【Native Speaker每日综合训练—43系列】【43-13】经管 Stock market

wensd1111

内容：neverland1021 编辑：wensd1111

Stay tuned to our latest post! Follow us here ---> http://weibo.com/u/3476904471

股票有风险，入市需谨慎。
大家enjoy~

Part I: Speaker

Why has there been so much turmoil in financial markets lately?
Source:NPR

http://www.npr.org/player/v2/mediaPlayer.html?action=1&t=1&islist=false&id=356869587&m=356869588
[Rephrase 1, 4:02]

wensd1111

Part II: Speed

What's making the stock market act so crazy?
Jeff Macke|October 9, 2014 2:15 PM

[Time 2]
It’s not your imagination: the stock market has gone a little bonkers lately. This week alone the Dow Jones Industrial Average (^DJI) plummeted 272 points on Tuesday, rocketed back 274 points Wednesday and sank more than 330 points today. October has already recorded five days where stocks moved more than 1%. That’s as many 1% moves as we saw in the prior five months combined.

So why are stocks so crazy? There’s no set answer but here are three of the most obvious explanations making the rounds on Wall Street.

It’s October
I know it sounds crazy but October is almost by tradition the most volatile month of the year. Whether it’s because of the upcoming holidays, the end of the fiscal year for mutual funds or because we hold elections every other November, October sees far and away the most 1% moves of any month. Remarkably since 1970 nearly one third of every trading day in October has seen the price of stocks change by 1% or more. It's also worth noting that historically bad days like the 1929 crash and 1987's Black Monday crash both took place in October.

Global concerns

The world is always crazy but right now things seem to be rockier than normal. Government officials in Europe are arguing over the best way to ward off an impending recession, growth is slowing to a relative crawl in China and Japan is tipping into a recession. That’s never good for companies driven by exports like General Motors (GM) or McDonalds (MCD).

For their part the Federal Reserve acknowledged these global concerns yesterday and suggested they would be very cautious about raising interest rates because of such worries. That sentiment sent stocks surging, just the latest bit of evidence that investors pay very close attention to every word uttered by the Federal Reserve.
[306 words]


[Time 3]
Bad news outbreak
It’s not just overseas. The Ebola outbreak has some investors worried that the U.S. economy, which hasn’t been great to begin with, could freeze. Despite good headline data on employment many economists point out that wage growth in the U.S. has been almost non-existent. The fear may be overblown but this time of year traders tend to sell first and ask questions later.
So what should you do? Probably nothing. If you’re like most investors you’re not looking at your portfolio more than once a month unless or until you see bold headlines about stocks plunging. That can make the prospect of opening up those statements pretty daunting.

The truth is trying to time the market is always a sucker’s game and that’s especially true during volatile times. Days like this aren’t a good time to radically change your long-term strategy.
Professional traders would love to see you panic into dumping some quality blue chips. Don’t be that person. Take a long-term view and if you’re in doubt make an appointment to meet with your financial planner.

For much of this year, the S&P 500 index has demonstrated fitful but steady growth, lifting it from just over 1,800 in January to just over 2,000 in September—a new record. That’s something of a disconnect with lackluster economic growth and rising interest rates, and it has investors puzzled and executives casting a gimlet eye on their share prices.
[240 words]

Source:Yahoo
http://finance.yahoo.com/news/what-s-making-the-stock-market-act-so-crazy-181536777.html;_ylt=AwrBJR5VwUVUSEAAUhyTmYlQ
                                                                                                                        

Investing smart in a rocky market
No byline available | October 14, 2014 8:24 AM
[ime 4]
“I've been sitting on the sidelines as the stock market has climbed in recent years. I want to invest, but I'm afraid I'll buy in at the top and lose big. Should I invest now, despite the recent turmoil? Or should I wait and get in at the beginning of the next bull market?” -- Meg M., Milwaukee, Wisc
Trying to time your entry into or exit out of the stock market is a guessing game you can't win. It's just impossible to divine where stock prices are headed.
Given recent volatility, doubts about global growth prospects and the fact that last week stock prices closed 5% lower than their level just three weeks ago, investors are understandably worried that we could be on the verge of a major meltdown.
But it's not as if investors haven't been skittish before or haven't seen worse declines from which the market has recovered and gone on to new gains. Prior to this most recent setback, the market dipped between 4% and 6% three times this year, as it did the year before. In 2012 there was a near-9% setback, while in the summer of 2011 stock prices dropped almost 17%.
That doesn't mean the recent turmoil will be followed by another surge. But it does show that volatility and setbacks don't necessarily mean a downturn is imminent. Fact is, while we all know this bull market will end someday, no one knows when that day will be.
As for your plan to wait until prices decline and then get in on the next bull market, well, that sounds nice. But how will you know whether prices have truly bottomed out or are likely to fall even more?
It's easy to pinpoint market turning points with the benefit of a stock chart and 20/20 hindsight. There will always be doubt and ambiguity in real time.
My advice: Don't even get into this should-I-or-shouldn't-I conundrum. It will get you nowhere. Instead, I suggest you develop a strategy that allows you to reap the advantages of the financial markets in a sensible way. Here's how to do that.
1. Don't even think of investing in stocks until you've established an emergency fund.
History shows that stocks can provide superior long-term returns. But to reap those long-term gains, you've got to be willing to ride out some short-term setbacks along the way. So you don't want to put money in the stock market that you might need to meet emergencies, unexpected expenses, or funds you'll need to sustain you in the event of a layoff.
Which is why I recommend that before you start investing in stocks and other investments whose value can fluctuate, you first set aside at least three months' worth of living expenses in a savings or money-market account that's insured by the FDIC.
Today, such accounts pay only a pittance. But maximizing yield is not the main goal for this portion of your savings. Your aim is to have a stash of ready cash you know you can always draw on, so you don't have to liquidate stocks at an inopportune time.
[520 words]


[Time 5]
2. Assess your risk tolerance and then create an appropriate stocks-bonds mix.
The real key to investing in stocks is to remember that you shouldn't be investing only in stocks. Rather, you want to create a portfolio of stocks and bonds that reflects the amount of risk you can stomach and the returns you'll need to achieve your goals.
Let's start with how to gauge your risk tolerance. Investors face a variety of risks. But here I'm mostly talking about estimating how much of a downturn you can stand before you start selling off stocks and moving into more stable investments.
One way to do that is to fill out a risk tolerance questionnaire, like the one in RealDealRetirement's Retirement Toolbox that helps you gauge what size loss you can stomach and then suggests an allocation of stocks and bonds that jibes with that tolerance. Once you have that recommended stocks-bonds mix, you can then see how it has performed in past severe downturns and see whether you would be comfortable sticking with it.
3. Resist the urge to abandon your plan when the market sinks (or soars).
This third step may be the toughest. It's one thing to calmly and rationally create a portfolio. It's quite another, however, to avoid abandoning it when every news headline or cable TV pundit is screaming that Armageddon is at hand and investors should flee the market -- or, alternatively, crowing that the market's ready to surge and that real investors should have all their money in stocks.
That's why a crucial part of a long-term investing strategy is to avoid becoming overly pessimistic when the market is flailing or overconfident when all is going swimmingly and stock prices hit and surpass new highs. In short, you've got to learn to ignore the hype and hoopla -- what I refer to as the investment circus -- and have the confidence to stick to your plan.

Bottom line: Focus on creating a stocks-bonds portfolio that jibes with your risk tolerance and goals. Because if you continue to obsess about whether this is a good or bad time to start investing or what the stock market is going to do in the short-term, you may find yourself still on the sidelines years from now, regretting that you never got into the game.
[389 words]

Source:Yahoo
http://finance.yahoo.com/news/investing-smart-rocky-market-900965.html;_ylt=AwrBEiTTlEVUSgQA5XmTmYlQ                                                                                                                                 

                                                                                                               

Understanding Stock Market Cycles
By Wayne Duggan |Oct 21, 2014

[Time 6]
Any historical chart of the Dow Jones Industrial Average demonstrates that the motion of the stock market is far from smooth. The gradual climb of the market over the past century is comprised of countless bull and bear markets' spikes and dips.

The emotional roller coaster that the typical trader endures throughout a market cycle is explained in something called the “investor sentiment cycle.” Understanding this cycle and interpreting its meaning may be the single most important part of stock trading.
The idea behind the investor sentiment cycle is that human emotions are backward-looking. A typical shareholder experiences emotional reactions to changes that have already occurred. When a stock falls, traders get angry or scared. When it climbs, traders feel excited and confident. The problem is that these emotions often lead traders astray because they have no predictive value.
The investor sentiment cycle represents a typical price cycle of a stock that is trading essentially flat over time. Notice that the stock price at the end of the cycle is the same as the stock price at the beginning. Looking at the cycle as a whole, an objective observer would see no need to have an emotional response to the cycle. The share price bounced around and then ended up where it started: no gain, no loss. However, human emotions occur in real time.
[224words]

[The rest]
A trader’s first reaction when a buy turns profitable will be a feeling of joy. It is natural to think, “This is easy! I am great at picking stocks!” The challenge at this point, the peak in the investor sentiment cycle, is to not make the mistake of buying more expensive shares. This period of the cycle comes with feelings of confidence and excitement because the rise in share price has provided positive reinforcement for the purchase. It is a fun experience, and it’s natural to want the fun to continue. However, this is the point in the cycle when Buffett would be selling.
A trader that continues to hold overpriced stocks for too long will inevitably endure a drop in share price and the worry that accompanies it. “It will go back up,” the trader might think, “This is just a bump in the road!” As it continues to drop, the trader will likely start feeling scared or overwhelmed and begin to think, “What is happening? How could I have lost all of this money?” This is the fearful lowest point in the investor sentiment cycle, and it's the point when Buffett gets greedy.
There are two sides to the stock market: an analytical side and an emotional side. No matter how good a trader is at analyzing stocks, if emotions are allowed to dictate trading decisions, it will be difficult to make money in the long run.
One of the reasons so many people claim that the stock market is “rigged” or “unfair” is that normal human emotions tend to lead traders astray when it comes to stock trading. Once emotion is removed from trading, it is much easier to recognize the rare opportunities that occur when other traders are blinded by fear or greed.
[297 words]

Source:Yahoo
http://finance.yahoo.com/news/understanding-stock-market-cycles-184802038.html;_ylt=AwrBJR8AvkVUk2sArwSTmYlQ

wensd1111

Part III: Obstacle

What’s behind this year’s buoyant market
Here’s how a tepid economy and rising interest rates support a strong stock market.
by Ritesh Jain, Bin Jiang, and Tim Koller | October 2014

For much of this year, the S&P 500 index has demonstrated fitful but steady growth, lifting it from just over 1,800 in January to just over 2,000 in September—a new record. That’s something of a disconnect with lackluster economic growth and rising interest rates, and it has investors puzzled and executives casting a gimlet eye on their share prices.
Whether you think the market is dangerously overvalued, as some worry, or that current high corporate profits and multiples are the result of fundamental changes in the performance of companies depends on your expectations of profit growth, cost of capital, and returns on capital.

1 In fact, much of the market’s value today is clearly tied to underlying sources of economic performance—and, in particular, the high level of profit margins in several high-performing sectors.
What’s behind the lofty P/E ratio?

At the highest level, the total market capitalization of companies in the S&P 500 index is $18.5 trillion. Their projected 2014 earnings of $1.1 trillion to $1.2 trillion imply a price-to-earnings ratio (P/E) of about 16 to 17—values that are well above average. We analyzed both multiples and earnings to understand what’s supporting their levels.

One explanation we often hear for the market’s current level—a lower cost of equity—doesn’t hold up to scrutiny. In fact, much of the increase in share prices has come over the past two years, a period in which long-term government-bond rates have actually increased. That development alone should quiet any assumptions that investors are discounting future cash flows at a lower cost of equity as a result of low interest rates, but earlier McKinsey research discounted that possibility even when government-bond rates declined following the financial crisis.2 Moreover, the cost of equity has been remarkably stable (in real terms) over the past 50 years.

So what is boosting share prices relative to earnings? P/Es are normally underpinned by expected earnings growth, expected returns on capital, and the cost of capital. But in the past several years, P/Es have also been affected by the high proportion of cash that US companies are holding. In fact, that cash buildup and an increase in returns on capital are together responsible for boosting the median P/E for the S&P 500 by about 2 points, from an average of 14 to 15 during the 1965 to 2012 period (excluding the high inflationary period of the 1970s).
Half of that increase can be attributed to higher returns. Returns on capital affect P/E because they influence a company’s cash flow. Higher returns at a constant rate of growth and cost of capital lead to a higher P/E because a company doesn’t need to reinvest as much to continue growing.3  The aggregate returns on capital for the S&P 500 have increased to about 17 percent from about 12 percent over the past two decades. That increase explains about one point of the observed increase in the index’s P/E.

The other half of the increase can be attributed to the extraordinary amount of cash today’s large US-based companies are holding on their balance sheets (mostly outside the United States to avoid taxes on its repatriation). We conservatively estimate that nonfinancial US companies have at least $1.3 trillion of excess cash that is mostly invested in shorter-term government securities earning less than 1 percent, before taxes. With such a low denominator for the ratio, the effective P/E on the cash is very high. For example, if the cash earns 0.7 percent per year after tax, its price would be about 140 times its earnings. The impact of all this cash is to increase the measured P/E by another point. In other words, if companies weren’t holding all this cash, their market capitalization would be lower by about $1.3 trillion—and their earnings would be roughly the same.

What about margins?

The key to understanding the current record-high value of the S&P 500 is not the P/E multiple but the high level of profit margins—and that, too, requires some examination. Major shifts in the composition of the S&P 500 since the mid-1990s have led to a higher aggregate profit margin for the index. Aggregate pretax profits were stable at around 10 percent of revenues from 1970 to 1995. But since then, profit growth in the financial, IT, and pharmaceuticals and medical-products sectors has outpaced other sectors, and their margins have increased, substantially increasing their share of total corporate profits. As a result, aggregate pretax profits grew to 14 percent of revenues in 2013 and are expected to hit 15 percent in 2014.

The profits of financial institutions alone increased from 4 percent of the index’s total profits in 1990 to 16 percent in 2013. This was largely due to so-called financial deepening, as financial assets have grown faster than GDP.4 Bank assets and tangible equity increased by 15 percent and 13 percent per year, respectively, relative to nominal GDP growth of 5 percent per year.
Not surprisingly, profits in the IT sector also increased substantially relative to the rest of the economy over the same time period, climbing to 18 percent of total profits from 7 percent. Coincidentally, the sector’s aggregate profit margin also increased to 18 percent from 7 percent. The increase in margins is largely driven by the fact that higher-margin software companies now command roughly 70 to 80 percent of the sector’s profits.

The healthcare-products sector increased its share of profits to 10 percent from 6 percent, again between 1990 and 2013, both due to faster growth and an increase in profit margins, which rose to 24 percent from 13 percent. The increase in profit margins in pharmaceuticals is largely due to the development of new drugs with higher margins than earlier drugs.
What’s the prognosis?

Assessing the market’s current value ultimately depends on whether the profit margins are sustainable. While we can’t predict the future, we can show what the fundamental value of the S&P 500 should be based on different profit-margin scenarios. Under the first, assuming current levels of profit margins are sustainable, the fundamental value of the S&P 500 would be in the range of 1,900 to 2,100. Under a second, assuming profit margins will return to 1990 levels, the fundamental value of the index would be 1,400 to 1,600. Under a hypothetical third scenario in the middle, the aggregate profit margin would be roughly at par with the 2003 to 2005 average, a period before the Great Recession, and the fundamental value of the index would be around 1,600 to 1,800.

A strong case can be made that aggregate profit margins will not revert to 1990 levels. The composition of large US companies has shifted from traditional manufacturing to intellectual property–based companies with inherently higher margins and returns on capital, such as software, pharmaceuticals, and medical devices. In addition, these US-based companies derive a substantial share of their profits from outside the United States, which should allow them to sustain their size relative to other S&P 500 companies.

It’s less clear whether the current level of margins is sustainable. In the IT sector, for example, many of the current top companies (including Cisco, Google, Microsoft, Oracle, and Qualcomm) didn’t exist or were small in 1990—relative to both the size they are today and the size of the dominant companies in the market at that time. Given the dynamism of the sector, it’s impossible to say whether a next generation of competitors will take away some of the high profits of today’s top performers. Similarly, in pharmaceuticals and medical devices, today’s high margins are supported by blockbuster drugs that have been losing patent protection, opening the door to competition from generics. The sector’s R&D productivity has been declining over the past 20 years, and the next generation of drugs may have lower revenues and margins per drug as they are targeting smaller patient markets. Furthermore, US government steps to reduce healthcare costs could also affect margins in these industries.

The current state of the financial sector is a conundrum. Despite increased regulation, the past four quarters combined have generated profits that are among the sector’s highest ever, on an annualized basis. In this era of ultralow interest rates, US banks have been earning near-record-high spreads between the rates at which they lend and the rates they pay on deposits and debt.5 It’s possible those spreads will decline to lower levels if interest rates increase to historical levels. Additionally, some sectors, such as transportation and manufacturing, are cyclical and at high points in their cycles.

Another, less tangible factor across all sectors is that companies may be underinvesting. For example, our recent survey found that a substantial number of executives believe their companies are passing up value-creating investment opportunities, especially in new-product and market development. If that continues, the current focus of many companies on cost cutting and short-term profits may well affect the sustainability of the market’s valuation

[1484 words]

Source:Mckinsey
http://www.mckinsey.com/insights/corporate_finance/whats_behind_this_years_buoyant_market

注：这些是文章中所有角标的解释，如果大家感兴趣可以自己看看哦~
1. See Bing Cao, Bin Jiang, and Tim Koller, “Whither the US equity markets?,” April 2013, mckinsey.com; as well as the interactive equity-market simulator, which allows readers to explore the likely impact of their own assumptions about market fundamentals: “Whither the US equity markets: An interactive simulator,” April 2013.
2. For more, see QE and ultra-low interest rates: Distributional effects and risks, McKinsey Global Institute, November 2013.
3. Lower interest rates do not account for a large portion of today’s higher price-to-earnings ratios. For more, see Richard Dobbs, Tim Koller, and Susan Lund, “What effect has quantitative easing had on your share price?,” McKinsey on Finance, February 2014.
4. For more, see Mapping global capital markets 2011, McKinsey Global Institute, August 2011.
5. For more, see QE and ultra-low interest rates.

cyndichiang

Speaker
DJ index has dropped about 900 points this week,about 5%
EU has worse performance: Germany dropped 9% and Frence dropped 11%
We don't know exactly the direction of market theoretically.
There is long list of worries especially  downside risk
EU has exprienced deflation and they could export .
The man thought capacity of political system could play a role in economy
US is  doing better than some other countries are.

Obstacle 7'26''
S&P has domenstrated that the stock market has growed steadily.
The reason behind the increased profit margins and P/E index:
P/E side:  lower cost of entity
Share prices related to P/E: 1. high returns 2. US-based multinational companies avoid send tax back and thus have additional amount of cash
Margins side: Various sections have increased their profits
Future: whether this increase would be sustainable is unpredictable.

wensd1111

1 A 01:28
2 A 01:19
3 A 02:53
4 A 01:48
5 A 01:14
6 A 01:18
7 A 08:28
evaluate the stock market.several factors.
1,p/e ratio
2,cash revernue
but on long term, the stable percentage matters more.
1,the profits ability is not as high as 1990s,
it, medical, finance, different situation
2, reinvestment rate

Stefan00

Time 2:1’55 : three explanations to the question what’ s making the stock so crazy: The time; global concerns;
Time 3: and bad news. What should investors do? Nothing, just calm do and have long-term view.
Time 4: To the question when should the sideliner get in to the market. Suggest one: don’t think about the time. set some money aside
Time 5:  2’00 assess your risk tolerance;be the toughest one.
Time 6: 1’51 Explanation to what is the investor sentiment cycle.
rest : 1’46 tow points of the emotion. Joy and fear. That shows how emotion lead trader.

Obstacle :8’42 use some ratios to analyze the market.

mozhiwanjia

掌管 5        00:11:47.34        00:36:02.87
掌管 4        00:04:19.41        00:24:15.52
掌管 3        00:12:39.86        00:19:56.11
掌管 2        00:02:41.20        00:07:16.25
掌管 1        00:04:35.04        00:04:35.04

法兰丝

wensd1111 发表于 2014-10-24 16:46
Part III: Obstacle
What’s behind this year’s buoyant market
Here’s how a tepid econom ...

2”28
1”56
3”54
2”49
1”39
1”57

sumy217

1.        The reason that the stocks are so crazy these day is for October is a month with volatile tradition.
2.        Volatile days should not make you panic into changing your long term view to dump some blue quality chips.
3.        Trying to time your entry into or exit out of stock market is a guessing game which you could not win. You should develop a long term strategy that allows you to reap advantages of the financial market in a sensible way.
4.        Create a portfolio of bonds and stocks and insist your plan whenever the financial market is surging or plummeting.
5.        There is an emotional cycle that human emotions are backward looking, and it is not predictive to the stock market.

conglomerator

2: 1:43

The stock market was crazy last week. There are 3 explanations on Wall Streets. 1, It’s October. So many things is going to happen in October and so many things happened in October. 2, Global concerns. EU, China and Japan.

3: 1:24

Domestically, the situation is not good. What you should do as an investor? Nothing. At times like this, it is wise to not change your long-term strategy. Having a doubt about that, meet with you financial advisor. After all the 500 indexes created a new record.

4: 2:38

The market is volatile. Investors hesitate to join the market or not. There is no way to predict the market will go up or down in short-term. If you want to join the stock market, the first thing you need to do is to have you emergency money ready, so that you won’t have to liquid your stocks at an inopportune time.

5: 1:55
Then you need to assess the risk tolerant level you can stomach. Remember do not invest only in stocks you need a stocks and bonds combination. The toughest thing to do is to stick to the plan, no mater the market is going up or down. Bottom line, you need to come up with the combination fits to your risk tolerance and join the market, otherwise you will only be thinking about what will happen in the market and regret that you miss all the opportunities.

6: 1:18

The stock market never goes smoothly. There are ups and downs. The reason is that investors’ emotion has ups and downs. an objective obsever would see no need to have an emotional response to the cycle. No matter how the prices changes, it will come back where it started.

The rest: 1:18

This part describes how the emotion of an investor lead his decision. If investors can get away from emotions’ influence, they can make much more accurate decisions than those who are influenced by emotions.

Obstacle: 8:01

It is hard to say that the current value of S&P 500 hundreds is under estimated or over estimated. Several key factors affected the judgement. One of the key factors is whether they can sustain their profit margin.