Your Gateway to Financial Literacy
Overview of Non-Marketable Securities Non-marketable securities refer to financial assets that are not easily liquidated due to their lack of availability on a major exchange for trading. These types of investments are typically illiquid, meaning they cannot be bought or sold in the public markets like other securities such as
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Introduction to Nominal Value Nominal value, also referred to as face or par value, is an essential concept in finance and economics. It represents the stated or declared value of a security, such as a bond or stock, which can be found on the document’s face. The relevance of nominal
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Introduction to Net-Net Investing Net-net investing, a value investing technique developed by Benjamin Graham, values stocks based on net current assets per share (NCAVPS). This approach focuses solely on current assets and calculates their worth by considering cash, short-term investments, adjusted accounts receivable, and reduced inventories. Net-net, as distinct from
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What is a Micro Cap? A micro cap refers to publicly-traded companies in the United States with a market capitalization between approximately $50 million and $300 million. This classification falls below small-, mid-, large- and mega-cap corporations, which have larger market values. Market capitalization is determined by multiplying a stock’s
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Introduction to Mean Reversion Mean reversion, also known as regression to the mean, is an essential concept in finance that assumes asset prices and their volatility eventually return to their long-term average levels (mean). This theory holds significance for various financial measures like percentage returns, prices, interest rates, and P/E
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What is a Market Maker? A market maker is an essential component of any financial market, providing continuous liquidity and depth through the quoting of bid and ask prices. Market makers assume the risk of holding securities in their inventory while profiting from the difference between the bid and ask
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Introduction to Margin Accounts A margin account is a unique type of brokerage account that allows investors to borrow funds from their broker to purchase stocks, bonds, and other financial instruments beyond their available cash. In essence, it offers the opportunity to amplify potential profits and losses by using someone
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Introduction to Low Interest Rate Environment A low interest rate environment refers to a prolonged period where the risk-free rate, typically determined by central banks via short-term government bonds, remains below historical averages. A prime example is the world economy since 2009 when many monetary authorities lowered their benchmark rates
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Introduction to Long-Term Investments Long-term investments refer to accounts on a company’s balance sheet, representing their holdings in stocks, bonds, real estate, or cash that are intended to be held for an extended period—typically more than one year. This contrasts with short-term investments, which companies plan to sell within a
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Introduction to Long-Term Growth (LTG) Strategy Long-term growth (LTG) is an investment strategy focused on increasing the value of a portfolio over a multi-year time frame. Unlike short-term trading, LTG investors aim for above-market returns throughout an extended period, typically ten years or more. The primary distinction between long-term growth
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What Is a Long Position? A long position refers to the investment strategy where an investor buys a financial asset with the belief that its value will increase over time. This approach signifies a bullish stance and is the opposite of a short position, where an investor sells an asset,
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Introduction to Logarithmic Price Scales Logarithmic price scales, also known as log scales, are a charting tool commonly used in finance that displays asset prices based on the percentage change rather than dollar values. This type of scale allows investors to observe substantial shifts in price more easily and effectively,
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Introduction Becoming ‘locked in’ refers to the situation where investors find themselves unable to trade specific securities due to regulations, taxes, or penalties. This may arise when an investor holds shares within a retirement plan that cannot be accessed until retirement age or when stocks are subjected to mandatory vesting
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The Concept of Liquidity Understanding Liquidity: A Crucial Aspect for Institutional Investors Liquidity is a fundamental concept in finance that refers to the ease with which an asset or security can be converted into readily available cash without significantly affecting its market price. Cash is the most liquid asset, as
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Introduction to Leveraged ETFs Leveraged exchange-traded funds (ETFs) represent an innovative investment vehicle for those aiming to amplify their returns by employing financial derivatives and debt to magnify the daily performance of an underlying index. Unlike traditional ETFs that follow the securities in their index on a one-to-one basis, these
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What Are Large-Cap Stocks? Large-cap or “big cap” refers to the market capitalization value of a publicly traded company that exceeds $10 billion. The term large-cap is derived from “large market capitalization,” which represents a significant portion (approximately 98.5%) of the U.S. equity market. Market capitalization, calculated by multiplying the
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Introduction to Kicking the Tires in Finance and Investment Kicking the tires is an expression derived from the car-buying process, describing a minimal research approach to investment decisions. In this context, it’s the opposite of conducting thorough due diligence. Although kicking the tires can be time-efficient, it may lead investors
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Introduction to J Securities J securities are a designation for Nasdaq-listed stocks, added as a fifth letter suffix following a dot in the ticker symbol, indicating that the stock has voting rights. This designation is temporary and only appears when there’s a shareholder vote situation, which is resolved once the
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The Basics of Investing: What is an Investment? An investment is a valuable asset or resource acquired with the primary goal of generating income and capital appreciation over time. When we invest, we are putting our money, time, effort, or another valuable asset to work in the hopes of earning
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Introduction to Investment Products An investment product refers to any financial instrument or security bought by investors with the expectation of earning profits. These products come in various forms and structures, all focused on delivering capital appreciation or income distribution or both. The range of available investment products is vast,
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Introduction to Investing Investing is the process of committing your hard-earned money into various financial ventures with the anticipation that you’ll receive an acceptable return over a period. It is distinct from saving, where you set aside funds for future use, and speculation, where you bet on an asset’s short-term
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