Dow down 416 pts! - Why

Over the weekend, Chinese Investors began to sell their stocks because they were concerned that the government would increase the interest rates, in an attempt to slow down China's fast-paced economy. China produces most goods used in America today. For this reason, "the U.S. and Chinese economies have become co-dependent on each other." Therefore, the U.S. investors followed the trend and began to sell their stocks.

All of these famous declines were caused by big sell-offs. The Dow dropped about 90 percent during the Great Depression, about 22 percent in 1987 and about 9 percent during the 9/11 attacks. In my opinion, I think it is best to buy a good amount of stock now that the stocks are low because in a way, there is no where to go but up. The stocks have become very cheap lately so if enough people start buying stocks again, the value of the stocks will rapidly increase. Therefore, I am going to buy a few penny stocks.

Opportunity Costs

When economists talk about opportunity costs they are talking about the sacrifice a person is making when making a decision. This can be illustrated when looking at the stock market. For every stock a person buys, the amount of money they have to spend on other stocks decreases.


Opportunity costs are the things a person gives up when making a decision. This opportunity cost can be, but is not limited to monetary values. For every decision a person makes, there is alternative decision (opportunity costs). For example, if a high school has $10,000 to spend however they choose, and they decide to spend it on textbooks for AP classes, the opportunity cost would be not being able to spend the money on other items for the school. Another example would be a person decorating their bedroom. Let's say there is a lovely view of the lake through the window and the decorator decides to put a chair next to the window, the opportunity cost would be not being able to put the bed next to the window and see the view when they're going to sleep. An example of oppportunity cost in my life would be getting a job. If I get a job, I will have to work the majority of the work week adn weekend. My opportunity cost would be not being able to stay in the Dance Company and not being able to join the Outdoor Track team.

Types of Economic Systems

Traditional Economies
An economic system in which the decisions are based on the customs, beliefs, religions and etc.

Centrally Planned (Command) Economy
An economic system in which all decisions concerning the production and distribution of goods are made by the political representatives.

Market Economy
An economic system in which the decisions are made by individual businesses and consumers.

Mixed Economy
An economic system in which the decisions are made by both private and public companies.

What is the difference between communism and socialism?
In a communist society, the productions of goods relies solely on the labor of the common people. Therefore, the economy relies completely on the labor of the common people, who work for the "common advantage" rather than personal gain. Although communism and socialism are relatively the same, socialism is based on the production of goods by social need and other factors that nature, while communism is based on the production of goods through common labor for a common benefit.

Stock Market Game - 1 - Initial Investment Strategy

I plan to buy a lot of small stocks that are on the rise because they have a lot of potential to expand. I want to buy approximately 2-3 micro caps, 1-2 small caps and 1 medium cap. Hopefully, there will be a large variety of micro cap technology companies to buy stocks in.

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