Blog Posts

Let’s look at some of the most abstract concepts in finance, trading, and investing.   Key Takeaways – Most Abstract Concepts in Finance, Trading & Investing Strategic vs. Tactical Asset Allocation: Strategic asset allocation is a passively-held, well-diversified portfolio, while tactical asset allocation involves active tilts and trading. Tactical trading is hard and often leads […]

Investment banking target schools are the college and universities that are commonly “feeders” into top investment banks. Many investment banks recruit heavily at these schools because they’ve tended to provide good talent in the past or because current people working there/key decision-makers went to these schools. Below we have a list of popular investment banking […]

We trade because we expect that it’ll earn us money. Except when you have a poor day, week, or month in the markets it seems like the markets are maybe the easiest way to lose money. Losing money in the markets teaches us expensive lessons on how to improve by doing things differently. One of […]

Falls in equity markets and the general anatomy of a bear market and their bottoms typically occur in a sequence.   3 Factors That Determine Equity Returns There are three main factors in terms of decomposing equity returns:  discounted earnings (cash flows) discounted interest rates, and  risk premiums Risk premiums are simply the type of […]

Hyperinflation refers to a situation in which goods and services inflation is very high and typically increasing in a non-linear way. It’s important for traders to understand the phenomenon because it can and will show up in some markets and can ruin entire investments. During hyperinflation, the real value of the currency declines. People who […]

In economics, a “trilemma” describes a situation where three competing elements are present, and a solution necessitates choosing two, forsaking the third due to their mutual exclusivity. Pursuing all three usually results in instability or inefficiency. This concept is applicable in various fields including healthcare and currency management policies. In currency management policies, policymakers must […]

Comparable company analysis – also called “trading comps” or “comps” in finance lingo – is another business valuation method to choose from among discounted cash flow and precedent transactions modeling. (A leveraged buyout is also technically a valuation method as well but is more specialized toward private equity firms rather than investment banking.) It is […]

The yen is typically thought of as the most notable safe haven in the FX market. That’s one of the first things an FX trader learns about the market. There are a few main arguments why the Japanese yen is considered a safe haven: i) Japan has a positive net foreign asset position. This means […]

The volatility risk premium (VRP) pertains to the compensation traders earn from insuring against market losses. This typically involves selling options and/or other derivatives to other traders and investors to protect against the downside exposure they have in their portfolios. To incentivize traders to underwrite these products, options tend to trade at a premium over […]

We look into the determinants behind “risk-free” government bond yields. At its core, bond yields are shaped by a trio of elements: The prevailing short-term interest rate Anticipated future interest rates A term premium While sovereign credit risk plays a role in many nations, for the scope of this discussion, we’ll set it aside, focusing […]