Financial Markets
Financial markets perform different functions, including fund mobilization, information provision, and risk sharing, which allow different investors to buy or sell their respective financial instruments at fair market value. Investing in the stock market is one of the best ways to grow your money (Shu, 2019). The stock market’s value tends to rise, despite the fact that individual stock prices often vary. Investing in well-run companies that have the potential to expand pays off handsomely for investors.
As a result, financial markets provide a wide range of benefits, including liquidity, diversification, inflation protection, dividends, and ownership. According to historical statistics, stock markets have consistently increased in value over time, independent of the value of individual companies (Vijh et al., 2020). Over time, the investment will expand if the person invests in companies that have a regular development pattern (Wójcik, 2019). While securing the financial future is the main goal of investing, it is vital to keep a close eye on inflation. There will be no gain if inflation and the rate of return on assets are equal; hence the benefits will be negative.
Various pre-conditions are vital for financial markets to operate effectively. Financial markets provide a wide range of possibilities; investors and debtors benefit from financial markets because they provide a level playing field for all players. People, corporations, and government organizations benefit from their contributions (Wójcik, 2019). Due to the wide range of employment opportunities, financial markets help to reduce unemployment.
Primary and Secondary Markets
Primary and secondary markets have various economic benefits that encourage safety and security. In order to attract investors, exchanges have the incentive to prevent malicious activity under their control. Because exchanges have the incentive to attract investors by limiting dishonest behavior under their control, secondary markets increase transaction security and safety. When financial markets are more efficient and secure, the economy reaps its advantages. The economy’s efficiency is enhanced through the secondary market (El Wassal, 2013). Sellers and buyers believe that the security is worth less than the asking price.
Obtaining working capital for a firm is easy and inexpensive in critical marketplaces. Securities have a high degree of liquidity since they may quickly be traded on the secondary market. The primary market’s most important role is to make it easier for people to develop their savings through the process of investing (Wurgler, 2020). In order to raise capital from individual households for company development or debt repayment, it makes it easier for corporations to issue additional shares.
Stock Markets Memorandum for J&J
- To: Investors
- From: (Name of committee)
- Re: Stock Price Movement of Johnson & Johnson’s Company
- CC:
- Date: March 14, 2022
Consumer safety and corporate practices are at the heart of the thousands of lawsuits filed against Johnson & Johnson (J&J). These data worry many investors are hoping to invest in the company. One of the most prominent pharmaceutical companies is blamed for the current opioid addiction crisis. It is important to note that the company’s stakeholders include trade groups, patients, consumers, healthcare providers, local communities, as well as the government.
Founded in 1889, Johnson & Johnson is an American multinational pharmaceutical, medical device, and consumer healthcare firm. In six therapeutic areas: cardiovascular and metabolic illnesses, immunology, infectious diseases and vaccines, neurology, cancer, and pulmonary arterial hypertension, Johnson & Johnson Pharmaceuticals benefits patients all around the globe. Consumer Health Care also addresses individuals through over-the-counter drugs and consumer items.
Looking at the company from technical, financial, and investment perspectives is essential. The acquisition and sales cost of J&J constitutes 50 thousand dollars. J&J’s technical analysis of J&J includes oscillators, which hesitate from strong sell to strong buy. It is essential to notice that J&J’s oscillator indicates a strong buy within the last month, which shows its perspective (Ong et al., 2020). Other technical drivers, such as the Relative Strength Index and Momentum, are more likely to grow or stay neutral. Moreover, it is vital to look at the stock price of the company and its trends:
As seen, the stock prices of J&J are slightly increasing from month to month. Notably, there were no significant drawdowns in the price. Moreover, it is essential to note trends that make the company ambitious to invest. For instance, the trend for variety offers abilities for growth with a steadily growing dividend. Exclusivity allows J&J to stay exceptional in the global market. If to relate trends to the context, for instance, the newly appeared virus of COVID-19, it seems that J&J has become a popular investment tool. Because J&J offers a vaccine, people will acquire the company and be more likely to invest. The stock price of J&J will probably increase due to the inflow of new investors.
Numerous lawsuits against J&J have been brought since 2009, but it has settled every one of them with an American court. Several high-profile studies have looked at whether talc is a cause of ovarian cancer since 2013 (McGuinness, 2020). Talcum is a substance found in J & J baby powder and other goods. Ovarian cancer is the most dangerous complication for women who use J & J baby powder. Inflammation in the woman’s genital region, which may go undetected by doctors, may result from long-term usage of baby powder. At least six judgments have been handed out in Missouri courts, while the most significant verdict was handed down by a jury in Los Angeles last year.
Empirical-rational strategies are based on the premise that the best way to effect change is to educate people. This method assumes that people are rational and will take action when they recognize that a change will affect their lives. It may work well if the information is regarded as sensible or valuable to individuals (Henke et al., 2019). Normative-return strategies assume that people agree with societal norms that influence their willingness to embrace change. Behavior drivers like responsibility, beliefs, feelings and social communication may be used to improve patient healthcare facilities.
Starting with an honest assessment of requirements and resources, developing a solid foundation, and instilling a culture of honesty from the top down are the first steps toward strengthening J&J operations. A well-thought-out strategy is the foundation of every successful firm. Establish a comprehensive ethical and compliance program after the organization’s requirements have been established. There is always space for improvement in Johnson & Johnson’s operations program. It means the firm may be invested in since it has shown itself to be a successful business.
Reference List
El Wassal, K. A. (2019) ‘The development of stock markets: in search of a theory’, International Journal of Economics and Financial Issues, 3(3), pp. 606-624.
Henke, R. M., Goetzel, R.Z., McHugh, J. and Isaac, F. (2019) ‘Recent experience in health promotion at Johnson & Johnson: lower health spending, strong return on investment’, Health Affairs, 30(3), pp. 490-499.
McGuinness, P. B. (2020) ‘IPO firm value and its connection with cornerstone and wider signalling effects’, Pacific-Basin Finance Journal, 27, pp.138-162.
Ong, C. Z., Mohd-Rashid, R. and Taufil-Mohd, K. N. (2020) ‘Do institutional investors drive the IPO valuation?’, Borsa Istanbul Review, 20(4), pp. 307-321.
Shu, H. C. (2019) ‘Investor mood and financial markets’, Journal of Economic Behavior & Organization, 76(2), pp. 267-282.
Vijh, M., Chandola, D., Tikkiwal, V. A. and Kumar, A. (2020) ‘Stock closing price prediction using machine learning techniques’, Procedia computer science, 167, pp. 599-606.
Wójcik, D. (2019) ‘Geography of stock markets’, Geography Compass, 3(4), pp. 1499-1514.
Wurgler, J. (2020) ‘Financial markets and the allocation of capital’, Journal of financial economics, 58(1-2), pp. 187-214.