Blog Posts

Before trading foreign equities denominated in a different currency, it’s important to understand that it’s not just the returns, but returns + the currency movement. For example, if the USD has a higher nominal interest rate than the JPY, it will have implications for the forward curve of the USD/JPY currency pair. So if a […]

Interest rate parity (IRP) is a fundamental concept in international finance that describes the relationship between interest rates and foreign exchange rates. At its core, IRP asserts that the difference in interest rates between two countries is equal to the expected change in their exchange rates. We also give a mathematical example below.   Key Takeaways […]

Thirlwall’s Law, named after the British economist Anthony Thirlwall, is a principle in macroeconomics that explores the relationship between economic growth and the balance of payments in an economy. It posits that the long-term growth rate of an economy is directly related to the growth rate of exports divided by the income elasticity of demand […]

A liquidity trap occurs when interest rates are low and savings still don’t translate to investments, essentially rendering monetary policy ineffective. This phenomenon is often accompanied by a flat demand curve for money, where individuals hoard cash instead of placing it in bonds or other riskier investments. Financial Market Implications Asset Price Inflation In a […]

Let’s look at some of the most abstract concepts in finance, trading, and investing.   Key Takeaways – Most Abstract Concepts in Finance, Trading & Investing Strategic vs. Tactical Asset Allocation: Strategic asset allocation is a passively-held, well-diversified portfolio, while tactical asset allocation involves active tilts and trading. Tactical trading is hard and often leads […]

Investment banking target schools are the college and universities that are commonly “feeders” into top investment banks. Many investment banks recruit heavily at these schools because they’ve tended to provide good talent in the past or because current people working there/key decision-makers went to these schools. Below we have a list of popular investment banking […]

We trade because we expect that it’ll earn us money. Except when you have a poor day, week, or month in the markets it seems like the markets are maybe the easiest way to lose money. Losing money in the markets teaches us expensive lessons on how to improve by doing things differently. One of […]

Falls in equity markets and the general anatomy of a bear market and their bottoms typically occur in a sequence.   3 Factors That Determine Equity Returns There are three main factors in terms of decomposing equity returns:  discounted earnings (cash flows) discounted interest rates, and  risk premiums Risk premiums are simply the type of […]

Hyperinflation refers to a situation in which goods and services inflation is very high and typically increasing in a non-linear way. It’s important for traders to understand the phenomenon because it can and will show up in some markets and can ruin entire investments. During hyperinflation, the real value of the currency declines. People who […]

In economics, a “trilemma” describes a situation where three competing elements are present, and a solution necessitates choosing two, forsaking the third due to their mutual exclusivity. Pursuing all three usually results in instability or inefficiency. This concept is applicable in various fields including healthcare and currency management policies. In currency management policies, policymakers must […]