing With Only $1,000

So you have a $1,000 set aside, and you’re ready to enter the world of stock investing. But before you jump head first into the world of stocks and bonds, there are a few things you need to consider. One of the biggest considerations for investors with a minimal amount of funds is not only what to invest in but also how to go about investing. Not long into your investment journey you may find yourself bombarded with minimum deposit restrictions, commissions and the need for diversification, among a myriad of other considerations. In this article, we’ll walk you through getting started as an investor and show you how to maximize your returns by minimizing your costs.

More from Investopedia:

What are the account minimums?
To the inexperienced investor, investing may seem simple enough – all you need to do is go to a brokerage firm and open up an account, right? What you may not know, however, is that all financial institutions have minimum deposit requirements. In other words, they won’t accept your account application unless you deposit a certain amount of money. With a sum as small as $1,000, some firms won’t allow you to open an account.

Stock brokers come in two flavors: full-service and discount. As the name implies, a full-service broker provides much more in the way of service, but it only deals with higher net worth clients. It’s not unusual to see minimum account sizes of $50,000 and up at full-service brokerages.

This leaves the $1,000-investor with the option of a discount broker. Discount brokers have considerably lower fees, but don’t expect much in the way of hand-holding. Fees are low because you are in charge of all investment decisions � you can’t call up and ask for investment advice. With $1,000, you are right on the cusp in terms of the minimum deposit. There will be some discount brokers that will take you and others that won’t. You’ll have to shop around.

You also could purchase shares directly from a company through direct stock purchase plans (DSPPs). But some of these plans have a minimum investment amount restriction, which ranges between $100 and $500.

With the advent of online trading, there are a number of discount brokers with no (or very low) minimum deposit restrictions. One of the most popular online trading sites is ShareBuilder. You will, however, be faced with other restrictions and see higher fees for certain types of trades. This is something an investor with a $1,000 starting balance should take into account if he or she wants to invest in stocks.

Mutual Funds and Bonds
If mutual funds or bonds are investments you would like to make, it is simpler in terms of minimum deposit amounts. Both of these can be purchased through brokerage firms, where similar deposit rules apply as stocks. Mutual funds also can be purchased through your local bank, often for less than $1,000 when you have an existing relationship with the bank.

If you want to purchase government bonds, this can be done straight from the government through TreasuryDirect. The only restriction here is the minimum purchase amount of a bond, which can range from $100 to $1,000.

Learn the Costs of Investing

Before you open an investment account, you must also consider the costs that you will incur from purchasing investments once the account is open. In most cases, every time you purchase an investment, it will cost you money (through commissions). With a limited amount of funds, these transaction fees can really put a dent on your $1,000.

Investing in stocks can be very costly if you trade constantly, especially with a minimum amount of money available to invest. Every time that you trade stock, either buying or selling, you will incur a trading fee. Trading fees range from the low end of $10 per trade, but can be as high as $30 for some discount brokers. Remember, a trade is an order to purchase shares in one company – if you want to purchase five different stocks at the same time, this is seen as five separate trades and you will be charged for each one.

Now, imagine that you decide to buy the stocks of those five companies with your $1,000. To do this you will incur $50 in trading costs, which is equivalent to 5% of your $1,000. If you were to fully invest the $1,000, your account would be reduced to $950 after trading costs. This represents a 5% loss, before you investments even have a chance to earn a cent!

If you were to sell these five stocks, you would once again incur the costs of the trades, which would be another $50. To make the round trip (buying and selling) on these five stocks it would cost you $100, or 10% of your initial deposit amount of $1,000. If your investments don’t earn enough to cover this, you have lost money by just entering and exiting positions.

Mutual Fund Fees
There are many fees an investor will incur when investing in mutual funds. One of the most important fees to focus on is the management expense ratio (MER), which is charged by the management team each year based on the amount of assets in the fund. The higher the MER, the worse it is for the fund’s investors. It doesn’t end there: you’ll also see a number of sales charges called “loads” when you buy mutual funds.

In terms of the beginning investor, the mutual fund fees are actually an advantage relative to the commissions on stocks. The reason for this is that the fees are the same regardless of the amount you invest. So, as long as you have the minimum requirement to open an account, you can invest as little as $50 or $100 per month in a mutual fund. The term for this is called dollar cost averaging (DCA), and it can be a great way to start investing.

Reduce risk with Diversification
Diversification is considered to be the only free lunch in investing. (If you are new to this concept, check out Introduction To Diversification, The Importance Of Diversification and A Guide To Portfolio Construction.) In a nutshell, by investing in a range of assets, you reduce the risk of one investment’s performance severely hurting the return of your overall investment. You could think of it as financial jargon for “don’t put all of your eggs in one basket”.

In terms of diversification, the greatest amount of difficulty in doing this will come from investments in stocks. This was illustrated in the commissions section of the article, where we discussed how the costs of investing in a large number of stocks can be detrimental to the portfolio. With a $1,000 deposit, it is nearly impossible to have a well-diversified portfolio, so be aware that you may need to invest in one or two companies (at the most) to begin with. This will increase your risk.

This is where the major benefit of mutual funds comes into focus. Mutual funds tend to have a large number of stocks and other investments within the fund, which makes the fund more diversified than a single stock.

A Small Step Toward a Large Future
It is possible to invest if you are just starting out with a small amount of money. It’s more complicated than just selecting the right investment (a feat that is difficult enough in itself) and you have to be aware of the restrictions that you face as a new investor.

You’ll have to do your homework to find the minimum deposit requirements and then compare the commissions to other brokers. Chances are you won’t be able to cost-effectively buy individual stocks and still be diversified with a small amount of money. Given these restrictions, it’s probably worth starting out on your investment journey with mutual funds. However, like all aspects of investing, it’s up to you to do the research and figure out the strategy that suits you best.

by Chad Langager

Chad Langager is the Senior Financial Editor for Investopedia.com. Chad graduated from the University of Alberta Business School with a degree in finance.

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How to Buy Penny Stocks (for Beginners) #sacramento #business #journal

#penny stocks


How to Buy Penny Stocks (for Beginners)

NEW YORK (TheStreet ) — It’s hard to check your email without hearing about the next “hot” penny stock that’s going to make you rich. But what are penny stocks, and can they really deliver on those promises? Here’s my 2 cents worth on penny stocks.

What Are Penny Stocks?

Low-priced, small-cap stocks are known as penny stocks. Contrary to their name, penny stocks rarely cost a penny. The SEC considers a penny stock to be pretty much anything under $5. And while there are sub $5 stocks trading on big exchanges like NYSE and NASDAQ. most investors don’t think of these when asked to describe a penny stock.

Most individual investors look at penny stocks like Wall Street’s Wild West, an untamed world of investing detached from all the glitz and media coverage that comes with stocks that are traded on major exchanges. While the gains and losses can be pretty impressive in the penny stock world, they’re not often heard about elsewhere.

Just because you don’t hear about penny stocks every day on CNBC doesn’t mean that penny stocks are without drama. Unfortunately, penny stocks have also garnered a reputation as a game filled with scams and corruption. Indeed, penny stocks could be your wildest ride yet as an investor.

So then, if penny stocks usually aren’t traded on normal exchanges, where can you buy them?

How to Buy Penny Stocks

Like any other stock you would buy, you can purchase shares of a penny stock through your normal stockbroker — regardless of whether or not it’s listed on a major exchange.

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Stocks Basics: Introduction #business #advisor

#stock market info


Stock Basics Tutorial

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Stocks #business #taxes




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Difference Between Shares and Stocks #the #difference #between #stocks #and #bonds


Difference Between Shares and Stocks

While even speaking to a financial advisor on Wall Street may not clarify a huge difference between the terms “shares” and “stocks,” there are small distinctions, outside of the spelling, of both words. In the American financial market, stocks and shares are related to the money market and the trading and investment into various businesses, products, and corporations. When a person purchases any part of a business’s assets, they are considered to be dealing with the economic trading of that particular company. Investors who are seeking to purchase into a particular company should understand that the terms “shares” and “stocks” may be used interchangeably and that it does not indicate two different legal terms. It is here that shares and stocks become confused with one another; however, rather than a physical difference that might be had between the two there is a grammatical difference.

Shares are typically used as a reference to certain ownership certificates of any particular company that you are seeking to invest in. Even business is divided into shares, and the person who owns the most shares of a company is essentially the person who is heading up that corporation. The more money that is invested into a corporation or business, the more shares from that company a person owns. A shareholder is anyone who even owns the smallest percentage of shares of a particular company. That person also has income received from the shares they own. Shares can be translated into a percentage of what the company has and what percentage your shares represent from the company entirely.

Stock is the overall ownership and investment into a business. A person can say they own stock in a particular company; however, this is in no way explains how many shares a person owns. “Stock” can be used as a generalization of the person’s involvement in the money market. Stocks can be used in referring to investments in more than one company where there are shares of ownership in more than one. However, the term “stocks” is fading for the more “modern” word “shares.”
In essence, stocks and shares are referring to the same thing merely different contexts in which either word should appropriately be used.

1.Shares and stocks both have reference to the financial and investment market that involves businesses, products, and large corporation investment opportunities. Investors must buy into these companies in order to obtain part of the profit from their financial increases.

2.A “share” refers to the certain amount of ownership certificates that a person has purchased for a particular company. The more shares purchased, the more ownership you take in a company.

3.A “stock” refers to the ownership in general of a certain company speaking outside of the number of shares that you specifically own. Stock is used to refer to the investment in multiple companies as well.

4.The words “stocks” and “shares” are used interchangeably, and there is no real legal or technical difference in the two.

Now explain the difference between share and stock that exists to this day in Britain (and in India, as well as some other parts of the former empire). Since the mid-19th century in the UK, a company with a share capital could convert fully paid-up shares into stock and later reconvert stock back into shares, if it chose. The UK Companies Act 2006 repealed such initial conversion (effective in 2009), but companies that already have stock are not required to reconvert it. Thus, a company s share capital can still consist of shares or stock or a mix of both, and holdings of shares are different from holdings of stock. Both are equity holdings in the company, but in this context the words are NOT interchangeable.

The practical difference seems to be minor: shares could be transferred only in whole-number quantities, whereas stock could be transferred in any fractional amount.

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Written by. Victoria. and updated on October 12, 2011

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Stocks Basics: What Causes Stock Prices To Change? #business #management #courses

#stock prices


Stocks Basics: What Causes Stock Prices To Change?

Stock prices change every day as a result of market forces. By this we mean that share prices change because of supply and demand. If more people want to buy a stock (demand) than sell it (supply), then the price moves up. Conversely, if more people wanted to sell a stock than buy it, there would be greater supply than demand, and the price would fall.

Understanding supply and demand is easy. What is difficult to comprehend is what makes people like a particular stock and dislike another stock. This comes down to figuring out what news is positive for a company and what news is negative. There are many answers to this problem and just about any investor you ask has their own ideas and strategies.

That being said, the principal theory is that the price movement of a stock indicates what investors feel a company is worth. Don’t equate a company’s value with the stock price. The value of a company is its market capitalization. which is the stock price multiplied by the number of shares outstanding. For example, a company that trades at $100 per share and has 1 million shares outstanding has a lesser value than a company that trades at $50 that has 5 million shares outstanding ($100 x 1 million = $100 million while $50 x 5 million = $250 million). To further complicate things, the price of a stock doesn’t only reflect a company’s current value, it also reflects the growth that investors expect in the future.

The most important factor that affects the value of a company is its earnings. Earnings are the profit a company makes, and in the long run no company can survive without them. It makes sense when you think about it. If a company never makes money, it isn’t going to stay in business. Public companies are required to report their earnings four times a year (once each quarter). Wall Street watches with rabid attention at these times, which are referred to as earnings seasons. The reason behind this is that analysts base their future value of a company on their earnings projection. If a company’s results surprise (are better than expected), the price jumps up. If a company’s results disappoint (are worse than expected), then the price will fall.

Of course, it’s not just earnings that can change the sentiment towards a stock (which, in turn, changes its price). It would be a rather simple world if this were the case! During the dotcom bubble, for example, dozens of internet companies rose to have market capitalizations in the billions of dollars without ever making even the smallest profit. As we all know, these valuations did not hold, and most internet companies saw their values shrink to a fraction of their highs. Still, the fact that prices did move that much demonstrates that there are factors other than current earnings that influence stocks. Investors have developed literally hundreds of these variables, ratios and indicators. Some you may have already heard of, such as the price/earnings ratio. while others are extremely complicated and obscure with names like Chaikin oscillator or moving average convergence divergence .

So, why do stock prices change? The best answer is that nobody really knows for sure. Some believe that it isn’t possible to predict how stock prices will change, while others think that by drawing charts and looking at past price movements, you can determine when to buy and sell. The only thing we do know is that stocks are volatile and can change in price extremely rapidly.

The important things to grasp about this subject are the following:

1. At the most fundamental level, supply and demand in the market determines stock price.
2. Price times the number of shares outstanding (market capitalization) is the value of a company. Comparing just the share price of two companies is meaningless.
3. Theoretically, earnings are what affect investors’ valuation of a company, but there are other indicators that investors use to predict stock price. Remember, it is investors’ sentiments, attitudes and expectations that ultimately affect stock prices.
4. There are many theories that try to explain the way stock prices move the way they do. Unfortunately, there is no one theory that can explain everything.

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Penny Stocks to Watch for September 2016 (BGI) #cheapest #business #cards

#penny stocks


Penny Stocks to Watch for September 2016 (BGI)

Trading and investing in penny stocks requires special skills attuned to unique price action at the low-end of the market’s value spectrum. The SEC defines penny stocks as stocks that trade for less than $5, so when trading penny stocks, aggressive risk management is needed because many of these low-priced equities have descended from much higher levels for good reasons that include declining earnings, sector headwinds, and accounting blow-ups. (For further reading, see: How to Invest in Penny Stocks . )

That said, not all low-priced stocks are bad. It’s a different story for up-and-coming companies listed at low prices on national exchanges because they often go public with limited revenues, but excellent growth potential, or at least a bullish story that will attract healthy speculation. Even so, there are no guarantees they’ll prosper in the competitive marketplace so aggressive risk management is needed to avoid significant or unexpected losses. While low-priced stocks are risky, they can produce handsome yields. Below are five penny stocks to watch this September.

1. Birks Group Inc. ( BGI )

Montreal-based Birks Group Inc. (BGI ) sells jewelry and other luxury products through 26 retail outfits in Canada and the United States. This is an old company founded in 1879, but it just listed on the NYSE in 2006. A quick rally into 2007 posted an all-time high at 9.13, ahead of a steep plunge that finally came to rest at 20-cents in March 2009. A recovery wave into 2010 stalled above 2.00, yielding sideways action ahead of a successful test at the bear market low in February 2016.

The stock took off in a high volume rally after the company reported an unexpected profit in July, rising more than 300% in a single session and dropping into a consolidation pattern that just broke support at the .618 Fibonacci rally retracement at 2.20. On Balance Volume (OBV) indicates shareholders are hanging tough, raising odds for renewed buying interest when price nears the confluence of the rising 200-day exponential moving average(EMA ) and .786 retracement at 1.42.

2. MGT Capital Investments Inc. ( MGT )

MGT Capital Investments Inc. ( MGT ) develops mobile and online gaming technology. It came public in 2006 at 167 (post a 15 for 1 stock split in 2012) and entered an immediate downtrend that lasted for more than ten years, dropping the stock to 15-cents in January 2016. It ground sideways into May and took off in a vertical rally that added more than 5 points into a three-year high at 5.58.

A quick decline to 2.27 got bought, with that level offering support in the last three months. The sideways action has drawn the outline of a symmetrical triangle that could yield a fresh rally wave into double digits. The stock is now trading in the dead center of the pattern and needs to rally above the August 5 high at 3.74 to set a breakout into motion. A September 8 shareholder meeting could offer a catalyst for that buying wave.

3. Gold Standard Ventures Corp. ( GSV )

Canadian junior miner, Gold Standard Ventures Corp. (GSV ) ended a strong uptrend at 3.05 in May 2012 and entered a steep downtrend that finally ended at 26-cents in July 2015, well ahead of the December low posted by the gold futures contract. The subsequent uptick eased into a rising channel in November, with price gains continuing into July when dropped into a pullback that tested the 50-day EMA. Aggressive buyers emerged, lifting the stock 15-cents above the 2012 high, to 3.20 and its highest high since listing on the U.S. exchanges in 2010.

This level marks major resistance, predicting a consolidation period before a breakout drives the stock to much higher ground. Watch the rising 50-day EMA for buying interest just above 2.00, with that level now aligned closely with the August 10 gap between 1.96 and 2.06. It may take a gap fill to bring prospective shareholders off the sidelines.

4. Northern Dynasty Minerals Ltd. ( NAK )

Northern Dynasty Minerals Ltd. ( NAK ). also based in Vancouver, Canada has been listed on the NYSE since October 2003, when it came public at 2.83. A rally into 2007 posted a top at 15.61, ahead of a steep decline during the 2008 to 2009 bear market. It bottomed out at 1.69, with the bounce finally reaching 2007 resistance in 2012, ahead of a breakout that posted an all-time high at 21.76 in 2011.

The subsequent downtrend may have finally ended at 20-cents in January 2016, with price action since that time carving an Elliott 5-wave pattern that’s lifted price to a two-year high at 1.16. It’s been pulling back for the last week and could drop as low as the 50-day EMA, currently rising from 61-cents, before gathering the buying interest needed to test the high and start the next leg of the trend advance.

5. TOP Ships, Inc. ( TOPS )

Greek shipper, TOP Ships, Inc. (TOPS ) has struggled since coming public on U.S. exchanges in 2004, posting four reverse splits that now set its first-day value at an astounding 14238. It entered a massive downtrend just four months after public listing, falling to an all-time low at 13-cents in January 2016. It ground sideways into February and went vertical, rising from 21-cents to 3.00 in a single session, after completing another reverse split.

A sideways pattern gave way to an early August breakout above the March high at 4.44, with the stock rising above 8 and then reversing sharply. It’s now filling the August 1 gap, which is located just under the breakout level at 4.44. The 50-day EMA is rising toward falling price and could provide the support needed to generate a strong bounce that sets the stage for a rally into double digits.

The Bottom Line

The low-priced, penny stock universe includes both beaten down entries and newly-minted start-ups hoping to become the next Microsoft Corp. ( MSFT ) or Alphabet Inc. (GOOGL ). It’s important to keep in mind that secondary offerings, warrants. and other financing games pose a significant risk with stocks under $5.00. Since low revenues force many of these companies to issue stock repeatedly or enter sweetheart deals with big investors, who will get paid before public investors when the company finally grows, and the stock’s valuation expands. (For tips on how to avoid being scammed, read: The Risks and Rewards of Penny Stocks ). The most successful strategy at this end of the pricing spectrum treats each candidate according to its unique risk profile, taking extra care with new uptrends forced to navigate multiple resistance levels put into place by long downtrends. The above-mentioned stocks are key penny stocks to watch this fall.

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Stocks Basics: How Stocks Trade #business #simulation #games



Stocks Basics: How Stocks Trade

The trading floor of the NYSE

The NYSE is the first type of exchange (as we referred to above), where much of the trading is done face-to-face on a trading floor. This is also referred to as a listed exchange. Orders come in through brokerage firms that are members of the exchange and flow down to floor brokers who go to a specific spot on the floor where the stock trades. At this location, known as the trading post, there is a specific person known as the specialist whose job is to match buyers and sellers. Prices are determined using an auction method. the current price is the highest amount any buyer is willing to pay and the lowest price at which someone is willing to sell. Once a trade has been made, the details are sent back to the brokerage firm, who then notifies the investor who placed the order. Although there is human contact in this process, don’t think that the NYSE is still in the stone age: computers play a huge role in the process.

The Nasdaq
The second type of exchange is the virtual sort called an over-the-counter (OTC) market, of which the Nasdaq is the most popular. These markets have no central location or floor brokers whatsoever. Trading is done through a computer and telecommunications network of dealers. It used to be that the largest companies were listed only on the NYSE while all other second tier stocks traded on the other exchanges. The tech boom of the late ’90s changed all this; now the Nasdaq is home to several big technology companies such as Microsoft, Cisco, Intel, Dell and Oracle. This has resulted in the Nasdaq becoming a serious competitor to the NYSE.

The Nasdaq market site in Times Square

On the Nasdaq brokerages act as market makers for various stocks. A market maker provides continuous bid and ask prices within a prescribed percentage spread for shares for which they are designated to make a market. They may match up buyers and sellers directly but usually they will maintain an inventory of shares to meet demands of investors.

Other Exchanges

The third largest exchange in the U.S. is the American Stock Exchange (AMEX). The AMEX used to be an alternative to the NYSE, but that role has since been filled by the Nasdaq. In fact, the National Association of Securities Dealers (NASD), which is the parent of Nasdaq, bought the AMEX in 1998. Almost all trading now on the AMEX is in small-cap stocks and derivatives.

There are many stock exchanges located in just about every country around the world. American markets are undoubtedly the largest, but they still represent only a fraction of total investment around the globe. The two other main financial hubs are London, home of the London Stock Exchange. and Hong Kong, home of the Hong Kong Stock Exchange. The last place worth mentioning is the over-the-counter bulletin board (OTCBB). The Nasdaq is an over-the-counter market, but the term commonly refers to small public companies that don’t meet the listing requirements of any of the regulated markets, including the Nasdaq. The OTCBB is home to penny stocks because there is little to no regulation. This makes investing in an OTCBB stock very risky. Stocks Basics: What Causes Stock Prices To Change?

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