Series
Basic Investing I Studied
16 posts
- #1
Overview of Basic Investing
A no-fluff rundown of investing basics — what markets actually do, asset allocation vs. security selection, the EMH, and money market instruments like T-bills and CDs.
· 10 min read - #2
Stock Market Indices
Breaking down what stock market indices actually are — Dow Jones, S&P 500, NYSE, NASDAQ — how they're calculated, and why the jump from a plain average to a weighted one matters.
· 3 min read - #3
IPO and Order Types
A breakdown of how IPOs actually work — from primary vs. secondary markets to road shows, bookbuilding, and why playing it cool at an IPO is a bad idea.
· 7 min read - #4
Buying on Margin and Short Sales
A casual breakdown of how buying on margin works — borrowing from your broker to buy stocks, why margin calls happen, and why losses hurt way more than gains feel good.
· 5 min read - #5
Mutual Funds
A casual breakdown of what investment companies actually are, how they're classified, and why mutual funds ended up eating unit investment trusts' lunch.
· 8 min read - #6
Types of Portfolio Average Returns
A rundown of the different flavors of portfolio average return — arithmetic, geometric (time-weighted), and dollar-weighted — and when each one makes sense to use.
· 5 min read - #7
Statistical Theory, Risk, and Risk Premium
A casual dive into the stats behind investment returns — scenarios, expected value, variance, and why the Gaussian is kind of a big deal.
· 8 min read - #8
Inflation-Indexed Bonds: TIPS
Real vs. nominal interest rates, the Fisher equation, and a quick intro to TIPS — the inflation-protected bond that hands you the truly risk-free rate.
· 2 min read - #9
Capital Allocation Line (CAL)
How slicing your cash between the spicy risky stuff and the boring risk-free stuff moves your expected return and volatility — that's the Capital Allocation Line.
· 4 min read - #10
Diversification
More stocks = less risk, but only up to a point — turns out there's this pesky market risk that no amount of diversification can ever kill.
· 7 min read - #11
Sources of Various Risks
Excess return broken down into three buckets: market vibes (β), totally-unpredictable company drama (e), and that mysterious security alpha (α).
· 4 min read - #12
Efficient Market Hypothesis (EMH)
How economists took Kendall's 'prices are random' bombshell and flipped it into the EMH — keeping the 'humans are rational' assumption perfectly intact.
· 8 min read - #13
Behavioral Finance
Behavioral finance argues human irrationality — forecast errors, overconfidence, conservatism bias — actually moves markets in ways the efficient market hypothesis can't explain.
· 11 min read - #14
Debt Securities
A casual grand tour of bond basics — types, coupons, bearer bonds, and why YTM is the number issuers actually care about.
· 14 min read - #15
Bond Valuation and Risk
We actually price a bond this time — figuring out what it's worth today by adding up the present value of all those future coupon payments.
· 5 min read - #16
Duration and Modified Duration
We crack open basic calculus to see exactly how bond prices react when interest rates move — and that's what leads us straight to the definition of duration.
· 6 min read