Friday, January 28, 2011
Tuesday, December 28, 2010
Economic differences in the North and South
This is a vague one, so pardon me if this is a bit all over the place.
As you may know, the Northern US is far, far, far, far far far far far, far, far more industrialized than the Southern US. Well, maybe it isn't so obvious now, but it was up until around the civil war, which was from 1860 to 1865. Oh, and I'm talking about the eastern part of the united states, because the rest wasn't occupied or even discovered for quite some time.
Geology
So first off, the geological conditions of the north aren't exactly spectacular for growing crops; this was a big part of the early failures to colonize America, since hardly anything was produced. The terrain is rocky, the weather is cold and variant, and the soil is no good. The plains of the south, however, are perfect for planting wide expanses of sugar, tobacco, and cotton (something I hope to discuss later).
Meanwhile, the rocky terrain in the north that I mentioned is fantastic for mining metals and granite, and the incredible forestation provided for plenty of wood to build tools, houses, and burn stuff (my vocabulary is amazing, I know). But more out of necessity for income, northerners actually had no other alternative but to try the factory system.
Immigrants
Because land costs a whole heaping ton of money, and a whole heaping ton of land is needed to make a profit, agriculture in the south was usually reserved for the rich. Sometimes after making a profit in northern industry, people would buy some land and some slaves in the south, and move there.
But this also made immigrants from europe go to industry because it was so much cheaper, and extra labor was always helpful. Factory owners preferred immigrant labor as well, since they would work for so much less, giving the factory more profit and allowing for the factories to spread.
And while a single plantation took up hundreds of acres, a factory would take up [insert small size of factory here]. This allowed the factories to multiply far faster than the farms. And if it ain't broke, don't fix it!
Snowball
As you may know, the Northern US is far, far, far, far far far far far, far, far more industrialized than the Southern US. Well, maybe it isn't so obvious now, but it was up until around the civil war, which was from 1860 to 1865. Oh, and I'm talking about the eastern part of the united states, because the rest wasn't occupied or even discovered for quite some time.
Geology
So first off, the geological conditions of the north aren't exactly spectacular for growing crops; this was a big part of the early failures to colonize America, since hardly anything was produced. The terrain is rocky, the weather is cold and variant, and the soil is no good. The plains of the south, however, are perfect for planting wide expanses of sugar, tobacco, and cotton (something I hope to discuss later). 
Meanwhile, the rocky terrain in the north that I mentioned is fantastic for mining metals and granite, and the incredible forestation provided for plenty of wood to build tools, houses, and burn stuff (my vocabulary is amazing, I know). But more out of necessity for income, northerners actually had no other alternative but to try the factory system.Immigrants
Because land costs a whole heaping ton of money, and a whole heaping ton of land is needed to make a profit, agriculture in the south was usually reserved for the rich. Sometimes after making a profit in northern industry, people would buy some land and some slaves in the south, and move there.
But this also made immigrants from europe go to industry because it was so much cheaper, and extra labor was always helpful. Factory owners preferred immigrant labor as well, since they would work for so much less, giving the factory more profit and allowing for the factories to spread.And while a single plantation took up hundreds of acres, a factory would take up [insert small size of factory here]. This allowed the factories to multiply far faster than the farms. And if it ain't broke, don't fix it!
Snowball
First Bank of the United States
AP US History midterm is coming up, and it's scaring the crap out of me, so I'm going to summarize as many US economic events and machines up to the 20th century as I can before said midterms, posted here for your enjoyment :) First up, the Bank of the United States!
The First Bank of the United States began operations in 1791 as part of debates forming the American constitution (and no, it has nothing to do with "Bank of America (NYSE: BAC)", which is a completely private bank). The intention was to centralize banking operations under a main bank, which would then help smaller existing banks when decided by the government.
Operations included:
-Issuing a standard currency
-Guarding government surplus money
-Facilitating public financial transactions (such as taxes)
Currency
The currency situation was a rather hilarious ordeal which is almost another issue in itself, but ultimately the problem was that the disorganized developing nation of the US didn't have anyone in particular to assign a monetary standard. But because people needed a place to stash their loot, private existing banks had to make their own standards just to organize their assets.
But since there were several of these private banks, each had a different currency, and financial transactions as seemingly simple as buying tea became virtually impossible. Imagine that I paid you in euros for a product, which you would convert to yen (as per your bank) and then turn around and use yen to pay for Bob's donuts, who uses canadian dollars. Then multiply that by several hundred thousand. Yeah.
Thus standardizing currency under a unified government would speed up finance considerably. Today, however, this task is performed by the Federal Reserve (aka "the Fed")
Money Storage
Since government funds would be stored in the bank, along with all private cash of the citizens, the bank could more effectively give out loans using stored capital. This would give a far more reliable backing for that risk-filled business. However, this would also mean that if the central bank failed, the country would fail. It's doubtful if it would have made it through the sub-prime mortgage recession we're still feeling the effects of today.
Cons
Obviously there's a problem with the bank, otherwise it would still be around today. The chief complaint lies in that it completely eliminates any competition in the financial sector, and we all know how much Americans hate not being able to personally control markets. The government would be entirely responsible for corrections in the face of recessions, contrasting with republican support of state banks.
The fall
No big recession stopped the bank, its charter just expired in 1811 by one vote, only to be chartered and rechartered again later. As I mentioned before, its remains today are the federal reserve, which just gives out loans to large businesses and prints currency. Its supporters were chiefly northern merchants who relied heavily on frequent and simple transactions, but eyed with suspicion by southern farmers who had little need for such centralization, and only saw it as constricting their freedoms.
Phew!
Operations included:
-Issuing a standard currency
-Guarding government surplus money
-Facilitating public financial transactions (such as taxes)
Currency
The currency situation was a rather hilarious ordeal which is almost another issue in itself, but ultimately the problem was that the disorganized developing nation of the US didn't have anyone in particular to assign a monetary standard. But because people needed a place to stash their loot, private existing banks had to make their own standards just to organize their assets.
But since there were several of these private banks, each had a different currency, and financial transactions as seemingly simple as buying tea became virtually impossible. Imagine that I paid you in euros for a product, which you would convert to yen (as per your bank) and then turn around and use yen to pay for Bob's donuts, who uses canadian dollars. Then multiply that by several hundred thousand. Yeah.
Thus standardizing currency under a unified government would speed up finance considerably. Today, however, this task is performed by the Federal Reserve (aka "the Fed")
Money Storage
Since government funds would be stored in the bank, along with all private cash of the citizens, the bank could more effectively give out loans using stored capital. This would give a far more reliable backing for that risk-filled business. However, this would also mean that if the central bank failed, the country would fail. It's doubtful if it would have made it through the sub-prime mortgage recession we're still feeling the effects of today.
Cons
Obviously there's a problem with the bank, otherwise it would still be around today. The chief complaint lies in that it completely eliminates any competition in the financial sector, and we all know how much Americans hate not being able to personally control markets. The government would be entirely responsible for corrections in the face of recessions, contrasting with republican support of state banks.
The fall
No big recession stopped the bank, its charter just expired in 1811 by one vote, only to be chartered and rechartered again later. As I mentioned before, its remains today are the federal reserve, which just gives out loans to large businesses and prints currency. Its supporters were chiefly northern merchants who relied heavily on frequent and simple transactions, but eyed with suspicion by southern farmers who had little need for such centralization, and only saw it as constricting their freedoms.
Phew!
Monday, August 30, 2010
Sunday, August 29, 2010
Portfolio tactics
Wow, this'll be a big one! But since it's so general, we'll probably be changing this over time, and adding more and more stuff.
A portfolio is the fancy investor term meaning your collection of investments. Thus, portfolio tactics are basically tactics to use for general investing; essentially these are rules you might do well to follow when you're buying shares.
What the @#$% is a portfolio?
A portfolio is the fancy investor term meaning your collection of investments. Thus, portfolio tactics are basically tactics to use for general investing; essentially these are rules you might do well to follow when you're buying shares.Diversification
Diversification: (diˈvərsiˌfiˈkā sh ən) noun. The act of diversifying a portfolio.
Diversify: (diˈvərsiˌfī) verb. To purchase a wide range of stocks from different industries and
businesses.
The purpose of diversification is to prevent major losses from plaguing your investments in case of an industry crash. And trust me, you will definitely lose some money in the stock market. DEFINITELY.
The good news is that, unless the market is plunging into a recession, significant changes only occur in industries, such as Energy, Healthcare, and Technology. For example, an oil shortage would mainly only affect the energy sector, since it has less goods to distribute. Yet that hardly makes any change to the production of Apple's iSoul, but for transportation costs (indirect factors).
If you had been exclusively invested in Energy when the shortage hit, your entire portfolio would have taken a hit. But if you average in your Conglomerates and Financial sector investments that didn't take a hit, you wouldn't suffer nearly as much!
That said, the same goes for a ridiculous growth in a single company out of the tens that you invest in; companies with normal growth would bring down profit from your super-company. Basically what diversification does for your portfolio is to reduce risk of failure. It can also reduce profit, but that's your choice to make.
NEWS NEWS NEWS
Simply liking a company in general is definitely NOT a good way to invest. If you're thinking long term, that kind of thinking helps, but you absolutely must pay attention to current events, or else your company will tank (lower in value) before you know it. Take advantage of major events (like oil spills, maybe? BP lost a whopping 50% in the two months after the spill!!), and the especially helpful quarterly reports, when companies tell you how much they actually sold and lost in the past three months.
More to come!
Thursday, August 26, 2010
Screw order and reason, I'm starting at the middle of the list.
Futures!
This is a pretty fun one, and it stems from your traditional stock investment; it's a Level 2 of sorts (I need to stop playing fallout 3..) As the name suggests, a future is the same thing as purchasing any old share, BUT you gain ownership of the share in THE FUTURE.
The concept is really quite simple: You arrange it so that you will buy a specified number of shares at a given time in the future, but you decide the price right now. All you're doing is making a bet that by the time you gain ownership of the shares, they will be worth more than what you paid. From then on you can just treat them as normal shares.
That's all there really is to it! Until I find a fatal flaw in this article; if I do, I'll definitely update it. Hopefully it's good already, so.. yeah!
Friday, August 20, 2010
Outline: business administration - finance
So, we were going to blog everyday for the rest of summer. That didn't work. No big deal. For the last week of summer, we've got a business administration course lined up for you on [drumroll please] finance. Topics we'll be covering include:
- Corporate Finance
- Capital Structure
- Capital Budgeting
- Mergers and Acquisitions
- Security Analysis
- Investments
- Options and Futures
- Risk Management
- Portfolio Tactics
- Empirical Finance
- Financial Modelling
- International Financial Environment
- International Financial Management
PS. We don't actually understand any of these topics... yet.
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