Want To Build Wealth By Investing?

Want to build wealth by investing?

  Want to build wealth by investing? Try the following: Learn so that you are not going the repeat the same mistake twice: It is always about risk versus return. The problem here is that most people don’t get their engine started in investment due to fear of losing or scared of making mistake. One would definitely make mistake. However, start investing now, learn from mistake and mitigate mistake is the way forward. Asking for help is like the end of the world: Parental teaching…

read more
Duration

Duration

Everyone in the financial sector is getting used to the idea of low interest rates among countries like United States and United Kingdom and also the idea that the Federal Reserve (“Fed”) of the United States is planning on raising the interest rate. The question is not whether the rates will raise but rather when it would raise. Therefore, it is important to know what to do when the rates raises. Most would agree that the bond markets would be impacted. How one would analyses…

read more
How To Lie Using Statistics In Finance?

How to Lie using Statistics in Finance?

Most readers would have read of Darell Huff’s book on “How to Lie with Statistics” which is written back in 1954. Some materials may come from there. This is goes hand in hand with Tversky and Kahneman’s framing theory which was published back in 1981. Basically, how one would use statistics in such a way that it would frame the readers into thinking something that the authors wanted to. Let’s start with the basic. Suppose that there is a fund management report that states an…

read more
How True Is The Efficient Market Hypothesis?

How True is the Efficient Market Hypothesis?

Eugene Fama first introduce his Efficient Market Hypothesis (“EHM”) back in 1970. In summary, EHM states that stock markets are efficient in the sense that new information are being reflected in the prices as soon as it is being known to the public. EHM implies that the securities prices follow a random walk movement. This means that subsequent changes in the security price doesn’t depend on the current or previous prices. Burton Malkiel’s 1973 paper titled A Random Walk Down Wall Street mentioned that a…

read more
Brexit So Far

Brexit So Far

What has happened to UK’s economy after months since Brexit was voted a yes? Overall, the economy is showing to be resilient following June’ Brexit vote. Financial data company Markit have published a survey which forecasted a GDP expansion of 0.1% in the third quarter. The Markit/CIPS purchasing managers’ index for August rose to 52.9 after slumping to 47.4 for July following the vote to leave the EU. That was the biggest month-to-month jump in the survey’s 20-year history and followed the biggest drop on…

read more
Things To Taken Note When Forecasting

Things to Taken Note When Forecasting

From fundamentalist point of view, investing is usually buying into something have higher intrinsic value compared to the current value. The determination of any company’s intrinsic value depends on several factors. However, not all useful factors are observable from the market. These factors could be implied by observing other factors. Furthermore, some required factors to determine intrinsic value could are forward looking. There is a misconception regarding forecasting. Mind you, that forecasting is not equal to prediction. Simply said, prediction concerns about future certainty while…

read more
Compute VaR: 4 Things To Know

Compute VaR: 4 Things to Know

Value at Risk (“VaR”) is a common risk management metric which quantifies the risk of a portfolio over a period of time. It is easy to explain to top management while answering the question of how much could a portfolio lose within a given probability. However, VaR can’t describe how bad could the portfolio’s losses be when things really go bad. In other words, VaR could underestimate the portfolio loss during stressed scenarios. After considering its strength and weakness, the company still view that VaR…

read more
Discounted Cash Flow

Discounted Cash Flow

Discounted cash flow is one of the common valuation methodologies that is being used among practitioners. The discounted cash flow relies on 2 components which are (i) projection or estimation of future cash flow and (ii) apply the appropriate discount factor. It is important to understand the structure of the financial product in order to correctly project the future cash flows. There are a few points to take note which are the timing of the cash flow and the amount of the cash flow. The…

read more
The Theory Of Interest

The Theory of Interest

Current Situation Interest can be viewed as the periodic money paid for a debt taken. Due to the 2008 economic crisis, the central banks of most developed countries has decided to lower their interest rate levels that is close to 0. This interest rate level is also called the nominal interest rate. Real interest rate is obtained by subtracting the nominal interest rate by inflation rate. Thus, effectively, most developed countries are having negative interest rates. Assumption However, this article, is talking about interest that…

read more
How To Study For CFA Level 1

How to study for CFA level 1

There are many guides on this. Fear not for we have selected the top 3 advices that will make your study manageable.   Give yourself ample preparation time   CFA Institute encourage candidates to spend roughly 300 hours for each exam. The next question is how should you distribute this 300 hours? Suppose you plan to spend 2 hours every day to prepare for CFA, this translate to 150 days of preparation which is roughly 5 months. This means, for June candidate, you should start…

read more
  • 1
  • 2