Student Loans - Beware

On May 8th, 2007 we read an article in class that talked about how some dreams of students get crushed by the student loans they take from the government. In the article it talks about how culinary schools are expensive for a student to afford so they take out student loans. As the student progresses through the school years, the student loan builds up interest that the student will have to pay after they graduate, and this is a problem because most of the jobs that graduate can get isn't enough to live and pay back the loans because of the interest of the loans. In my opinion student loans are a good way to help you pay off school but you must make sure that the career you are going for will be good enough to pay off your loans and help you live. If your career can't do these things then it may just ruin your life. If I was to take out loans, I think I wouldn't because it sounds scary that the fact that so much interest builds up and then you'll be stuck forever trying to pay off the loans.

Compound Interest and the rule of 72

Today we learned about compound interest and the rule of 72. The compound interest means the certain amount on money you have used to invest in something, gets a certain interest rate. This interest rate is added to the original amount of money that you originally put in so every year the interest piles up on itself. Since the interest on the money keeps piling up on itself, that means that your money will keep increasing by the amount of money from the year before and not from the that was originally invested from the first year. Compound interest will actually guarentee that ur money will increase and will keep piling on itself. The rule of 72 is a rule that is used by investors to get a certain estimate of how much time it should take for their money to double. The rule works by dividing the number 72 by the annual rate of return which results in the time needed for the investors money to double.

Stock Market Game 1- Initial Investment Strategy

On February 8,2007 we started to plan out or strategy on how we're going to make our money on the stock market game. I'm planning to buy the stocks of the companies that sponsor a soccer tournament called "The Champions League" because I think these stocks are going to rise through the fact that all of these companies will be shown throughout the tournament. I'm also buying the stocks of companies that produce athletic wear because I think the market is pretty good to invest in.

Oppportunity Costs

Opportunity costs are costs that a person pay in order to get something else. This is important to business owners because they wouldn't want to make too much or too little of their product. If they make too much or too little of their product then they lose money because their isn't enough of their product to be bought or too much of their product that people don't want to buy. They also set have to set a reasonable price to have a certain amount of people that want to buy the product so they can estimate about how much they want to make their product, and also to see how much profit they will make. An example of opportunity costs would be when a company buys supplies to make a shoe. The company obviously wants to make a profit so they compare prices with the demand for the product. Anyone would probably want to get the product for cheap so they have a higher demand for the same product, but the company won't make any money because they pay a lot for the supplies and the labor to make the product and barely get paid for it. So the company evens up the price with demand so it can be where both the company and the consumer can be happy.

Dow Down 416 pts! Why?

On February 27, 2007, the Dow Jones Industrial average had gone down about 416 points in one day. The cause of this significant drop was caused due to the fact that the Chinese stock market had crashed. People who invest in the stock market got scared and began selling all of their stocks being afriad that the U.S. stock was also going to crash. This was a big decline but it wasn't a huge drop as the Great Depression because it was only for a day and some stocks are already begining to come back up. I think this would be a good time to start buying some stocks that have had their prices dropped because eventually the stock price will go back up again.

Insider Trading Scandal - What Happened?

There was an insider trading scandal that was caught on Wall Street. About 13 people were accused of insider trading. This ring or people started around 2001 when two people were talking about a debt they had. They would tell each other about when the stock market was going to either upgrade or downgrade stocks for those with hedge funds. They would also talk about potential mergers and acquisitions. These people worked for 4 different banks, Morgan Stanley, UBS, Bear Stearns, and Bank of America. There were also some traders that were blackmailed to keep quiet about the scandal that was going on. Obviously this was illegal because these people worked for the banks and knew about every little information that the bank was going to do so they knew when to invest more money in to make some more money.

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