Nick's 5 L's for Playing the Stock Market (Ethical or Not)

Disclaimer: I am not responsible for you losing money on the stock market. Don't trust the internet. I'm not trying to be Jim Cramer or play Jon Stewart here. I don't feel that people should play the stock market. However, I believe that people should try it once to understand what it's like.

Additional Note: Perhaps these 5 L's + Innovation within the company that outlines what will best work for a company.

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Legislature

"Free Trade" has never existed. It's naive to believe of its existence, although it's something to be strived toward. Neoclassical economists and thinkers strongly believe in "do what you do best and trade the rest." The matter of the fact is that diversification in your economy is needed to equally divide the risk, hedge-your-funds, and/or survive. If your country is but one industry, you will end becoming like Ireland (potatoes famines and vacant housing! emigration... brain drain - ooh, that sounds like a good topic for the future) or the Ivory Coast. The latter's disaster happened in the 1980s and involved the IMF telling the mired countries of Cameroon, Ghana, and Nigeria to make chocolate. Producing it cheaper than the Ivory Coast, the main supplier of cocoa to Nestle - also the country's main crop - lost favor with the company. Nestle signed up with the above countries and the Ivory Coast went kaput. Subsequently, this happened at the end of the decade, courtesy of alumnus Charles Taylor, who incidentally walked off with a degree in economics

Back on track -

So eventually, if other countries produce the same good or service cheaper and more competitively, like in the above you case, you will end up losing your clientele and you will be forced to either suffer or downsize your economy (along with emigration of indigenous peoples). Anyway, the human race has witnessed a history of governments dictating tariffs, embargoes, and setting up barriers restricting trade. That being said, governments will definitely affect public company's stock. It is, after all, the HAND, visible or not.

Liquidity

Currency is an important thing these days. Also liquidity preference - particular tastes and/or choices in choosing what liquid monies one has. Take the Iceland default. When credit froze, they didn't have enough pounds, Euros, dollars, and whatnot to deal back to their investors/customers. They thought highly of their krona but whether conscious or not of their lack of diversification, they tanked, and the financial market with it, and their investors holdings - which disappeared! Poof! Does your head hurt? OK let's go back. Anyone own a lemonade stand or do student marts? Was there ever a situation where you had to run to your parents or some family member to ask for change?

Location

Real estate adage: "Location. Location. Location." Gotta have it. Is it temperate? Is the weather devoid of blizzards, hurricanes, storms, and climate that would make business unsuitable, facilities inoperable? What of the people that tend to pool around those locations, hm? "Location" speaks for itself. (the concept is also called "inherent comparative advantage" where said nation of location can produce effectively and cheaply, based on factors that are relatively unchangeable - resources, climate, aloha spirit, etc)

Logistics
How would an exporter best smuggle Cohibas from Cuba to the US, disguising them as fake Cohibas? A joke! Let's turn to Wikipedia for this one: "[Logistics] is the management of the flow of goods, information and other resources, including energy and people, between the point of origin and the point of consumption in order to meet the requirements of consumers... Logistics involves the integration of information, transportation, inventory, warehousing, material-handling, packaging, and occasionally security. Packaging - I suppose that has something to do with marketing. Think critically in your mind on that if you're bored.

Labor
Is the work force belleaguered? Are they in a place, where frankly, it's hard to get from point A to point B because of dangerous gangs? Are they associated with friends like such? Are conditions too chaotic to conduct long-term business? Age? Generation? I almost feel that labor should be implied in Logistics

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That's it. I got a final tomorrow morn'
About the above image... couldn't resist. I only saw the premier for this... season continuation?! They could have started season 2. I don't think I'll get into it until they play a cover I like... oops, this is an economics blog

Unknown Calamity Ahead?

Time to finish up where I left off with "Circle of Life" - the predicament of China not allowing its currency to float. Many can argue that damage has been done by their currency peg. If they allowed the currency to float, their economy would be forced to downscale, allowing other South East Asian economies that are rich in resources to replace it, at least in some industrial sectors. The truth is, I don't know what will happen if they keep their currency pegged or if they end up devaluing it again. The feeling I have about it is that the government has a choice for the long run - take lots of damage or marginally less damage. Or maybe, China will revolutionize their economy/financial markets once again. Time will tell.


China's trade surplus dropped by 63% in February, according to their government. The above photo is from telegraph.co.uk

Macroeconomics and Living Beyond Our Means

fyi This article won't be so serious, not concerning figures and numbers.

I would guess that administration within most colleges (especially business schools) want their students to know all about the financial crisis. This makes sense but right now most of us feel like all this information is being crammed down our throats. I am sick of it. I don't want to even talk about it. However, the blog must go on. Noting the past few decades, it seems that the United States, among many other developed countries has forced other countries into converting into an economy where individuals, groups, businesses, and entities alike live off debt. Some say it was the American way. I think that with the creation of banking via the Stonemasons storing soldiers' fortune during the Crusades, it was only inevitable before technology sprung this sucker high into the sky. But it's always worth remembering that space is an illusion, at least in this game. You'll never make it out of the atmosphere. What goes up must come down.


Actually, maybe I'll be eating my words 50 years from now. Maybe a perfect utopia will be created... a Giver-esque world where a pill will be administered and perfectly rational, robot-like human beings will exist. Not. And for this reason, we should be winning more Pulitzers. Come on, America. Stop looking at the screen and IMAGINE (unless you're reading my blog) - deviation from economics.

Hence Keynes belief that a nation must spend their way out of a deficit, we can see that even 19th/20th century (though radical) classical economic thought was within a world of debt. It's amazing to me, and certainly should amaze the world of people who can afford to not live in such a way. Those that live paycheck to paycheck are not the ones maxing out their credit card, buying themselve a new i-(insert whatever thing-noun).

Jon Stewart tearing Jim Cramer a new one, concerning Bear Sterns. Cramer was urging people to buy and many had reason to believe that the man had some stake in the company (or was being paid by the company to support selling).

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note: found a nice cover illustration for The Giver, will post it after class

http://www.nytimes.com/2010/04/08/business/global/08yuan.html?pagewanted=2&hp
Relevant article to last post