The Fed's ability to raise and lower short-term interest rates is its primary control over the economy.
— Alex Berenson
Microeconomics is the study of how specific choices made by businesses, consumers and governments affect the markets for different goods and services. For example, a microeconomist might examine how price changes affect sales of apples relative to oranges.
From 1983 to 2000, William Goren stole more than $30 million from investors on Long Island and in Queens. His favorite targets were widows and retired couples, like Helga and Simon Novack, Holocaust survivors who gave Mr. Goren their life savings.
To economists, prices serve as crucial signals to producers and consumers. In a regulated market, the state sets prices high enough for private companies to cover their costs and earn a guaranteed profit for their investors. But in a deregulated market, prices should vary with demand and supply.
It has been said that the Fed's job is to take the punch bowl away just as the party gets going, raising interest rates when the economy is growing too fast and inflation threatens.
Big companies, which spend tens of billions of dollars annually on 'call centers' to take orders and provide customer support, increasingly rely on speech recognition not just to handle requests for information but to process customer orders.
For value investors, General Motors is a tempting target. The company's share of the North American auto market has steadily declined for two decades, and analysts say the company suffers from weak management and unexciting cars.
Higher productivity enables companies to increase sales without adding workers. Even if job markets tighten and wages rise, corporate profits can continue to climb as long as worker productivity is growing faster than overall wages.
With 950 reporters and 79 bureaus, Bloomberg competes to break news with Dow Jones, Reuters and Bridge News along with newspaper Web sites, dozens of smaller Internet sites, and even gossipy chat rooms.
To finance deficits, the government must sell bonds to investors, competing for capital that could otherwise be used to invest in stocks or corporate bonds. Government borrowings raise long-term interest rates, stifling economic growth.
Big swings in the wholesale price of electricity are not unusual in the summer, when high demand taxes generators' ability to supply power.
Many newly public companies are able to post a year or two of strong sales growth off a small base, but their growth almost always slows over time, thanks to what investment professionals call 'the law of large numbers.'
The notion that employees and companies have a social contract with each other that goes beyond a paycheck has largely vanished in United States business.
Don't expect Barton Biggs to be offering his market insights on 'Bloomberg News' anytime soon. His plumber, maybe.
Never underestimate the power of Abby Joseph Cohen.
Would-be drug companies must either produce medicines that stand up to federal scrutiny, demonstrate that their data has value to other companies, or go out of business.
For decades, Wall Street has charged companies a standard fee of 7 percent to sell their shares to the public.
The difference between microeconomics and macroeconomics is a bit like the difference between biology and medicine. Knowing that certain genes increase the risk of cancer is relatively easy. Figuring out exactly which people will get sick, or how to cure them, is a lot more complicated.
Economics pretends to be a science. Its practitioners fill blackboards with equations and clog computers with data. But it is really a faith, or more accurately a set of overlapping and squabbling faiths, each with its own doctrines.
Lower interest rates are usually considered good for stocks because they lower the cost of borrowing and make bonds a less attractive alternative investment.
As the Nasdaq soared in 1999 and early 2000, demand for many offerings far exceeded the supply of shares available at the initial offering price.
Technology investment drove growth in the 1990s, both directly and by fueling a rising stock market that led to increased consumer spending.
Automated call centers are only the most obvious way speech recognition will be used. The software is now becoming sophisticated enough to identify speakers through 'voiceprints,' akin to fingerprints, eventually reducing the need for personal identification numbers.
Business cycles lengthened greatly during the 20th century, as central banks learned to manage national economies by raising and lowering interest rates.
African runners regularly work out in the United States and Europe, and the International Olympic Committee sends some of the cash from the Games to Olympic committees in poor nations, which use the money to finance their own programs.
The biggest profit center for investment banks is the hefty fees they charge for underwriting stock offerings and giving financial advice, and analysts put those profits at risk if they publish negative conclusions about the companies that pay the fees.
When all the plants in a region are running at full steam, there is simply no way to get more power.
Electronic communications networks match trades between investors directly, without using a market maker or specialist as an intermediary.
At any moment, one company stands in the spotlight of the middle ring in the stock market's never-ending circus. It may not be the biggest corporation in the world, or the most profitable, but somehow it both mirrors and leads the market's broader action.
Big companies often use their leverage to take stakes in would-be suppliers, especially in the technology business.
Hedge funds try to produce above-average investment returns using tactics ranging from traditional stock-picking to complex derivative and arbitrage plays. High minimum investments, redemption restrictions and aggressive strategies make them suitable mainly for more sophisticated and well-heeled investors.
America Online, of course, is a master of the hard sell, from stuffing mailboxes with free trial offers to forcing subscribers to click through ads before they can get their e-mail.
If only the human body could handle trauma as well as biotechnology stocks do.
It's no secret that big institutional investors have a lot of advantages on Wall Street. They get the first chance to buy hot initial public offerings. They get to meet in person with companies' managements.
Macroeconomics is the analysis of the economy as a whole, an examination of overall supply and demand. At the broadest level, macroeconomists want to understand why some countries grow faster than others and which government policies can help growth.
In a Ponzi scheme, a promoter pays back his initial investors with money he has raised from new investors. Eventually, the promoter can no longer find enough new investors to pay off the people who have already put up money, and the scheme collapses.
One of the Internet's highest-profile companies, Priceline once dreamed of transforming the way consumer goods are bought and sold by offering customers the chance to 'name your own price' for a variety of products, including airline tickets.
Big fund companies have many ways to increase the returns of young funds that they want to promote. And at least one of those games involves popular offerings.
Short sellers sell stock they have borrowed, hoping to buy it back later when its price has fallen.
The stock prices of networking equipment companies like Cisco Systems and Nortel Networks sometimes seem as if they are priced for perpetual success.
Individual income can grow only as fast as productivity rises.
Financial news services and other media organizations get press releases 15 minutes before they are distributed to the general public, fueling a furious competition among the news services to rewrite them for their subscribers during their window of exclusivity.
It is a truth universally acknowledged on Wall Street that original research is on life support. Serious research can be bad for business, as well as expensive.
For as long as anyone can remember, reliable, cheap electricity has been taken for granted in the United States.
As they grow, companies saturate their markets, become more complex and difficult to manage, and face larger and more entrenched competitors.
For chat-room tyros who expect to make their first million day-trading by age 27, paging through the Sunday newspaper with a pair of scissors just to save a couple of cents on Cheetos seems so, well, old economy.
A vote of confidence from Cisco Systems can be very important to fledging technology companies, especially if they have initial public offerings on the horizon.
Volatility may be rising simply because investors must digest more information every day.
Generally, a rally will have staying power, technicians say, if, in addition to price movements, it has heavy trading volume and breadth, meaning that several stocks rise for each stock that falls.
While Wall Street firms typically underwrite offerings in teams, the lead underwriter, or manager, of the offering has primary responsibility for selling the offering and reaps much of the fees and profit.
