In a capitalist society, money is power to businesses. Institutions that generate revenue — for-profits and non-profits, corporations and single-employee businesses, farms and automobile factories alike — eventually need to achieve solvency to be sustainable long-term. The economy cycles between periodic highs and periodic lows, and as much as businesses may want to prolong periods […]
Hedge funds are financial partnerships that use pooled funds and employ different strategies to earn the highest possible returns for their investors. They are run by a fund manager, also known as the general partner, whose job is to maximize returns and eliminate risk as much as possible. Hedge funds are considered to be more […]
One of the most famous ratios used by value investors is the EV/EBITDA ratio, or the Enterprise Value to Earnings Before Interest, Tax, Depreciation, and Amortization ratio. Value investors use it to evaluate a company. The EV/EBITDA ratio is used with or instead of the P/E ratio. Let’s break down this ratio into two parts: […]
On August 19, 2020, Apple Inc. became the first public US company to reach an astonishing $2 trillion market cap. Apple’s stock has soared in the midst of the COVID-19 pandemic—a time when US GDP for the second quarter of 2020 shrank nearly 32%. COVID-19’s Effect on Valuation The technology hardware company and maker of […]
The Dot-com bubble of the late 1990s and early 2000s was a speculative economic bubble created by excessive optimism towards Internet companies and their stocks. Today, it serves as a reminder of the consequences of greed, excess, and hype. Innovation in the 90s The 90s were a period of rapid technological advancement. The creation of […]
After the introduction of subprime mortgage-backed securities, investors were throwing their money into the U.S. housing market and housing prices began to rise. The newly relaxed lending regulations and low interest rates drove housing prices higher, making the MBS and CDO seem like even better investments. They figured that even if the borrower defaulted on […]
The main trading session of most stock markets is during normal business hours, from 9:30 AM to 4:00 PM, in the daytime. However, trading is not restricted to this time period. Investors can buy and sell stocks after the markets close during the after-hours trading session. There are key differences between trading in the daytime […]
The coronavirus originated in Wuhan, China at the end of 2019 and has since ravaged economies and countries around the world. In response to this novel threat, the Federal Reserve has taken steps to try and stabilize the US economy. In total, the Fed has spent upwards of $2.3 trillion in aggressive policy actions to […]
Many people associate financial options with options traders who make mammoth returns on their investment. In reality, options are a useful type of financial security, which is a tradable financial asset such as a stock, that provides traders with flexibility, efficient bets, and most notably, high returns on investment if used correctly. So, what really […]
From 2007-2009, the United States witnessed its biggest economic crash since the Great Depression. The Great Recession left 8.8 million people without jobs, shooting unemployment up to 10% and leaving about 10 million Americans without homes. The stock market crashed with the DOW dropping around 7,000 points or 54% in a span of 18 months. […]