Reputation is an important asset to corporations and those who know it do what they can to build it. To achieve prestige requires a long-term outlook toward building competitive advantage. Companies develop winning reputations by both creating and projecting a set of skills that their constituents recognize and are unique. For some companies, that means differentiating themselves through innovation—nurturing good ideas, translating them into products, and marketing them well.
Market experts often refer to the general market. What is the general market and why is it important? In broad terms the general market is represented by leading market indices like the S&P 500 or the NYSE Common Index (an index of all of the stocks listed on the NYSE).
An old Wall Street adage holds that a stock is worth what somebody is willing to pay for it. However, even more appropriate is an adapation of that adage by Investment Advisor Richard Ney (1916-2004.) He used to say “a stock is worth what the NYSE floor specialist is willing to pay for it.” In any case, both have more merit than all of the blue sky that so-called “investment experts” tell us what a stock or the stock market is worth.
Over last few decades, many investors have moved away from the traditional full service stockbrokerage firms to discount and internet brokerage firms. For some investors, especially during the heady days of the late 1990s and the middle of the first decade of this century they have abandoned all brokerage advice and took on the business of investing by becoming “day traders.”
During the end of the first quarter of 2001, there was a virtual chorus of individuals across the country blaming Alan Greenspan for the economic downturn that followed the DotCom Bust. The chiming got louder as the stock market continued to crumble and economy softened. While Greenspan may have been a culprit in the downturn, it was not because of his actions or inactions during the economic and stock market declines. On the contrary, it was because of what he did not do during the speculative boom. Thus, the complaints were great examples of how little most individuals knew about the bull market of the 1990s and the bear market of the early 21st century.
The 200-day moving averages (calculated by averaging the closing prices for the past 200 days) are plotted daily for many individual stocks, indexes and market averages, including the Dow Jones Industrial Average (DJIA), S&P 500 and the New York Stock Exchange Composite Index. Many financial newspapers print graphs which include the 200-day moving average for the most well-known averages and indexes. In addition, there are a number of chart and graph services that plot the 200-day moving average for individual stocks.
Among the many approaches to analyzing the outlook for the stock market are those most popular with “value analysts.” They typically involve a study of various corporate productivity measures such as dividends, earnings and book value. Included among “psychological market indicators” are three of the yardsticks most often used to determine if the market is overvalued, undervalued or fairly valued.