Blog Posts

Harry Markowitz, who popularized modern portfolio theory, said that “diversification is the only free lunch in investing.” For most of the post-2008 period, the bull run in large-cap US equities meant that those who diversified well often found that lunch to be quite costly. If someone went from a 100% stocks portfolio to the 60/40 […]

Let’s look at some interesting facts about gold, with a natural focus on its financial and investment implications. Gold’s Unique Position as an Asset Gold is the prototypical “non-productive store of value” (NPSOV). It doesn’t generate cash flows, yet it retains value through scarcity and because it’s widely agreed that it has intrinsic value. (Contrast […]

One of the biggest problems in trading – and really in any career – is simply having too much to do. Especially when you’re first starting out, you have lots of decisions to make. Maybe you’re watching videos, reading articles, and everybody is saying all these different things. Cognitive load and decision fatigue are a […]

A gamma squeeze is a sudden, sharp rise in a stock’s price, often triggered by a rush of options trading activity. It’s driven by the actions of market makers and their hedging activity – which can trigger other buying activity – in response to the activities of options traders. We explain the concept of a […]

If hedge funds have one real strength, it isn’t picking the hottest stock or calling the next major macro shift. It’s how they manage risk. Many beginning traders imagine hedge funds as bold gunslingers. They think of concentrated bets, calling the next big thing, exotic derivatives, or extreme leverage. And yes, some of that happens […]

Day trading sounds exciting. You sit at a computer and click buttons and make money. It’s very different from a 9-to-5 and even traditional entrepreneurship where you openly sell a product or service. (Trading primarily provides value through capital allocation and liquidity provision in financial markets.) Yet, as we listed here, 96% of day traders […]

From the outside, and among novice traders, there’s the widespread belief that trading is about predicting the future and being right.  Call the top, buy the bottom, predict what happens next.  Unfortunately, that mindset is why most traders have suboptimal results. It rarely works out. Taking into account the edge institutional traders have, plus the […]

Let’s say you’re trading a market and you want the upside, but want to limit the downside, but don’t want to pay an arm and a leg to protect against it. What do you do? In this article, we provide one idea.   Key Takeaways – Using Ratio Spreads to Finance Protection Goal: keep most […]

Exotic financial trading strategies go beyond traditional asset classes like stocks, bonds, and plain vanilla options. They often feature complex structures, unusual payoffs, and multiple market dimensions. We’ll discuss what “exotic” strategies are and examples of them.   Key Takeaways – Exotic Strategies “Exotic” strategies use complex, customized payoffs that depend on barriers, paths, or […]

Market impact is a concept in financial markets, referring to the effect a market participant has when buying or selling an asset. It is an essential consideration for large investors, such as financial institutions, as it can significantly influence investment decisions and overall profitability. This article will explore the nuances of market impact, its relationship […]