Trading News

A Ponzi scheme and a pyramid scheme are both types of investment fraud, but they differ in their structure and how they’re carried out. A Ponzi scheme is a type of investment scam in which returns are paid to existing investors from funds contributed by new investors, rather than from any actual profit earned. The […]

The quality of a company and which financial, operating, investing, and business metrics to use to assess it can be subjective because it largely depends on its purpose. A for-profit company has a different type of purpose than a non-profit. In this case, we are going to consider the question from the vantage point of […]

Over the long run, an economy boils down to productivity. When we trade markets and invest our money, our goal is to generate income. That income, over the long run, is a function of productivity and is the biggest driving force of economies over time. In the near term, it’s economic cycles that make the […]

In the US, from 1802-2025, the real (inflation-adjusted) returns of stocks has been about 6,9% per year according to the Jeremy Siegel “Stocks for the Long Run” series. Bonds have returned between 3 and 4 percent. (1802-2025 = 3.3% ) Bills – which are safe government bond securities and have a duration of less than […]

A centralized market is a type of financial market structure where all orders are routed to a central exchange rather than a variety of competing markets. This is done to speed up the process of buying and selling and keep trades fair. Centralized markets are typically monitored by a regulatory body to ensure that all […]

In An Overview of the Leveraged Buyout (LBO) Financial Model, we discussed the basic main inputs into a private equity LBO model, assumptions, how debt and financing works, valuation multiples and financial metrics, and how each of these inputs affects outputs and the feasibility of a deal occurring. Here, we are going to take a […]

What Is Modern Portfolio Theory? Modern portfolio theory (MPT) is a framework for analyzing and making decisions about investment portfolios. It was first developed by Harry Markowitz in the early 1950s and has since become one of the most important ideas in finance. MPT is built on the idea of diversification, which is the concept […]

Loss aversion is a psychological concept that refers to the tendency for people to strongly prefer avoiding losses to acquiring gains. In other words, people tend to feel the pain of losing something more strongly than the pleasure of gaining something of equal value. This phenomenon has been observed in many studies and is considered […]

In economics, deadweight loss is defined as the loss of economic efficiency that can occur when the market for a good or service is not in equilibrium. The concept of deadweight loss is important for financial professionals to understand as it can help inform decision-making about pricing, output levels, and other factors that impact an […]

The debt-service coverage ratio (DSCR) is a financial metric used to assess a company’s ability to repay its debt obligations. The ratio is calculated by dividing a company’s net operating income (NOI) by its debt service, which includes principal and interest payments on loans and leases. A DSCR of 1.0 or higher indicates that a […]