Blog Posts

A market neutral strategy involves selecting individual securities to buy and short-sell such that roughly equal amounts of money are both long and short the asset class. The market neutral strategy is typically applied to equities, given the vast selection to choose from. Though it can also pertain to other asset classed like fixed income […]

Making better decisions trading involves knowing how markets function and what they value. Markets are information discounting mechanisms. Where markets go is not based on what things are at face value but what transpires relative to expectations that are already built into the price. To better illustrate this concept, let’s first consider an example. On […]

Who doesn’t want to invest in the stock market and make a “full” passive income? Everyone in the markets, from individual traders and investors to institutional funds, has the goal of generating income with the least risk. For the sake of this article, we’ll assume a “full” income of $50,000 per year. We’ll also assume […]

Approaching trading from any narrow vantage point is difficult. Financial markets are a mix of different players with different motivations and different sizes. Some traders will use price levels and a mix of different indicators of where price and/or volume has been in the past. While markets can be responsive to those in a self-fulfilling […]

At the Federal Reserve’s 2020 Jackson Hole symposium, Fed officials announced a new way of managing inflation, now called average inflation targeting, or AIT for short. The market basically ignored the announcement, as it didn’t seem entirely consequential with any near-term effects. But arguably it’s a notable announcement. Two main forces influence markets at the […]

The Dow Jones is one of the most popular global equity benchmarks, dating back to the mid-1880s as a daily bulletin and 1896 in terms of its formal introduction as the Dow Jones Industrial Average (DJIA). The S&P 500 came around in 1957 and the more tech-themed NASDAQ in 1971. Yet as a point of […]

In this article, we’ll go through the general outlook for financial assets and factors related to the economy and portfolio construction. In particular, we’ll talk about bull markets primarily driven by central bank liquidity and how that builds leverage and risks into the system.   The three big forces There are three big forces and […]

There are a few main reasons why countries’ monetary policies move together. i) Business conditions are correlated internationally ii) Inflation rates and commodity prices tend to be correlated iii) Countries don’t want their currencies to get too strong or too weak relative to others, so the decisions of some countries’ central banks influence those of […]

Short selling, commonly known as shorting, is risky. When shorting a stock, your upside is limited to 100 percent (the value of the short); the downside is theoretically infinite as the stock can go up many multiples. Moreover, financial assets essentially “need” to appreciate over time to get the overall system to work efficiently where […]

What if deflation sets in and there’s not much that policymakers can do about it? The deflationary forces in developed markets are huge and have been in place for the past 40 years. This has been a huge wind to the back of asset prices (through the present value effect) that’s now more or less […]