Sunday, June 22, 2008

38. Getting Started

If you have gone through the videos here, read the book and really delved into the subject and you understand risk, time horizon - what is sure and what is total gambling, and you have a long-term view and understand how investing works - then prudently beginning is the next step.

Saturday, June 21, 2008

37. Transaction Costs

One of the things that can damage our returns is transaction costs - a brief video on this subject.

Thursday, June 19, 2008

36. Following the Crowd and the Role of Expectations

Blindly following the crowd can lead to some of the worst investment decisions - something everyone is expecting in the future is also often already reflected today.
Often one can read headlines like 'this market is expected to rise strongly for the coming year' or 'this stock will perform strongly'. If everyone, or a very large percentage of the market participants expect the same thing, then often all of the future expectation is already priced in today.
Smart investors spend a lot of time trying to figure out things that might not be expected or priced in - that is also a reason why financial literacy and therefore not having to believe everything you hear are so important.

35. Diversification -

Diversification - or not putting all your eggs in one basket - has a solid foundation in math. In fact there are some really good reasons to always bear them in mind.

Wednesday, June 18, 2008

34. Two Generic Types of Pension Plans

There have been some horror stories regarding pension plans - but not all pension plans are alike. Newer pension plans are typically significantly different in their approach than the older ones.

Tuesday, June 17, 2008

33. First Principles of Taxation

Saving and investing is incentivised in most western countries through tax benefits. Governments want to collect taxes to provide the services that they provide - but they also provide tax benefits for saving and investing because it is considered beneficial for individuals and society as a whole.

Monday, June 16, 2008

32. Taxes and Compounding -

Compounding is one of the key forces when it comes to any saving and investing plan - but the reality is that paying, or not paying taxes, has a huge impact on what we compound to. And often we can save the taxes because governments want us to save for when we retire, or for when our incomes are low

Sunday, June 15, 2008

31. Timing Investments and Dollar Cost Averaging

Timing investments is not straightforward, and there are ways of making the process pretty efficient.

Saturday, June 14, 2008

30. The Impact of Time

The nature of the stock market means that our time horizon makes a big difference in determining which investments are more suitable.

Friday, June 13, 2008

29. Hedge Funds 5: Prime Brokers

Prime brokers perform a very important role in the hedge fund industry by providing much of the infrastructure backbone that allows hedge funds to hold securities, employ leverage and even by assisting in raising assets.

Thursday, June 12, 2008

28. Hedge Funds 4: Funds of (Hedge) Funds

Because of the risk associated with investing in any single hedge fund - to diversify and lower volatility, a number of hedge funds are often combined into what is known as a fund of funds or fund of hedge funds.

Tuesday, June 10, 2008

*** New Video: V7C: The Risk-Free Rate

The rate used to discount future cash flows is based on the risk-free rate plus a premium for the risk of those particular cash flows. In effect, the risk-free rate is the lowest return, or the lowest rate of interest, that investors would be willing to accept (for a riskless investment).

This video goes into what the risk-free rate is and what benchmarks might be used to establish its value.

27. Hedge Funds 3: Different Strategies

Hedge Funds use many different strategies to make money although broadly speaking they are often put into 3 main categories. This video details the categories and what the means are.

Monday, June 9, 2008

26. Hedge Funds 2: What is Short-Selling?

Short-selling is often spoken about, particularly in the context of hedge funds - this brief video explains what this is.

Sunday, June 8, 2008

25. Hedge Funds 1: What is a Hedge Fund?

An introductory summary of hedge funds. There is a lot more on this in the book because it is easier to convey in a written format than on tape - also at more info at

Friday, June 6, 2008

24. Index Funds and ETFs

Passively managed funds are index funds - funds that aim to hold securities in exactly the proportion that they are held in within an index and that typically have significantly lower fees that actively managed funds. These products offer market exposure at lower cost - so do ETFs.

22. Mutual Funds 3: Active and Passive Management

The terms active and passive management are often used when discussing mutual funds - what do the terms actually mean and what have some people concluded.

Wednesday, June 4, 2008

21. Mutual Funds 2: Types of Mutual Funds

There are many types of mutual funds - here is a summary of some and why they can exist.

20. Mutual Funds 1: What is a Mutual Fund?

Mutual Funds explained in simple terms.

Tuesday, June 3, 2008

19. Why do Financial Markets Exist?

Financial markets exist for a very important reason - one that has been around for a very long time. This is explained very simply.

Monday, June 2, 2008

*** 29. Prime Brokers

Prime brokers perform a very important role in the hedge fund industry by providing much of the infrastructure backbone that allows hedge funds to hold securities, employ leverage and even by assisting in raising assets.

Sunday, June 1, 2008

*** New Video: V7B: Discounting

A number of the valuation methods refer to discounting - discounting cash flows - discounting dividends. This video looks at what discounting is - and how to some extent it is the inverse of compounding.