https://gdpark.blog/series/basic-investing-i-studied/Recent content in Basic Investing I Studied on gdpark.blogHugoenTue, 24 May 2016 00:00:00 +0000https://gdpark.blog/posts/basic-investing-01-overview-of-basic-investing/Tue, 29 Mar 2016 00:00:00 +0000https://gdpark.blog/posts/basic-investing-01-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.https://gdpark.blog/posts/basic-investing-02-stock-market-indices/Tue, 29 Mar 2016 00:00:00 +0000https://gdpark.blog/posts/basic-investing-02-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.https://gdpark.blog/posts/basic-investing-03-ipo-and-order-types/Sat, 02 Apr 2016 00:00:00 +0000https://gdpark.blog/posts/basic-investing-03-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.https://gdpark.blog/posts/basic-investing-04-buying-on-margin-and-short-sales/Sun, 03 Apr 2016 00:00:00 +0000https://gdpark.blog/posts/basic-investing-04-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.https://gdpark.blog/posts/basic-investing-05-mutual-funds/Sun, 03 Apr 2016 00:00:00 +0000https://gdpark.blog/posts/basic-investing-05-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.https://gdpark.blog/posts/basic-investing-06-types-of-portfolio-average-returns/Mon, 04 Apr 2016 00:00:00 +0000https://gdpark.blog/posts/basic-investing-06-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.https://gdpark.blog/posts/basic-investing-07-statistical-theory-risk-and-risk-premium/Mon, 04 Apr 2016 00:00:00 +0000https://gdpark.blog/posts/basic-investing-07-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.https://gdpark.blog/posts/basic-investing-08-inflation-indexed-bonds-tips/Mon, 04 Apr 2016 00:00:00 +0000https://gdpark.blog/posts/basic-investing-08-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.https://gdpark.blog/posts/basic-investing-09-capital-allocation-line-cal/Tue, 05 Apr 2016 00:00:00 +0000https://gdpark.blog/posts/basic-investing-09-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.https://gdpark.blog/posts/basic-investing-10-diversification/Fri, 15 Apr 2016 00:00:00 +0000https://gdpark.blog/posts/basic-investing-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.https://gdpark.blog/posts/basic-investing-11-sources-of-various-risks/Sat, 16 Apr 2016 00:00:00 +0000https://gdpark.blog/posts/basic-investing-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).https://gdpark.blog/posts/basic-investing-12-efficient-market-hypothesis-emh/Wed, 11 May 2016 00:00:00 +0000https://gdpark.blog/posts/basic-investing-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.https://gdpark.blog/posts/basic-investing-13-behavioral-finance/Thu, 12 May 2016 00:00:00 +0000https://gdpark.blog/posts/basic-investing-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.https://gdpark.blog/posts/basic-investing-14-debt-securities/Tue, 24 May 2016 00:00:00 +0000https://gdpark.blog/posts/basic-investing-14-debt-securities/A casual grand tour of bond basics — types, coupons, bearer bonds, and why YTM is the number issuers actually care about.https://gdpark.blog/posts/basic-investing-15-bond-valuation-and-risk/Tue, 24 May 2016 00:00:00 +0000https://gdpark.blog/posts/basic-investing-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.https://gdpark.blog/posts/basic-investing-16-duration-and-modified-duration/Tue, 24 May 2016 00:00:00 +0000https://gdpark.blog/posts/basic-investing-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.