This is a guest post by Christopher Russell of TheStockDork.com As an investor, you dedicate your hard-earned money to one or multiple financial schemes, property, commercial ventures, or shares, expecting to achieve a profit or an increase in value over time. Therefore, this calls for investing in things that you understand but doesn’t mean you […]
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Image source www.dakotavalue.com This chart shows top investors returns or their Alpha versus the market returns. What is Alpha Return? Alpha (α) is used in investing as a measure of performance of returns of an investment or investor returns that are higher than a relative benchmark index. Alpha is the term used in investing to describe
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“An investment operation is one which, upon thorough analysis, promises safety of principal and an adequate return. Operations not meeting these requirements are speculative.” – Benjamin Graham Example of Investment and Speculation An investment is buying an asset with intrinsic value that has cash flow and/or physical asset value. Speculating is buying something in an
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In trading and investing, the rule of 70 is a method used for estimating the doubling time for capital based on investment or interest rates of return. What is the Rule of 70? The rule number is divided by the rate of return percentage per period (years is the most common used) to obtain the
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Financial literacy is the ability to understand and apply a range of financial skills effectively. It applies to successful personal financial decisions and management like monthly budgets, saving, investing, and establishing a career to pay living expenses. Financial literacy means people can become self-sufficient and not need to live with parents or family as they
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In finance, TTM stands for trailing twelve months, and it represents a company’s financial performance in the last 12 consecutive months. For example, if a company financial statement is created on August 1, 2022, then the TTM financial report and the dollar values used to prepare the statement will be created using the trailing twelve
A Cantillon effect is a change in prices related to one another that was caused due to a change in the money supply, first discovered by Richard Cantillon an 18th-century economist. History shows that some assets are favored over other ones when extra money is available in the economy for spending and investing. These preferences
“A margin of safety is achieved when securities are purchased at prices sufficiently below underlying value to allow for human error, bad luck, or extreme volatility in a complex, unpredictable and rapidly changing world.” – Seth Klarman For investors the margin of safety is the variance between the fundamental value of the underlying company of
In investing and trading, diversification is the process of buying positions with capital that are not 100% correlated in price movement during most market environemnts. Diversification can be as broad as investing in different types of assets or just in equities but in stocks in different sectors, market cap, or countries. In trading, diversification can
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Negative correlation in markets, also known as an inverse correlation, indicates that two securities have a relationship where their prices move in opposite directions from each other most of the time. As an example, if gold and the U.S. dollar have a negative correlation, as the dollar goes up in value then gold will go
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