Compound interests and the rule of 72

Compound interest is interest earned on previously accumulated interest as well as the principal. Compound interest is very good for saving and earning money because you accumulate "free" money. Compound interest keeps the money that you originally invested plus adds the extra or the interest money. An example of this is if you had $2000 in the bank and added $500 every year for 10 years with 5% annual interest (which is very very rare), you will have accumulated $9,800.!
The Rule of 72 is a rule that shows how long it will take to double the money you have invested. The rule is to divide the interest rate by 72 and the answer you get will be the number of years it will take to double the money you have invested. Example if you have $5000 invested with a 5% annual interest, it would take 14.4 years for your money to double (72/5.)

Insider Trades

There were 13 people arrested on March 1, 2007 accused of trading as insiders. The scheme involved 4 investment bankers, hedge funds, day traders, lawyers and even some supervisors who found out about the trading and blackmailed traders in order for them to keep quiet about the scheme. Nine of the defendants have been arrested and 4 pleaded guilty to crimes including bribery and securities fraud. The tactics that these traders used were all too familiar to the investigators: tipping traders about potential up/downgrades of stocks, leaking information about stock prices moving and potential stock mergers. Two of the men arrested met in Grand Centrals "Oyster Bar" to discuss debts owed to one another and exchange cash made from the profits of insider trading. One of the men would give his partner tips on rating changes and in return his partner would make quick changes to his funds and gain a huge profit. Over a 5 year period one of the accused men was said to have made over $5 million in illicit profits.

Dow Jones Down

Why did the Dow go down? The Dow went down because the Chinese stock market crashed. When the stocks crash people start selling their stocks for lower and lower amounts of money. This in turn makes the stock market go down. How does this decline compare to the other famous declines (Great Depression) ? this decline compares to other declines such as the depression because it affected people around the world. The GD happened in the United States but it ended up affecting many different countries around the world and international trade declined rapidly. This is very similar to what happened with the Dow. What will you do with your socks ? well I decided to buy some smaller stocks because they are cheaper now and they will probably make more money since the market went down. Is this a time to buy since prices went down? This would definately be the time to buy stocks since the prices went down. Stocks are less money now and they may have a much bigger gain soon.

Opportunity Costs

An opportunity costs is the value of the next best alternative that must be given up when a choice is made.

Example: the opportunity cost of studying on a Saturday night is the fun you are missing by not going to the party.

Economic Systems

Traditional Economies: a type of economic system where people's economic role are the same as their parents and grandparents. These types of economies are usually found in countrie like Asia, South America and Africa. These people harvest their own crops on their own land. They're past and tradition determines their way of life.

Centrally Planned (Command) Economy: this is the type of economic system where the government controls is the main decision maker. There is no one person who can inpendently open and run a business. The government decides what good and services can be used and they delegate these services.
Market Economy: this type of economic system is one where the nations economic decisions are the results of individual buyers and sellers in the marketplace. The U.S. has a markey economy. This is sort of like a "democratic" economy. You can choose to where anywhere you like as long as there is a job opening. You can open your own business and run it. You may do extremely well with your business but if it is not popular with the public, you will not be in business for long.
Mixed Economy: there are 3 different types of economic systems capitalism, socialism and communism. No one country has a 100% capitalism, socialism or communism system. All countries have mixed economies which are combinations of 2 or 3.

Investment Strategy

I did not have a strategy when I began to invest and I should have because my stocks are not doing well. I have only invest in 3 stocks but I plant to buy maybe 2 or 3 more. I want to find a smaller company to invest in because as Mr.Moloney said they are more likely to change and make money.

Investments

I want to invest in Citigroup, BP, Walt Disney, Yahoo and Google.