What is "Depression"

The Great Depression didn’t happen overnight, It was caused by a whole bunch of factors including deflation where money is not worth as much as it used to be, A decline in trade this is important because if no one is buying our goods then we cannot make money.

The Great Depression of 1929 to the late 1930s was the largest economic downturn in the history of the modern world. Although capitalism's boom and bust cycle has been producing a bust roughly every decade or so since the early 19th century, this was the worst.

The Great Depression was an economic collapse that began in the United States in 1929 and spread across the globe, lasting for much of the 1930s. During the Great Depression, millions of Americans lost almost everything they had: their jobs, as the economy contracted; their investments, as the stock market plunged; and their savings, as bank after bank failed.

The Great Depression was the most severe economic crisis in U.S. history. And even before it had ended, journalists, historians, and especially economists were trying to put together the pieces to figure out what exactly had caused it.

Today, more than three-quarters of a century after the Great Depression began, its causes are still the subject of much debate.

The term depression is usually defined now simply as an economic downturn that is longer lasting and more severe than the more frequently occurring recessions. Sometimes, in order to define the term more formally, a depression is said to begin when GDP declines more than 10% from the most recent economic peak. By this criterion, the last two real depressions in the United States occurred:

•  From 1929 to 1933—the Great Depression—where US GDP declined by nearly 33%   and unemployment rose to 25%. 
•  In 1937-38, where GDP declined by more than 18% and unemployment reached 19%.

By contrast, US GDP declined at most 5% in the severe recession of 1973-75.

In general, periods of economic depression are characterized by greatly reduced GDP, as well as severely high measures of unemployment, foreclosures, business closures, and greatly reduced wholesale and retail sales activity.

Define "Boom Market"

A boom refers to a rising financial market. Another term for boom would be a bull market. Period that follows recovery phase in a standard economic cycle. A boom is characterized by an economy working at full or near-full capacity, strong consumer demand, low rate of unemployment, and a rising stockmarket, usually accompanied by rapidly increasing consumer prices (inflation).

Although the stock market has the reputation of being a risky investment, it did not appear that way in the 1920s. With the mood of the country exuberant, the stock market seemed an infallible investment in the future.

During a stock market boom the majority of stocks rise in price and there is often a euphoric feeling about the market. A boom market does not necessarily refer to the stock market as a whole. As more people invested in the stock market, stock prices began to rise. This was first noticeable in 1925. Stock prices then bobbed up and down throughout 1925 and 1926, followed by a strong upward trend in 1927. The strong bull market (when prices are rising in the stock market) enticed even more people to invest. And by 1928, a stock market boom had begun.

The stock market boom changed the way investors viewed the stock market. No longer was the stock market for long-term investment. Rather, in 1928, the stock market had become a place where everyday people truly believed that they could become rich. Interest in the stock market reached a fevered pitch. Stocks had become the talk of every town. Discussions about stocks could be heard everywhere, from parties to barber shops. As newspapers reported stories of ordinary people - like chauffeurs, maids, and teachers - making millions off the stock market, the fervor to buy stocks grew exponentially.

Although an increasing number of people wanted to buy stocks, not everyone had the money to do so. 

Individual sectors of the market can have explosive boom periods of high, often unsustainable growth, such as the boom in the dot com sector during the late 1990s.

The opposite of a boom period is known as a bust, and many sectors of the market traditionally have boom and bust cycles. Substantial profits can be made during a boom cycle of the market, but, similarly, fortunes can be lost when the boom ends and the prices of stocks fall.

When to buy stocks either during "Bullish" or "Bearish"

While many investors fall into one of the two categories, and tend to follow their pattern of investing, regardless of actual market conditions, bull and bear markets go in cycles.

Eventually, every bull market phase will peak, and reach a market top or a stock-market bubble. This peak is not usually a dramatic event. People are naturally unaware at the time that the market has reached the highest point it will for a few years.

A decline then follows, beginning a bear market phase. The decline is usually gradual at first and then gains momentum. A market bottom is when the market reaches it's lowest point. This signals the end the downturn, and precedes the beginning of an upward moving trend or new bull market phase.

It is very difficult to identify the bottom, or end of the downturn, while it is occurring. An upturn following a decline is often short-lived, followed by a resumed declining of prices. This can bring losses for an investor who purchases shares during a "false" market bottom, and must then sell them at an even lower price due to insufficient liquidity.

Some people believe that recognizing bull and bear markets is a key way to make money on stock trading and investing. The basic principle for profiting from trading is to buy low and sell high. One way to do this is to buy stocks in a bear market when the prices are low and sell stocks in a bull market when the prices are high. However, recognizing the best times to buy and sell is not that much easy.

It's tough if not impossible to predict consistently when the trends in the market will change. Part of the difficulty is that psychological effects and speculation can sometimes play a large (if not dominant) role in the markets.

Many investors sell in a bear market, either because they become too emotional about trading and don’t want to risk bigger losses, or they don’t have the liquidity to hold onto their investments while awaiting a market reversal.

If a large number of investors are fearful and pessimistic during a bear market, they are likely to contribute to further declines by “panic selling.”

Conversely, the optimism and increased trading that occurs during a bull market serves to boost investor confidence. The increased liquidity results in higher volumes of trading, further raising the prices of stocks.

Ways to Profit in Bull Markets

A bull market occurs when security prices rise faster than the overall average rate. These market types are accompanied by economic growth periods and optimism among investors.

New investors often assume that they need to avoid investing during bear markets, and invest heavily during bull markets. This is not the case. Experienced investors know that you need to be able to invest in any sort of market condition, provided that you do so wisely. Each investor has a different strategy for dealing with a bull market or bearish markets. 

Many investors try to take advantage of bull markets by buying stocks as soon as the market gets bullish, and then starting to sell when prices seem to have reached their peak. The difficulty, of course, is that it is almost impossible to tell when the trend is beginning and when it will peak. In general, investors can take more chances with the market during a bullish phase. Since overall prices will rise, the chances of making a profit are good.

Ways to Profit in Bear Markets

A bear market is defined as a drop of 20% or more in a market average over a one-year period, measured from the closing low to the closing high. Generally, these market types occur during economic recessions or depressions, when pessimism prevails. But amidst the rubble lie opportunities to make money for those who know how to use the right tools.

In bearish market conditions, prices are falling and the possibility of loss is pretty good. What is worse, it is not always possible to tell when bearish conditions will end. Therefore, if you invest during such market conditions, you may have to suffer some losses before bullish times return and you're able to realize a profit. For this reason, many investors decide on short selling or fixed income securities and other more conservative types of investment. 

Defensive stocks are another good option that remain stable during bearish conditions. On the other hand, some investors see bearish market conditions as an ideal time to invest in more stocks. Since many people are selling off their stocks -- including valuable blue-chip stocks -- at low prices, it is possible to set up long-term investments that will prove valuable during bullish times.

While every investor loves to see the upswing in prices during a bull market, the wise investor will be able to handle a bear market as well. Whether you are just beginning to invest or are an experienced investor, learning to deal with various market conditions you neen not panic but decide patiently on investment.

The best way to make money, regardless of the cycles of bull and bear markets, is to create a varied portfolio of investments, and to maintain sufficient liquidity to ride out the tough periods without needing to resort to panic selling.

What is "De-Listing" of Stocks

Delisting is the process by which a company's shares are taken off the stock exchange and trading in its shares stops thereafter. According to a Securities and Exchange Board of India (SEBI) directive, at least 25 per cent equity shares of a listed company must be held by the public. A company that wishes to delist must buy back shares from the public. This buyback is done through an open offer. Promoters must acquire at least 90 per cent stake to delist. The outstanding shares are purchased in the open market at a fixed price.

A delisted stock is no longer traded on a major stock exchange. Corporations sometimes voluntarily withdraw their stocks; in other cases, government regulators force a stock to delist. Regardless of the reason, delisting a stock has consequences and, in some rare cases, benefits.

Delisting can happen on two situations and can be done by the stock exchange or by the company itself. If it is done by the stock exchange then it is called compulsory delisting and if it is done by the company itself it is called voluntary delisting.

In the case of compulsory delisting, the stock exchange might remove the shares of the company if it finds that there is a breach of, on the part of the company, the legal requirements of the stock exchange. This has got its own process.

In the case of voluntary delisting, the company voluntarily would decide to go for delisting and remove its shares off the stock exchange. This is a lengthy process because the interests of the shareholders are involved. The voluntary delisting requires the mandatory meeting of all regulations including approval from board members, providing an exit opportunity for all public shareholders at a price quoted by them, and in-principle approval from the stock exchange among others.

What is "Listing" of Stocks

All exchanges have initial listing requirements that companies must satisfy before they can be listed on a particular exchange. and traded there, but requirements vary by stock exchange:
Since an exchange makes money by charging commissions or fees on trades, most requirements are designed to ensure that a certain amount of trading will occur in the company’s shares. In most cases, larger companies have more trading activity, and so several requirements are related to ensure a minimum size. The most common requirements are a minimum market value, a minimum income and revenue, a minimum number of shares outstanding, and a minimum number of holders of public stock.

Although most stocks listed on an exchange are listed stocks for that exchange, an exchange can list the securities of any other exchange, if it so chooses. To increase pricing competition, the Securities and Exchange Act of 1934 contains a provision referred to as unlisted trading privileges (UTP) that allows any exchange to list any securities listed on any other exchange.

•     Bombay Stock Exchange: Bombay Stock Exchange (BSE) has requirements for a minimum market capitalization of Rs.250 Million and minimum public float equivalent to Rs.100 Million.

•     London Stock Exchange: The main market of the London Stock Exchange has requirements for a minimum market capitalization (£700,000), three years of audited financial statements, minimum public float (25 per cent) and sufficient working capital for at least 12 months from the date of listing.

•     NASDAQ Stock Exchange: To be listed on the NASDAQ a company must have issued at least 1.25 million shares of stock worth at least $70 million and must have earned more than $11 million over the last three years.

•     New York Stock Exchange: To be listed on the New York Stock Exchange (NYSE) a company must have issued at least a million shares of stock worth $100 million and must have earned more than $10 million over

Only members of an exchange may list and execute trades at the exchange. When a retail investor wants to trade an exchange-listed stock, he must go to a broker. If the broker is a member of the exchange where the stock is listed, then she can send her client’s order to a representative of her firm, who will then execute the trade. However, if her firm is not a member, then she will have to send the order to another broker or dealer who is a member of the exchange or to their representative at the exchange.

Buy or sell limit orders are entered into the system and crossed with matching orders. If there are no matching orders, then they are queued, first by price, then by date, as a bid or offer price. The list of all bids and offers constitutes the order book, and the current market quote is the best bid and offer.