Investing in Stock Market - Research Proposal Example

University

Introduction

Stock market is a place where shares of different firms are traded between buyers and sellers. On the face of it, this looks a simple trading activity but it is not. For example, stock investment requires considerable amount of information, knowledge and understanding of risk factors and most importantly decision making rules which must be supported by the technical and non-technical aspects of stocks. Additionally, for a new or potential investors, it is not possible to enter into a stock market and start participating in the stock trading activities because there are various stocks which look highly lucrative but their technical and non-technical aspects do not support their long-term lucrativeness.

Problem statement

Investing in the stock market has become a complex process because of the involvement of various factors, such as stock’s internal and external information, influence of systematic and non-systematic risks and other market and non-market influential factors.

Research questions

What are the technical challenges for investors before investing in the NYSE?

What are the methods to handle the technical challenges?

What are the identifiable steps for reducing the negative effects of technical challenges before investing in the stock market?

Budget

It is expected that this project will require $1000 budget which will be consumed for satisfying the objectives of this technical document paper. For example, publication fee, interview processing, data collection, and other factors justify the mentioned budget.

Timeline

This technical document project will be completed in three months. In the first month, data will be collected through interviews from brokers, institutional investors, small and ordinary investors from New York Stock Exchange. And it is expected that the publication of technical paper will take two months.

Conclusion

Investing in stock market has become a new field for various potential investors. Investing is not a mere activity but it has become an art and that art must be learnt before going to practically enter into a stock market. However, there is no specific place where this particular art is formally or properly taught. Because of this situation, new and small investors are unable to materialize the potential benefit from investing. Thereby, the NYSE loses potential benefit from new investors. More specifically, this gap can only be filled out by providing accurate information to potential new investors.

Recommendations

Technical information and technical methods should not be prerogative of particular investors but they should be shared with other existing and potential investors. It has been observed that the institutional investors do not share technical information with other investors and prefer to restrict the access. Because of the limited access to the technical information relating to investing strategies, the new and potential investors find it hard to maximize its returns. Thereby, it is highly recommended that the institutional investors and other large investors are encouraged to share technical information and strategies with the new investors as they would collective improve the performance of NYSE.

Proposed technical document draft

Stock investment has become an art. This art can only be learnt through knowing fundamental and technical analysis of information relating to stocks. Theoretically, both technical and fundamental analysis can be easily understood and taught as well. However, on the ground, they are highly complex as the real data does not support the perspectives which are mostly highlighted by the theoretical data. As a result, this situation makes investing more challenging than ever before.

Institutional investors and ordinary investors have no similar investing pattern in their routine structure. Both adopt different investment strategies, philosophies, technical and fundamental analysis of stock information. Consequently, this situation creates a strategy gap between institutional investors and ordinary investors. Moreover, because of this strategy gap, institutional investors reap more return than the small and ordinary investors. And the prime objective of this technical document paper is to collect the relevant data and convert into the proposed technical document which can be easily read, understood and implemented by small and ordinary investors.

Table 01: NYSE 2015 Stock Performance

Source: (Yahoo Finance, 2016).

Changes in the stock activity clearly represents that the NYSE has not been stable and consistent during this period of time. In the month of January 2015, the NYSE was around 10,500 points. Subsequently, this level touched the mark of 11,200 points at the end of second month, clearly showing that the stock market has gained 6.67 percent in a single month. This shows that the stock exchange has almost satisfied a common perception relating to the increase of stock market in a single month. On this basis, it can be easily deduced that even a new investor can easily be attracted by this level of increase and he will be willing to invest in the stock exchange. However, the subsequent month’s changes do not agree with the perspective. For example, In the month of march, the NYSE decreased to 10,900 approxmatively. In other words, reduction of 2.7 percent was recorded in a single month. When the findings of this period are compared with the previous year’s growth percentage, it can be easily deduced that there is no stable and consistent increase in the stock exchange while accounting for change in both months. In the month of April, the NYSE touched the mark of 11,100 points, showing an appropriate increase in the stock exchange in the current month. When this figure is compared with the previous year’s figure, the subsequent results reveal that 1.8 percent increase has been made by the NYSE. This increase is considerably smaller and insufficient to satisfy the expectations of many current and potential investors. In this regard, it is relevant to mention that the NYSE has been volatile in this period by not developing and retaining an appropriate pattern in its activity. This situation clealry indicates that the NYSE has not been able to record above-expectation growth in the current period.

At the same time, it is worth highlighting that globally financial conditions are largely stable as unemployment has been steadily diminshing, inflation rates are generally stable, consumer confidence has been reflecting an unchanging pattern. Under this situation, it should be assumed that the stock markets should generate more volumes and gain more points during this stable financial and economic global period. However, on ground, the reality is totally different.

It is generally believed that investing in the stock market is not difficult but it is a simple investing activity as one only requires the services of brokers and completion of certain other formalities. However, these are only some aspects of investing in the stock market and the most important areas include evaluation and understanding of stock market performance and application of similar measures on certain stocks are some of those aspects which are of pivotal importance. Based on the general expectations and overall market participation, the whole investing process has not been fully understood by many including the small investors as well. Within this context, it is worth highlighting that the above mentioned table clearly indicates that there is no stable pattern in the NYSE in the previous year. This unstable volatility is not only present in the first six months but also in the last six months as well. More specifically, at the beginning of 2015, the NYSE was at 10,500 and it touched 10,180 at the end of 2015. A closer analysis of this period clearly highlights that the NYSE has experienced a reduction of 320 points in the year by showing a decrease of around 3 percent in that year. Based on this situation, it can be deduced that the NYSE has failed to show an impressive performance instead it has experienced reduction of points. In other words, for new and small investors, investing in the NYSE is and will not be a simple and easy strategy as no one will be ready to bear the loss on investment. Under this situation, it is the prime objective of this proposed technical document is that the new investors should be given an opportunity to know and understand the technical areas of investing in the NYSE and this can only be done through providing concrete and effective information relating to the investment. And this can only be done through conducting primary research and interacting with active and experienced investors, stock brokers and other important members of the NYSE and subsequently collecting the required data. At the same time, it is worth insisting that the simple assessment of NYSE clearly indicates that investing has become an art and this art can only be mastered through having accurate, reliable and practical information.

The proposed technical document will also put light on those investing issues which are normally faced by the ordinary and small investors. Since small investors do not have much access to quality information and quality investing strategies, this proposed document will enable them to reap maximum benefit from the potential stock investment opportunity.