Thomas asks…
IF I invest in a contract for the dow jones industrial average how much is a point worth?
Go to the site below the contract dow johns industrial average my question is what happens how much do you lose or make when it falls a point? How many points did it fall today? How much would you have lose today if you bought one on MARGIN?
http://futures.tradingcharts.com/specs/summary.html
Justin answers:
You actually have 3 different Dow contracts — The standard Dow, the Mini Dow and the Big Dow contracts.
The Standard is $10 per point, the Mini is $5 per point and the Big is $25 per point.
Now, let’s assume you went long (bought) a Dow Contract, market on open. What you have to remember is the Dow Index is the Cash index, while the contract is the futures contract, therefore the value of the futures contract although it follows the cash index, has a slight variation in price. For example, the Dow Cash index opened at 13339.20, had a high of 13339.45, a low of 13158.58 and closed at 13167.20. The Dow Dec. 07 contract opend at 13300, high of 13305, low of 13170 and closed at 13184. The futures contract follows the movements of the cash index, but not necessarily the exact point for point move.
Okay, let’s say you are long at market on open the Dec. 07 contract. You’ve have bought at 13300, but the contract closed down, so you have an intraday movement of -116 points. Now, to translate that into dollars, if you bought:
1 Dow Standard contract – $1,160 LOSS (116 pts x $10/pt.)
1 Dow Mini Contract – $580 LOSS (116 pts x $5/pt)
1 Dow Big Contract – $2,900 LOSS (116 pts x $25/pt).
If you sold short the contract, the change the above numbers from LOSS to PROFIT.
So, if you have a standard Dow contract, a $1,160 loss translates to a loss of 24% of your initial margin and would have triggered a margin call as you need $3900 maintenance margin.
Futures are not for the timid or faint of heart, you better know what you’re doing. Let’s say you were long the contract and we had an 1987 type day. That day the market gapped down on the open, which means, if you had a stop loss, it may never have been triggered as the market may have gapped below your stop loss level. Andl let’s say it ended lossing 508 points. That translates to a $5080 loss PER Contract on a std., a $2,540 loss on a mini and a $12,700 loss on a Big Dow contract. These are all PER CONTRACT losses.
Futures are very risky and I would never trade them naked, ie, without some way to hedge your position. For example, if you’ve bought Dow stocks, you can always short Dow futures as a hedge in case the index (and your stocks) tank.
If you’re going to get involved in index futures contracts, you need to LEARN, LEARN, LEARN and when you’re done with learning, LEARN some more.
Daniel asks…
How Did Whaling Become Such A Problem?
What were the causes and why is it STILL a problem? I’m doing a school project and would like to know a little more on whaling because I find there isn’t a whole lot on the internet. Any other details on whaling like why the IWC hasn’t stepped in because the Japenese obviously aren’t in it for reasearch, would be appreciated, thanks.
Justin answers:
There is a great deal of information on whaling to be found on the internet. However, it often addresses the history of whaling only in brief summary, and concentrates heavily on recent incidents and disagreements.
Basic history:
Western Europeans, starting with the Basques, began hunting whales in large numbers as a commercial endeavor, mostly for whale oil. Although, other groups around the world also hunted whales in limited numbers for nutritional use. For a long time the English and Dutch came to dominate the industry — then the Americans, and after the advent of modern whaling, the Norwegians.
In the late 19th century, modern whaling methods and technology were invented and enabled whalers to kill whales on a scale never seen before in history. Svend Foyn’s harpoon canon design with explosive tipped harpoons, combined with powered steel ships, and later floating factories, spread from the Norwegian whaling industry to other nations.
Into the early 20th century, the relentless hunting with new technology was quickly depleting whale stocks, and whalers branched out into new territory seeking new supplies of whales — eventually as far as Antarctica.
The first international agreements to limit whaling began in the 1920s and 30s. However, the International Convention on the Regulation of Whaling was not established until 1946. This agreement also established the International Whaling Commission which first convened in 1949.
The IWC has almost entirely failed to protect whale stocks from over-exploitation. Its decisions were often thwarted by rampant cheating on quotas (especially the Soviet Union). Its observer program was underfunded and undermined. Some nations (especially Japan) even facilitated “pirate whaling”, which is essentially foreign companies poaching whales in secret and smuggling the unreported meat to Japanese markets. Despite the IWC, nearly every large species of whale was driven to the brink of extinction. Many species are still endangered today as a result.
The “Save the Whales” movement began in the early 1970s as the public was more informed about the systematic destruction of whales. Finally, the IWC gained some significant anti-whaling influence and its membership ballooned. In 1982, after many failed attempts, the IWC passed the “moratorium on commercial whaling” to begin in 1986.
Unfortunately, several nations took advantage of loopholes within the ICRW to continue whaling. Norway continues under an official objection to the moratorium. Japan abuses Article VIII of the ICRW and claims its whale killing is done for “research”. Iceland originally accepted the moratorium, then tried “research whaling” like Japan, then stopped whaling under international pressure and protest, then rejoined the IWC in 2002 and started killing whales again under a “new objection” to the moratorium.
Today, Norway kills common minke whales for domestic use. Iceland kills common minke whales for domestic use and endangered fin whales for export to Japan. Japan kills endangered fin whales, endangered sei whales, Bryde’s whales (population uncertain), vulnerable sperm whales, common minke whales, and Antarctic minke whales. Many of the whales killed by Japan are hunted in an IWC established “whale sanctuary”.
Many other international conventions prohibit the killing and international trade of whales. Unfortunately, Iceland, Norway, and Japan all choose to undermine the IWC and defy its restrictions for the whaling industry, which is not necessary for economic prosperity or nutritional subsistence in any of these nations.
Other than this commercial whaling, “Aboriginal Subsistence Whaling” (ASW) is also carried out by native groups, with IWC approval.
Small cetaceans like dolphins are also killed in several countries such as Japan (up to 20,000 annually) and the Faroe Islands.
The tools of modern whaling, international economic competition for resources, and issues of nationalism overriding scientific advice, all contributed to the over-exploitation of whales. The bad practices of the past, especially the subversion of the IWC, and the hunting of endangered species, are still a problem today.
James asks…
Should I purchase a new or a used car?
I’m currently 20 years old, living in Canada. I would like to personally get a new car because then I don’t have to worry about my vehicle breaking down while driving. If I was to purchase a new car, do you recommend paying the entire price or go financing?
This will be my first car.
Justin answers:
You are very wise for factoring-in the cost of maintenance into your buying decision. It’s one of the most important factors, and far too many people focus on haggling over $100 without thinking twice about matters that could cost them thousands.
Whether it’s better to buy new versus used is entirely dependent upon the situation. The recent economic crisis has had the unusual effect of creating unprecedented demand for quality used vehicles as people have turned to them to (presumably) save money. At the same time, makers and dealers have been desperate to stimulate sales and clear inventories, and new vehicle incentives and dealer willingness to negotiate have never been greater.
The result is that MANY new vehicles are commonly LESS EXPENSIVE to purchase than low-mileage used equivalents. In fact, Edmunds.com has written a summary report citing many examples:
http://www.edmunds.com/industry-car-news/new-vs-used-car-buying.html
In determining whether you should pay cash versus finance, presuming you can afford to do either, the answer is entirely dependent upon the interest rate and the economy. Today, with interest rates being SO low (often less than 5%), what business wouldn’t leap at the opportunity to borrow as much as they could when the stock market is rising so quickly?
Of course, you can’t always base your decisions on the unpredictable performance of the stock market, but you CAN base your decision upon other far more important factors like inflation and the time-value of money (i.e. What a dollar will buy you tomorrow versus today). World economic fundamentals are such that almost every western nation (and we, your American neighbors are going to be very badly hit) is likely to be subject to considerable inflation within the next 24-36 month.
In such times, if you can stick the money you’d have normally spent in the bank and earn say 2%, your 5% loan really only costs you 3%. If inflation then exceeds 3%, (or you’re able to obtain ANY other kind of return on investment that’s any greater), you actually MAKE money buy borrowing. And before you dismiss the idea entirely, billions of dollars are borrowed and currency traded on this exact principle.
That doesn’t mean you’d be wrong to pay cash if you can. Many people enjoy the piece of mind. But, I’d recommend borrowing at least 1 or 2 years worth of payments you can afford, and putting that money in a “rainy day” account. It will either cost you very little (and you may even profit from it), plus you will have money on hand to meet any emergency that may arise or a buffer to make a year’s worth of payments if something unforeseen happens. Not bad for free eh?
Too many people offer “you should always pay cash if you can” advice without ever bothering to consider the realities involved. They’re the same people we discussed earlier who don’t think about what a particular used car might cost to maintain. Since you’ve already demonstrated you’re smarter than the latter, I’m sure you’re smarter than the former too and are now prepared to make the best possible choice for yourself.
Best of luck. I hope this helps.
Robert asks…
financial crisis in the news today? I need a summary?
I need a summary of the bank crisis that I heard of in the news today about the stock markets being greatly affected by it. I will give ten points to the person with the 1st best answer. And one more thing can you try to put it into simple english rather than having economical terms that are hard to understand. thanks.
Justin answers:
AIG issed a loan to themselves to save their butts. Bank Of America baild Merill Lynch out, who was bankrupt, and Lehman Brothers went bankrupt.
Michael asks…
how does real time stock ticker works?
anyone can enlighten me how real time stock tickers on brokerage website works? how does it ‘pushes’ live data to the browser, and is it really real time?
Justin answers:
A stock market ticker is a banner that contains a constant scrolling of current stock prices. It provides real time information about the stock market. So, it actually doesn’t teach you about how to buy shares, it only give shares and stock information.
When something exciting is happening, many stock market ticker will provide those information, especially about the market.
There is so much trading that goes on in today’s markets that the stock price listed for any given company is likely to change at least a little each time it comes around again on the ticker.
One will have to pay a feel to get the actual up to date numbers, since most stocks have a certain delay and only some running in real time.
It is not necessary for many investors to have the exact real time prices, unless they are day trading where they need to sell or buy quickly during the day.
Through many source online or an online brokerage account, you can actually set up your own stock market ticker to simply show which information you’re interested in. You might want to just see a scroll of the stocks that you have invested in.
While you’re considering a purchase, you may want to keep an eye on a single stock with all the breaking news and any other information as soon as you can buy it. From the ticker, you can even get information about stock market holidays.
There is another option to set up a ticker, that is to set it up from a specific area only that you’re interested in, for example, tech stocks, oil companies, or car companies if you like to see numbers moving very fast!
In summary, the stock market ticker can inform you quickly when the market has changed. It is considered by many investors as a useful investing tool. It can alert you when the stock go up or go down, so that you can search more information from other new sources to find out what is happening.
Chris asks…
Most historians agree that Radical Reconstruction was a failure. What might have been done in Texas that would?
Justin answers:
Corruption and bribery did take place in government during Reconstruction, as they had prior to the Civil War and as they still do today. Railroad promoters, business speculators and their retainers, land contractors, and stock market investors all sought to purchase their share of influence with elected leaders. As one black representative and former slave commented, “I’ve been sold eleven times in my life; this is the first time I ever got the money.” Yet despite these moral frailties, all of the southern governments combined did not steal as much from the public treasury as William “Boss” Tweed’s Ring in New York City, a Democratic Party machine that lined its pockets with over $75 million, or the Republican “Gas Ring” in Philadelphia, which did the same thing. Though such comparisons do not excuse the failings that Reconstruction governments did exhibit, the fact remains that such governments did establish some of the first public and social services in the South outside of North Carolina; they collected taxes to fund public schools, expand hospitals, and build asylums, among other programs.
Nonetheless, as whites regained power over the South by 1877 and throughout the century that followed, whites from both North and South pilloried the Reconstruction period as a disaster because blacks were in charge, and were—by their interpretation—racially unfit to rule and unprepared for the rights, responsibilities, and freedoms granted to them in postwar America. Reconstruction-era instances of corruption or bribery were vastly exaggerated; the nation’s foremost scholars, especially historians, wrote seething histories of the period that decried the supposedly deplorable treatment of white southerners and spun overtly racist tales concerning the ignorance and savage lust of black officeholders. More……………… Http://www.shmoop.com/reconstruction/summary.html ———— The interpretation of Reconstruction has swung back and forth several times. Nearly all historians hold that Reconstruction ended in failure. It is hard to see Reconstruction “as concluding in anything but failure” says Etcheson (2009) Etcheson adds, “W. E. B. DuBois captured that failure well when he wrote in Black Reconstruction in America (1935): ‘The slave went free; stood a brief moment in the sun; then moved back again toward slavery.'” Likewise Eric Foner concludes that from the black point of view, “Reconstruction must be judged a failure.” The many factors contributing to this failure include: lack of a permanent federal agency specifically designed for the enforcement of civil rights; the Morrison R. Waite Supreme Court decisions that dismantled previous congressional civil rights legislation; and the economic reestablishment of conservative white planters in the South by 1877. Historian William McFeely explained that although the Constitutional amendments and civil rights legislation on their own merit were remarkable achievements no permanent government agency whose specific purpose was civil rights enforcement had been created.
The first generation of Northern historians believed that the former Confederates were traitors and Johnson was their ally who threatened to undo the Union’s Constitutional achievements. By the 1880s, however, Northern historians argued that Johnson and his allies were not traitors but blundered badly in rejecting the 14th Amendment and setting the stage for Radical Reconstruction.
The black leader Booker T. Washington, who grew up in West Virginia during Reconstruction, concluded that, “the Reconstruction experiment in racial democracy failed because it began at the wrong end, emphasizing political means and civil rights acts rather than economic means and self-determination.” His solution was to concentrate on building the economic infrastructure of the black community, in part by his leadership of Tuskegee Institute..More…………………
Http://en.wikipedia.org/wiki/Reconstruction_era_of_the_United_States#Legacy_and_historiography
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