Notes

Finding a Great Stock Trading System - How to Select a Stock Market Sector
Banks in particular and the financial sector in particular tend to take a very long view of the global economy. U.S. Banks is particularly well capitalized with regard to their holding of short-term assets like commercial real estate loans. They also tend to be more sensitive to changes in the interest rates and to fluctuations in credit quality of their customers.

There are three important aspects of banking that are considered in the financial sector; balance of fixed earnings, surplus funds, and monetary policy. The term "balance of fixed earnings" refers to the overall profit margin (the difference between total assets and total liabilities) at the end of a period of operations. This is often considered as the best measure of the health of a bank. The "surplus funds" refer to the extra assets that the banks accumulated during previous operations.

The third aspect of the financial sector is the area of mortgage finance. Mortgage finance deals with lending money to businesses and individuals for the purchase of property. This sector includes sub-prime mortgage loans, high-risk loans, commercial mortgage loans, and home equity lines of credit.

All these three aspects of the financial sector need to be closely watched. One should also keep an eye on the inflation, trade, and balance of payments in all these sectors. Inflation is the increase in price levels of commodities, goods and services over time. Trade barriers may result in the de-valuation of certain sectors or goods. Balance of payments means the movement of money within the country, and the ability of the country to make imports and repay its export credits.

As far as the third aspect of the financial sector is concerned, it refers to the performance of the New York Stock Exchange and the Nasdaq. Both the NYSE and the NASDAQ are widely recognized stock exchanges. Both these stock exchanges provide a platform for companies to list their stocks. In the healthcare sector, the stock exchange referred to as NN is the New York Stock Exchange.

A buyer can look at sample lists from the Financial Spread Betters to get a better understanding of the buy-side and the non-buy-side activities in the financial sector. Buy-side activities comprise of institutional investment in securities and activities. This sector has always been involved in large-scale buying by large corporations. The buy-side position is characterized by the premium paid on shares. This implies that buyers purchase shares as a result of the corporation's increase in value.

Non-buy-side activities in the financial sector are the operations of banks. The U.S. banks have a lot of flexibility over their pricing of interest rates. This is because most of the banks base their interest rates on the fed funds rate.

The financial sector includes two stocks; then you can buy or sell the Nasdaq and NYSE, depending on your objectives. Thenyou can view sample lists of Nasdaq and NYSE from online brokers. Alternatively, you can go directly to the company websites where you can view sample lists of the stock shares of different companies.

The financial sector includes many sectors, as explained above. The five industries that dominate the u.s. banks are insurance, commercial banking, investment banking, credit card companies and mortgage banking. The five industrial sectors that are important to healthcare are pharmaceuticals, health care supplies, diagnostic, medical equipment and lab supplies. The five utilities that dominate the financial institutions are electrical and gas, water and sewerage, electrical generation and personal and business services. The main commodities that are traded in the financial sector are gold, petroleum, silver, corn and agricultural produce.

The main cause for the financial crisis is the imbalance in the distribution of assets and liabilities between the finance and the industry sectors. The banks started taking excessive risks during the boom period due to the availability of credit. The height of the crisis was in the second half of the decade; thereafter, the growth gradually slowed down and most of the financial institutions were able to weather the storm. However, the current recession has turned the attention of financial institutions towards the sectors at a much deeper level, and the result has been a total decline in business activity.

The fundamental reason for the financial crisis is bad risk management. The large number of complex derivatives and the intricate internal control systems that are used by the banks have resulted in a lot of blunders, which ultimately led to the downfall of the US economy. The most serious blunder committed by the financial institutions during the last recession was their lax risk management during the boom periods. The excessive leverage that was encouraged by the finance industry resulted in an over optimistic expansion, at the expense of the customer. As a result of this, the financial institutions took excessive risk, which ultimately led to the crisis.

Another reason that led to the downfall of the financials sector was excessive speculation on stocks. Stock speculation is one of the major reasons that create volatility in the market and thereby make it difficult for the financial institutions to predict the direction of the market. This in turn results in a rapid increase in the price of the stocks, and eventually lead them to decline. Since the stock market is a highly volatile and unpredictable form of trading, it is important for any investor to select his stocks intelligently based on the current market trends.
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