On August 22, the Federal Reserve released its revised Statement on Longer-Run Goals and Monetary Policy Strategy. The revised document reverses policy changes introduced in 2020 which some economists believe contributed to the surge of inflation in 2021 and 2022. To understand the 2020 policy changes, we have to go back to earlier in the […]
The Federal Reserve’s Old New Policy Framework Read More »
Why I Changed My Topic This Week I had a very different week of content planned. My original idea was to dive into the 2021–2022 inflation cycle, and particularly the misguided monetary and fiscal policies that fueled it. But on Monday morning, I came across an article on CNBC.com titled When “invest like the 1%”
The JOBS Act and the Risks of Private Markets Read More »
Call me old-fashioned, but I believe that words matter. In the world of finance, the terms investment and speculation are often blurred. We frequently use “investment” as a catch-all to describe any outlay of money made in the hope of future profit. I’m as guilty as anyone of using it in this overly broad sense.
Investment vs. Speculation: Investing Defined Read More »
Compounding refers to the growth in the value of an investment where the return is being reinvested. Compounding is the inverse operation to discounting. Compound growth is exponential rather than linear. This means that the value of a compounded investment becomes disproportionally larger as time passes. Suppose that an account earns 5% per year. We
Discounting refers to calculating the present value of a future sum. Discounting is the inverse operation to compounding. For example, suppose we invest $1,000 into an account that earns 10% per year for five years. We can find the value of the investment at the end of year five by calculating the compounding factor and
In finance, the discount rate is the rate used in present value calculations. The concept of present value is one of the most foundational concepts in finance, as it allows investors to quantify a future payment in today’s dollars (or euros, yen, etc.). Investors use present value calculations (called discounting) to estimate the value of
The more I learn about artificial intelligence (AI), the more convinced I become: this may be the most transformative innovation in human history. Learning AI as a Non-Technical Investor I don’t have a technology background. But I do believe in research and critical thinking. As an investor, I’m trying to understand the economics of AI
AI and the Future of Work Read More »
Lost in the flurry of headlines regarding the conflict between the White House and the Federal Reserve is the wildcard for lowering interest rates more broadly – inflation expectations. What Is Inflation—And Why Does It Matter? Inflation is a persistent increase in consumer prices—or, put another way, a decrease in the purchasing power of money.
Inflation Expectations and Interest Rates: What Investors Should Understand Read More »
Fundamental investing is an investment philosophy centered on analyzing the core financial and operational health of an asset before making a decision to buy. This disciplined approach relies on three foundational pillars: 1. Investing in Cash-Flow Producing Assets Fundamental investors seek to purchase assets that generate income, such as: These assets are chosen for their
Fundamental Investing Read More »
In a previous post, I discussed how individual investors have a significant advantage over professional money managers: they don’t face the pressure of outside capital being redeemed. This allows them to adopt a long-term investment strategy, regardless of short-term market fluctuations. In contrast, professional fund managers must consider short-term performance to retain investors and assets
The Benefits of Small Capital: Why Individual Investors Have the Upper Hand Read More »
