economics

[Teluog]

can anyone tutor me or point me to a url that has the basics of how economics works? i've been follwing the news more lately with an increasing concern for society and what to keep track of it more, but i still don't get what all those numbers mean in the financial field of things--DOW Jones, TSE, Gold.

And if someone could tell me how the stock market business works that'd be great, since the other folks who tried to teach me got nowhere.

[Little Shepherd]

This is going to be very, very basic. Partially because I'm not qualified to go extremely in-depth, and partially because what depth I am qualified to go to is . . . well, it would just be a whole lot of writing anyway.

Basics of the private sector:
People who have the means to provide goods or services are able to do so in return for something. In older societies, they might barter directly for things they need or want. In modern societies, we use a medium of exchange -- currency -- which can allow us to give our stuff to one person and reap the rewards(what we want or need) from another. It's just more complicated bartering, really.

People who have goods or services that are rare, of high demand, or that require specialized labor/equipment to provide can become what we deem "rich." And if the demand grows, they can use a portion of their wealth to hire and train employees. The employees make a living. The employer's profits go up. It's win/win. Every job that exists is provided by someone rich(well, richer than the employee, unless the person is self-employed of course).

Then comes the public sector:
All public sector jobs are paid for by taking a portion of money from the private sector. Less private sector money = less ability to create new private sector jobs, which is why it is in everyone's best interest to keep the public sector as small as possible. This is a necessary trade off sometimes, of course(we need a military, for example), but can be abused -- we often hire people as public sector employees when there is no reason for their jobs not to be handled by the private sector instead.

Now for the stock market:
Buying stock is basically buying a part-ownership in a company. You do so in incremental units called "shares," whose values are determined by how many total shares a company has and how well that company is doing. You buy them at their current price, and the performance of the company they belong to determines where their value goes from there.

The indexes -- DOW, Nasdaq, S&P, etc. etc. are just lists that represent a group of specific companies(different companies for each major index). They track the performance of those particular companies, so looking at multiple indexes over a significant period of time can give you a picture of the overall health of the market(looking at only one or two indexes, or only following the indexes for a short time . . . not so much).

Putting all your eggs in one basket -- ie buying individual stocks -- is usually a bad idea. Very few people can do well like this. What is advised is that you diversify -- that is, buy stock in multiple companies. An easy way to do this is called "mutual funds." You can buy stock in much the same way as doing so from a company directly, but that stock covers a wide range of businesses instead of being tied to just one. Some will do well, some not so well, but overall mutual funds outperform individual stocks. Even then, you want to invest in multiple mutual funds. Diversification is good. And the best performing mutual funds are those that follow(that is, are connected to the businesses on) one of the major indexes like DOW or Nasdaq.

And always remember these are long-term investments. You don't want to follow them too closely because you'll freak yourself out whenever there's a bump. Over significant periods(20 years or more), the index funds have always outperformed the rest of the market, beating inflation and then some.

[Cow Poke]

can anyone tutor me or point me to a url that has the basics of how economics works? i've been follwing the news more lately with an increasing concern for society and what to keep track of it more, but i still don't get what all those numbers mean in the financial field of things--DOW Jones, TSE, Gold.

And if someone could tell me how the stock market business works that'd be great, since the other folks who tried to teach me got nowhere.

Some very basic economic fundamentals....

Them what know what interest is collect it - them what don't pay it.
When you find yourself in a hole, stop digging.

I'll add more later.

[Cow Poke]

Another quick couple of factors...

if you want less of something - tax it.
If you want more of something - subsidize it.

This, IMOHBAO, is why we have fewer jobs and higher unemployment.