First, what is margin? Margin is a collateralized loan from your custodian that lets you control more exposure than your cash balance. How to establish a short position Foremost You better know what you are doing. You are betting against an asset that you believe will fall in value. If you are wrong, your losses […]
The classic duck or rabbit illusion seems straightforward. Some people see a duck while others see a rabbit. With a small shift in perspective, the image changes entirely. Investment decisions can work in a similar way. When “Cheap” Isn’t Is a stock attractively priced or is it fundamentally challenged? Is a low earnings multiple an […]
During Thomas Edison’s long effort to perfect the incandescent light bulb, a small accident captured his philosophy of progress. After finally producing a working prototype, Edison handed it to a young assistant to carry upstairs for testing. Near the top of the stairs, the assistant slipped and accidentally shattered the bulb. The assistant was forgiven […]
A Merger and a Need for a New Identity In 1998, Citicorp and The Travelers Group merged, creating a massive financial entity. Citigroup would be a unified brand that needed a new identity to represent both companies. A Logo Created in Seconds Paula Scher was hired to create the new logo. During the first meeting, […]
Today I want to discuss correlation within the context of portfolio construction. If you live in a climate where the weather is unpredictable, you will want a furnace as well as an air conditioner. You will need a wardrobe that takes into consideration the varying weather. The same could be said about portfolio construction. Covariance, […]
Using charitable contributions is generally only valuable from a taxation standpoint if you itemize deductions on your tax return. If you take the standard deduction, you generally cannot deduct charitable contributions. Even still, this is not the main reason to be charitable. You are supporting causes that you feel are important. Love is not dead […]
What are stock buybacks? A stock buyback or a share repurchase decision occurs when a company buys its own stock from the open market. By doing this, the company reduces the number of shares available to the public. This is the opposite of dilution. Why Would Companies Purchase Their Own Stock? To Increase the Stock […]
In it’s simplest conceptual form, stock dilution is basically a company adding more water to a pot of soup, but not adding more ingredients. The company issues new shares of stock in order to raise capital. You own 100 shares of a company. If the company suddenly creates more shares of stock and sells them […]
A market maker is a person or entity that provides liquidity to financial markets by continuously buying and selling a particular asset at publicly quoted prices. They “make a market” by always being ready and willing to trade. They quote two prices A Bid The price at which they are willing to buy a security. […]
My friend Matthew is in the publishing industry. He suggested I write about the word Synecdoche. I have never used this word in a sentence, however, I am interested in English and I am always looking to broaden my vocabulary. And this word is complicated. Now we must define it and relate it to finance. […]
