Monday, November 14, 2011

Stock Certificates Thing of the Past?

!: Stock Certificates Thing of the Past?

Since the early days of the New York Stock Exchange, when stocks were traded under a large tree through the enormous expansion of financial markets in the 20th century. Stock certificates have been the currency used to represent share ownership in companies. Millions have been made from the iconic trade of stocks but in recent times the financial industry has started a move to computerize the trading of stocks and more precisely the stock certificate. The beautifully decorated staple of the financial industry is becoming no more, we will investigate the multiple reasons for it's decline.

Firstly in the United States electronic registration is supplanting the stock certificate. Companies are no longer required to issue paper certificates. In fact Sweden has taken a regulatory step further by abolishing share certificates entirely, use of electronic shares have replaced the paper alternative. Very much like the system before shares are either registered in the share owner's name or in the share owner's broker's name. It is important to clarify that share certificates do exist in Sweden in certain cases. Private companies, non-profits and other entities may still entitle paper certificates only publicly traded companies have restrictions. However besides government intervention as in these cases, the financial industry in North America has gradually removed stock certificates from the majority of it's business dealings.

Just 1.6 million paper stock certificates remain in the vault of the Depository Trust & Clearing Corporation, a respected and large transfer agent. The numbers show a decrease from 1.9 million last year, 8 million in 2000 and 32 million stock certificates in 1990. The decline is industry wide and are a result of many advances such as the Direct Registration System. The DRS was an advance brought along by the computerization of markets in the 1990's. The system allows corporations, brokers and regulators to keep track of shareholders electronically. SEC regulators gave DRS another push last year by requiring that all major public companies be eligible for inclusion in the electronic system record keeping system.

Secondly, corporations are taking it upon themselves to discontinue using stock certificates. A growing number of publicly traded companies have taken the move among them are big names (Sears, Visa and Intel) that simply do not deal with certificates anymore. These few corporations are still a minority but as waning demand for certificates continues we will very likely see an extension of the move to all electronic share transfers.

Many of these changes are driven by lowered demand from investors for the certificates, investors prefer the ease and convenience of non-material substitutes. The emergence of low demand for the paper versions has created a hostile environment for the few that wish to receive a paper copy of their shares. Prices to receive the paper copy of one's stock ownership from online brokers are outlandish, figures range from -500 to produce stock certificate copies. Though this fee can be avoided by registering shares directly with the transfer agent (as opposed to "street name" where the brokerage firm technically holds the shares) and having them issue the certificate. Nevertheless, investor demand as well as DTCC regulation are the root cause the high fee situation.

The stock certificate was an icon that symbolized prosperity, growth and opportunity. However due to the modernisation of stock exchanges, investor demand and in a small part government regulation the popular symbol as dwindled to the brink of extinction.


Stock Certificates Thing of the Past?

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Saturday, November 12, 2011

Understanding Stock Market Movement

!: Understanding Stock Market Movement

Given enough time investing in the stock market, a trader will tell you that the research and analysis require the most time. In order to be successful, an investor needs to understand how the markets move and how to interpret differences in the various market indexes and what they mean. This kind of evaluation becomes an important part of an investor's technical analysis of the stock market. It can add further clarity to various stock market movements and help an investor to find potential trades.

Let's start this review by looking at each of the big three market indexes:

o S&P 500 - This market index is most commonly used by professionals in the financial world because it includes such a large sector of the market. It includes 500 of the most widely traded stocks and because it is a market cap weighted index, changes in larger companies tend to reflect more strongly than small cap stocks. The S&P 500 tends to be a more accurate indicator of market movements than the Dow.

o The NASDAQ Stock Market Composite - Even though this market index includes all of the stocks that are listed on the NASDAQ market, it is historically weighted toward technology stocks. This condition is the result of the fact that it is a market cap weighted index and thus the large cap stocks of technology companies strongly influence this index.

o The Dow Jones Industrial Average - This is the old-timer of the bunch. The Dow is the oldest, most widely known and most quoted of all the market indexes. The Dow tracks 30 of the most influential companies in the US and because it represents only large companies, it misses out on the small and mid-size companies completely. Unlike the S&P 500 and the NASDAQ, the Dow is a price weighted market index which means that if a stock price changes by , the effect on the market index is the same no matter the price of the stock. The Dow reflects only about 25% of the total market but changes in the Dow tend to reflect consumer confidence in the stock market as a whole.

What perspective does each index take?

Because each of the indexes takes a different approach, the stock market movement for each is different. For example, the NASDAQ structured so that technology stocks enjoy greater prominence that those in other stock sectors. This was evident in the late 1990's when the technology boom was taking place. As events unfold that effect the technology sector, the NASDAQ will tend to see the most dramatic stock market movement, although the Dow will also be significantly affected.

The S&P 500, on the other hand, is not as severely impacted by tech stocks but tends to have a stock market movement that more accurately reflects the market in its entirety. Because it is weighted to the larger stocks it does not have the violent reaction to Wall Street news that its small-cap stocks might cause. The overall balance of the S&P 500 causes a more accurate representation of market movement than the Dow. This is the reason that most financial professionals use it as their barometer for stock market movement.

The Dow is the interesting one of the bunch; the granddaddy of the market indexes, it looks only to the 30 most influential stocks for its analysis of market movements. These are all large-cap stocks so they do not accurately evaluate the entire market, yet the Dow has proven to be the best market index for indicating consumer confidence.

Conclusion

No one index gives you the entire picture of stock market movements. The combination of the three can help you draw better conclusions about the market movements and what is motivating them. Activity by the tech sector will appear with strong reactions by the NASDAQ. Strong movements by the Dow can indicate whether the consumers are feeling good about the market in general. The Dow, though weighted to the top, will be a better indication of the overall stock market movement. By considering all three, successful traders can locate where highs and lows in stock market movement can be found and invest accordingly.


Understanding Stock Market Movement

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Friday, October 21, 2011

The Alter-Real Horse Breed

!: The Alter-Real Horse Breed

Being an avid horse lover all my life, I must admit I had never even heard of an Alter-Real until my current research. And now I am intrigued.

The Alter-Real is closely related to the better known Lusitano.

It is termed a baroque horse. Which is a loose term used to describe horses of medieval descent. The baroque is characterized by agile movements, powerful body, a muscular, arched neck, and typically a thick mane and tail; and known for their exceptional ability in the haute ecole classical dressage.

The Alter-Real is generally about 15 to 16 hands high with a smallish head which is either straight or slightly convex. They are usually brown or bay though grey and chestnut is not unheard of. The shoulder should be strong, muscular and well sloped. The body is relatively short with a deep chest and the hindquarters broad, powerful and well muscled. Though the legs are short with big, flat knees and strong hocks they are agile with a most extravagant knee action and fairly short stride.

The Alter Real was founded in 1748 by the Royal House of Braganza (the dynasty that ruled Portugal at the time) in Villa do Portel. Several years into the breeding program the stud was moved to another Portuguese town Alto de Chao. This is how the breed obtained it's name 'Alter' from the town and 'Real' which is Portuguese for Royal.

The initial breeding program started with Andalusian mares imported from Jerez in Spain and the finest Arabian stallions.

Unfortunately, the stud was subject to several crises and during the years 1804-14 amid the Peninsular War most of the stock was stolen or destroyed by Napoleon's army. What stock remained was then taken in 1834 when the King abdicated the throne.

The stock was then infused with Hanoverian, Norman and Arabian blood which resulted in a decline in the quality of the breed. By the late 1800's the breed was in a bad way. The introduction of some Azpata strain of Andalusian blood was the turning point in the breed's decline and a small stud started. In 1932 this stud was taken over by the Portuguese Ministry, which have since undertaken much culling and refining using the finest stallions.

Today the breed is continuing to increase in numbers and although there are not a lot of them the future of the breed appears secure.

Happy Horsing
Jo Thompson


The Alter-Real Horse Breed

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