The Primacy Of Capital Market
The Primacy Of Capital Market
The economic crisis of 2008 actually could have been avoided if the flow of funds to spur supply housing sector using the instrument-based financial stocks and/or bonds. Not to rely on the means of derivatives. Both the stock and bond instruments have advantages, i.e. in terms of transparency. Whereas the instruments do not yet have a standard raw derivatives in terms of transparency. Similarly, the rules applied in the world capital market and bond market so tight, so everything works under the law or
In addition, the level of efficiency and productivity of the housing sector that was built through the market mechanism is much better and more secure than other markets. Consequently, the pool of funds from the capital markets are really creating a sufficient economies of scale. Thus, a banking capital markets use the funds effectively for the construction of the housing sector is not only going to produce an efficient source of funding but also able to give a very broad impact follow-up.
Other advantages of the construction of the housing sector-based capital markets is no terpsichorean in capital and production factors in the effectiveness of the use of capital thus increasingly effective and efficient. An almost homogeneous price conditions could be kept and maintained in the housing market-based capital market.
Here’s what could avoid the housing industry from economic bubble or bubble. It supported again by the Konstantine between house prices and the stock price of the property sector. Antisepsis condition can occur when the stock price drop property does not run with the price of the property itself so that it requires intervention to prevent the occurrence of the condition of the market bubble.
Kahneman and Tversky (1974) reminds will risk in trading shares of transferability. Kahneman is finally getting the Nobel Prize in Economics. Stock trading in fact is the personification of the theory of Capital Asset Pricing Model (CAPM) where risk can be defined as the risk of the individual and systemic risk. Kahneman has finally received the Nobel Prize in Economics.
Housing Authority of China, for example, try applying the upper limit of the price of the House. That step is necessary when the economy of the people in the country – as seen from the per capita income — not yet in a position to take off as said by Rostow. Or when the lack of income per capita is also very wide. That’s what’s forgotten by the authorities of housing in the United States.
Productive Assets and Financial Innovation
Productive assets
Another example of financial innovation is to have as many assets consumptive than productive assets. Have you seen the merchant who lived in a Shop house, where the bottom floor is used for trade, while the upper floors used as a residence?
That is, a place of business and residential into one. In other words, the merchant houses are not just houses, but has become a productive asset that can generate money, aka the place to do business. What about you? Perhaps you have the house for more than one. And you do not live in the house every month instead drain your pockets because it must pay the cost of electricity and other maintenance costs. In fact, housing conditions continued to decline due to aging and so forth. Concretely, some houses you have not only not productive, but instead become a burden. Therefore, the house must underproduction, in the sense of providing an income, such as leased to another party.
In addition to the house, try to see again those resources you have. Pay attention to whether the asset is an asset just as consumptive, or a mere tool to maintain prestige, or is quite productive. If you have gold jewelry whose value increases, the jewels belonging to the productive assets that can increase your wealth. So also with paintings whose value could be increased. In summary, productive assets are assets that have investment value.
Financial innovation can also be done by way of selection of appropriate investment. Understanding the right investment here is how to send your money “work” for you. So, money making money. How do I? Do the active investment.
Investment is active on a regular basis to select and evaluate investments that have been done. In capital markets, for example, some people buy stock, then keep holding it in a long time, with the hope of obtaining dividends and capital gains. It’s not wrong. However, in this period, could have held the stock price decline in price. Among those who hold these shares may not care or even sell it for fear that stock prices will further decline.
The Money to Make Money
Investment is one of the most effective way to achieve financial prosperity. In fact, through investment, a person can send money “work”. So, the money to make money. You’re not looking for money, either as workers or entrepreneurs.
That is why someone who should be setting aside some fixed income fixed income to invest that in the future, when in question does not work anymore, still have an income through investment returns. It is the ideal situation investing.
However, in reality, the investment could also make a person lose the prosperity that has been owned. How so? Yes, because the investment also has a dark side associated with personality (personality) a person. Therefore, this paper will discuss some of the dark side so that you avoid the problem in investing.
First, the yield of the trap. There are a thousand and one choice of investment, both in financial markets and real sector. From the sensible to the insane. But for some people, which is used as the indicator is a large yield. That is, if the investment promises lucrative profits, many people who would be interested. In fact, the yield must be accompanied by a big risk too great.
Therefore, in investing, which should be seen not offer investment returns, but how the target return on investment that you want to earn. By custom, if you can earn investment returns twice the rate of inflation, it is considered good. Concretely, if the rate of inflation of 7 percent per year, return on investment of 14-15 percent per year has been very adequate.
Second, the “greed” investment. You would never hear someone who has suddenly become wealthy through stock investments, but then suddenly all become poor again. Why? Only one answer, ie greedy. When a person invests his chosen stocks and shares already reaping capital gains, is likely to begin to be interested in other stocks, which do not necessarily have a good fundamental performance. Other stocks that move was triggered by the price because of market sentiment or ‘fried’ “by dealer stock.