For the average consumer, “inflation” means a higher cost of living. But did you know that certain investors and sectors actually benefit from inflation? Savvy investors can mitigate the losses by identifying sectors that may positively benefit from inflation. Those invested in energy companies may benefit from a rise in energy stock prices due to […]
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In investment portfolios, cash plays a crucial role in managing day-to-day operations like controlling inflows and outflows and collecting income sources like dividends. However, holding too much can negatively impact portfolio performance compared to benchmarks. This is called cash drag. What is Cash Drag? Cash drag is a form of a performance drag, referring to […]
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What is Tail Risk? Tail risk refers to the chance of portfolio losses caused by rare events, as shown by a normal distribution curve. It’s the risk of an investment’s returns being much lower than expected. This is often caused by unexpected events with a low likelihood of occurrence but large impacts, such as natural […]
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Classical economic theory suggests that investors and financial markets move solely on the basis of fundamentals and economic analyses of businesses. However, this efficient market hypothesis doesn’t account for many decisions made by both investors and businesses. The study of psychological influences on investors and, by extension, markets is called behavioral finance. What is Behavioral […]
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To become an investor, individuals should begin by defining their investment goals and researching markets and investments. There are many tools available to learn about one’s best investments. Investors can look at different types of assets such as stocks, bonds and alternative investments to build a well-diversified portfolio. New investors can also look at tax-advantaged […]
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What is Liquid Capital? Liquid capital refers to the amount of cash or assets that can be easily converted into cash within a short period of time. Cash, checking and savings accounts, short-term investments and marketable securities are all liquid assets. Companies utilize liquid capital as an important measure of financial health and stability. It […]
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At the beginning of 2022, pandemic-induced supply chain issues were already beginning to push prices higher. At the same time, consumers had some of the highest levels of cash seen in recent decades. Of course, the rosiness of pandemic lockdowns lightening and travel opening back up was short-lived. The Federal Reserve began its steep quantitative […]
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Standard deviation and variance are both measures of data variability. When it comes to investing, it’s used to identify the risk level of an asset’s returns. What is Standard Deviation? The term “standard deviation” (or standard error) is used in many areas of statistics and occasionally involves some complex math. In personal finance, standard deviation […]
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Buy low, sell high sounds simple enough, but it can actually be quite difficult. While the goal of almost every investment is to sell your assets for more than you bought them for, buy low sell high refers specifically to a strategy used by active traders. Long-term investors or passive investors may employ different strategies […]
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When investing, risk and reward go hand in hand. Some investors are willing to take on more risk if there is a potential for greater reward, while others prefer to invest in more stable and secure investments even if it provides only a moderate return. This is called an investor’s risk tolerance. Risk tolerance plays […]
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Business investment can be a complicated endeavor. While individual investors can compare bond yields or earnings-per-share of stock in order to pick the ideal investment for their portfolio, businesses looking at the potential profits from different projects aren’t often comparing apples with apples. How do you compare an investment in new manufacturing equipment versus an […]
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