U.S. Trade Deficit

• Explain what the US Trade Deficit is.

• The U.S. Trade Deficit is a negative balance of trade in the United States.

• Why did it go down in December 2007?

• The US Trade Deficit decreases in December of 2007 because of an increase in exports.

• What does the value of the US dollar have to do with the trade deficit falling?

• Since the dollar is at a record low, the trade deficit failed because of the exportation of goods to foreign companies.

• Why do you think that a large trade deficit is bad for the economy?

• A large trade deficity is bad for the economy because we aren't making enough money to pay for the incoming goods.

• In other words: why is it bad to import more goods than you export?

• The more goods we import means that we have to have more money to pay for them. This money comes from the exportation of our goods.

Oppurtunity Costs

An oppurtunity cost is the willingness to spend money to save money. An example would be buying a lot of cheap stocks and as opposed to investing a lot of moeny in large, well known companies. An example of my own life would be spening $8,000 a year to go to college so I could make more money with my education compar compared to working right after high school and making $16,000 annualy in a random store.

Stock Choosing Strategy

Considering I am blind to anything related to stocks, I honestly had no idea what I was looking for in my investments. I pretended like I understood the big words and meanings. However, I tried to use my common sense. If a stock was fairly cheap and still going up, I would buy atleast 100 stocks. If a stock was fairly expensive and was still going up, I would buy around 50 stocks. After the first day, I would check to see who was int he lead and review the stocks with high percentage gains. Then I would quickly invest in more shares than they had bought. This way, when ever they decide to sell their stocks, I could sell mine and make more of a profit.

Introduction To Stock Market

• What exactly is a stock and why do companies sell stock in the first place?
• A stock is a share of ownership in a company.
  
• Companies sell stocks to allow people with interest in buying a company to own shares of the company because they don't have enough money to buy the entire company.
  
• What is the difference between a public and a private company?
• A public company sells shares to the public whereas a private company cannot sell shares to the public.
  
• What is the Dow Jones Industrial Average?
• The Dow Jones Industrial Average is the price-weighted average of 30 actively traded blue chip stocks on the New York Stock Exchange (NYSE)
• What is a blue chip stock?
• A blue chip stock is a shares of generally large companies that have a history of strong earnings growth and dividend payments.
• What is the New York Stock Exchange and the NASDAQ?
• The New York Stock Exchane is the largest organized securities market in the United States, founded in 1792.
• NASDAQ stands for the National Association of Securities Dealers Automated Quotation System
• What is a mutual fund?
• Mutual funds are pools of money that are managed by an investment company.
• What are some of the biggest companies on the stock market, how much is their stock?
• Microsoft, Intel, E*Trade Financial, Cisco, etc.
  
• What is the PE ratio of a stock?
• A ratio used by some investors to gauge the relative value of a security in light of current market conditions. Ratio = Market Price divided by Earnings per Share.
• What is a stock dividend?
• A stock dividend is paid to shareholders in shares of stock rather than cash.