Stock Trading News

In the US, from 1802-2012, the real (inflation-adjusted) returns of stocks have been between 6 and 7 percent. Bonds have returned between 3 and 4 percent. Bills – which are safe government bond securities and have a duration of less than one year – have a return between 2 and 3 percent. Some might also […]

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 […]

In this article, we explore the concept of the business cycle and all of its implications on financial markets.   What are business cycles? Business cycles are periods of time during which the economy grows or contracts. The four main phases of a business cycle are expansion, peak, contraction, and trough.   What are the […]

Cash flow return on investment (CFROI) is a valuation method by which it is assumed that the stock market sets prices based on cash flow rather than company performance and earnings reports. For the company, it essentially equates to an internal rate of return (IRR) calculation. Calculating CFROI The CFROI is compared to the total […]

What Is Probability Theory and Why Is It Important? Probability theory is essential in trading and investing because it allows market participants to understand and quantify the uncertainty and risk associated with financial decisions. Like life itself, trading is about probabilities. There are rarely black-and-white obvious outcomes that are easy to capitalize on. By using […]

What Is Residual Income? Residual income is defined as revenue that continues to be generated after the initial effort has been expended. This can include interest payments, dividends, and royalties. Essentially, residual income is money that is being earned without having to put in active work.   Types of Residual Income There are different types […]

When it comes to trading and investing, there are two main types of strategies: alpha and beta. Alpha refers to generating returns through active management, while beta refers to achieving returns by matching market returns. Smart beta is a combination of the two involving harvesting beta in a more efficient way. Alpha strategies Alpha strategies […]

In markets, there is commonly the “hot thing” going around. There are always so-called hot assets that are the thing that nobody should miss out on. Sometimes it’s a certain stock or group of stocks: the Nifty Fifty in the late-60s and 1970s Cisco, Enron, Worldcom, among others of the dot-com bubble Tesla was the […]

Investing in Africa can be a lucrative opportunity for investors looking to diversify their portfolios. The continent boasts abundant natural resources, a growing middle class, and a youthful population, creating a favorable investment climate for foreign investors. However, investing in Africa comes with unique challenges, including political and foreign exchange risks that require careful consideration. […]