The Bull Hunters Guide

Hello Fellow Bullhunters

Today I will take another excerpt from the eBook The Bullhunters Guide to the US Stock Market and discuss with you one of the averages that makes up part of the DJIA.  In general the Dow 30 stocks can be broken down into the five groups: Industrials, financials, cyclicals, consumer non-cyclicals and technology.  The Industrials is what we are looking at today.

Although the idea of Dow Jones Industrial Average industrials may seem redundant, the fact is that the term industrial average is a bit outdated.  Long ago Charles Dow created several averages to simplify market watching.  At the time, it was the Dow Jones Transportation Average that mattered most - this is the age when railroads ruled.  Over time the importance of manufacturing has lessened so instead of allowing the DJIA to become obsolete the Dow Jones company (which owns The Wall Street Journal, Barron’s and SmartMoney magazine) decided to make it more inclusive.

General Motors (GM) is the industrial of all industrials.  It used to be said As GM goes, so goes the United States.  Well fortunately for the USA that is no longer the case.  Generally industrials do well when the economy is good and do poorly when the economy is bad.  This makes them cyclical stocks.  But GM’s problems are of a more secular nature meaning they are not entirely related to the business cycle.  As the largest corporation in the world for several generations, GM grew arrogant.  It made cars that nobody wanted to drive and made promises to its workers that were financially unsustainable.  Once unthinkable the very existence of GM into the future is in doubt and its credit rating has been lowered to junk status.

In reading this little piece of the eBook, we can form an opinion of the Industrials.  Being that they are clycical stocks these companies do best when the economy is in the early stages of the business cycle. Most companies are cyclical.   But GM’s problems as we see here were drawn out over a longer time-frame making it a secular trend rather than a business cycle.  The  five stages of the business cycle are growth, peak, recession, bottom (or trough), and recovery.   They are predictable cycles of economic activity that repeat over time.

I don’t know about  you but the more I read the more I learn.  Every time I go over a section of the eBook I pick up something new.  It’s like that with anything that you study.  You may hear or read the same thing over and over again until one day the penny drops and you retain some more information.  If you haven’t yet downloaded your very own copy, please do so now so that you can read it at your own leisure and revise it in here with me.

Stick with me on this as I know that if I am learning you certainly are too.  It’s all good.  By the time you are ready to trade on the US Stock Market you will have plenty of background into how it works.

Yours in prosperity

Angela Recchia
Graduate Support
Universal Wealth Creation © 2004 - 2007

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On May 26th 1896 Charles Dow first introduced the industrial stock average we know today as the Dow Jones Industrial Average. This was a time when the stock market was not highly regarded and Investors were more likely to invest in bonds rather than stocks.

In today’s world we regard the stock market as a vehicle which when used with some guidance and self-education can provide us with a source of regular income.

The Bull Hunters Guide to the US Stock Market gives us an insight as to how the market works. When Sean Rasmussen authored this eBook he provided us with an understanding and a very useful tool to guide us through the jungle of what makes up the market and its day to day workings.

We know that there are 30 stocks that make up the DJIA and then these 30 components are split into a further 5 groups: Industrials, Financials, Consumer cyclicals, Consumer non-cyclicals and Technology stocks.

After yesterday’s drop of almost 200 points, there had been speculation prior that the bullish rally would have a correction which was due to low trading volume and more volatility.

Those of you who are interested in learning more about how these stocks shape up and follow the US Stock Market I found this great website at stocktrak.com where you can sign up for an account for a nominal fee depending on if you have delayed prices which seem sufficient to practice with, or real prices.

Remember for those of you not in the US the market may be open in our sleep time.

StockTrak is the webs most comprehensive trading simulation tool and is used by 80% of the top business schools in the US every year to teach students how to trade on the stock market.

As individuals wanting to learn this instrument it is a very educational way to place trades and start practicing how to trade options – one of them being renting shares.

If you are a return visitor to the Bullhunter blog tell us what you think of the stylish new look. Does it work for you? Is it simple to follow and easy to find previous articles? Sean is busily working on the next installment to his first eBook and I know there are some of you eager for it to surface so that we can get stuck into the nitty gritty of real live trades. Keep charging Bullhunters until next post.

Angela Recchia
Graduate Support
Universal Wealth Creation © 2004 - 2007

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