A Ponzi scheme is a scandal where new investment money is used to create the illusion of returns. A Ponzi scheme (named after Charles Ponzi, who in the early 1900’s was the first to effectively implement such a scheme) is essentially a confidence trick. As an example, suppose 10 people each give someone $100 to invest, with the promise of a 10% return (in addition to the $100 principal) in a year. During the course of that year, 20 more people invest $100 each as well (for a total of $2,000 from the second group). Continue reading...
Not all hedge funds are obligated to disclose their holdings, trades, or performance. About half of them are, however, and their performance can be found online through Morningstar and other sources. This information may not be as detailed as you would like, and you may try other means. Since the Dodd-Frank Act in 2010, more information about hedge funds is available to the public. This does not mean that all the information you seek will be readily available, however, and there are many hedge funds that do not make their information public. Continue reading...
Dive into the shadowy realm of Ponzi schemes, the infamous financial scams that have ensnared countless investors. This comprehensive exploration delves into the mechanics, history, and red flags associated with these deceptive investment strategies. From the tales of Charles Ponzi and Bernie Madoff to the differences between Ponzi and pyramid schemes, this guide offers a deep understanding of a persistent financial menace. Whether you're a novice investor or a seasoned financial professional, this exploration equips you with the knowledge to navigate the treacherous waters of financial fraud. Arm yourself with insights and stay one step ahead of the swindlers. Continue reading...
Throughout the history of the U.S. Stock Market, there have been countless crooks, swindlers, and villains. Money can drive people to cheat, and there have been no shortage of cheaters over the years. Undoubtedly, the biggest hoax in the history of the market is credited to Bernard Madoff, who made off (no pun intended) with over $10 billion of his investors’ money through a massive Ponzi scheme. However, there have been countless other criminal activities, such as the Enron scandal of the early 2000’s. Continue reading...
A layoff occurs when an employer suspends or terminates a worker, either temporarily or permanently, for business rather than performance reasons. This practice is distinct from firing, which typically arises from performance issues or workplace misconduct. In this article, we delve into the concept of layoffs, exploring their implications, statistics, and providing a real-world example. Continue reading...
The Herrick Payoff Index is one of the only technical indicators to combine price, volume, and open interest data for the analysis of futures, commodities, and derivatives. The Herrick Payoff’s main function is to elucidate whether money is flowing into – or out of – the derivative instrument in question. It can be useful for spotting divergences that may occur before prices change direction, or for confirming price trends. Continue reading...
Explore Modern Monetary Theory (MMT), a groundbreaking approach redefining government finance and money creation. MMT challenges conventional beliefs about fiscal policy, revealing how sovereign countries can create money without relying on taxes or borrowing. Delve into its origins, growth, and key principles, including its unique perspective on government debt. While MMT gains momentum, it faces substantial criticism, raising questions about its potential as a revolutionary economic paradigm. Join the ongoing debate on the future of fiscal policy and economic thought. #MMT #Economics #Finance Continue reading...
The strike price of an option is a crucial element of any options trade, and it plays a significant role in determining the outcome of your investment. Understanding how to choose the right strike price is essential for both seasoned traders and newcomers to the world of options. In this article, we will explore the basics of strike price selection, the factors to consider, and the potential impact on your trades. First, let's clarify what the strike price represents. The strike price, also known as the exercise price, is the price at which a put or call option can be exercised. Continue reading...
Call options are powerful financial instruments that provide traders with a unique opportunity to profit from the price movements of various assets. In this comprehensive guide, we will delve into what a call option is, how it works, and its various applications, complete with real-world examples. A call option is a derivative contract that grants the holder the right, but not the obligation, to purchase a specific underlying asset, such as stocks, bonds, or commodities, at a predetermined price, known as the strike price. Continue reading...
Paying off debt depends on a variety of factors, like the total amount of debt, your payment schedule, the principal amount, and interest rates. There are plenty of financial calculators you can access on the web, which would allow you to calculate your payment schedule. Your financial advisor should also have software available to run these numbers for you, or in the very least, a financial calculator to run the numbers quickly. The 'inputs' you need to complete the calculation are: the size of your debt, your planned payments, and the interest rate you’re paying. Continue reading...
An accelerated return note (ARN) is an unsecured debt instrument that uses derivatives to offer leveraged returns and minimal loss exposure to retail investors. Accelerated Return Notes came onto the scene around 2010-2012. They are a form of structured note marketed primarily by Merrill Lynch and Bank of America. They were packaged as offering “accelerated” returns on familiar indexes and stocks. The way such returns are generated is by taking up 2x or 3x positions in calls and futures on the index or stock of choice. Continue reading...
It looks like the Social Security Trust Funds may be depleted by 2037. The system can most likely continue while paying reduced benefits that come directly from the current social security taxes to the workforce. Estimates are that the Social Security Administration could pay about 70% of its obligations at that point. There is enough money to pay Social Security benefits at the current rate until about 2037. Continue reading...
Stock markets plunged as poor job data and Fed rate concerns sparked fears of a recession. The Dow dropped 1.51%, S&P 500 fell 3%, and Nasdaq declined 3.4%. Explore the key factors driving this downturn and the growing anxiety over the Federal Reserve's inaction. Continue reading...
Most estimates project that the Social Security Trust Funds will be depleted by 2037. The system could still function at 70% of their full obligations by transferring cash flow directly from social security taxes to the retired beneficiaries, which most people don’t realize when they spread the news that the system is tanking. Adjustments to the system and interest rates could change how this plays out and keep it operating closer to full capacity. Continue reading...
Nash equilibrium, a critical concept in game theory, signifies the optimal outcome when no player has an incentive to change their strategy, knowing their opponents’ strategies. It's where an individual's action, given the actions of others, leads to the best possible result for all involved. However, it doesn't guarantee the best individual payoff in every situation. Continue reading...
Bottom-up investing is the practice of looking for solid companies and investing in them as opposed to investing in indexes and basing that decision on broader market/macro conditions. In bottom-up investing, an investor or advisor takes the stance that the best investment portfolio will not be a broad allocation across market indices, but that an optimal portfolio should be built from the bottom-up with the stocks and bonds of individual companies whose fundamentals and individual potential have been analyzed. Continue reading...
A strangle is an options strategy which is profitable if the price of the underlying security swings either up or down because the investor has purchased a call and a put just out of the money on either side of the current price of the underlying. To execute a strangle an investor chooses an underlying security which he or she anticipates will experience some price volatility around a given expiration date for options, but is not sure which way it will go, so a call and a put are both purchased. Continue reading...
This term might apply to bonds or pensions and other financial instruments which build up interest value which is paid out at a later time. Accrual Rate is the rate at which a nominal interest rate is credited to an account that will be paid out at a later time. A bond sold in the secondary market, for instance, will take the accrual rate into account if the sale takes place in between coupon payments. Continue reading...
Investing is a journey, one that requires patience, diligence, and a clear understanding of your objectives. By familiarizing yourself with the basics and the various types of investments available, you're better equipped to navigate the complex world of finance.. Continue reading...
Unemployment is a term that holds significant importance in the realm of economics, serving as a critical indicator of the health and vitality of an economy. At its core, unemployment pertains to a situation in which an individual is actively seeking employment but is unable to secure a job. This article delves into the multifaceted concept of unemployment, exploring its various causes, classifications, and methods of measurement. Continue reading...