More on Margins: How Borrowing in Long Accounts Boosts ReturnsÂ
Leverage is an essential part of finance, and understanding how it works can benefit traders; misunderstanding it can wipe out accounts, and often has!
Vectorizing the Qualitative
To model assets properly you need to vectorize the qualitative. Sound weird? It is–but it’s also a lot of fun.
How Leverage Boosts Returns–and Risk
If you know how credit, leverage, borrowing, and liquidity are interrelated, good for you–you have some instinct for the financial game. But the details are very important, because they demonstrate why some people become billionaires using borrowed money and others go bankrupt.
More Options Fun: Finding Price with Spreads
Knowing how options combinations work is essential for any financial professional, and spreads are a bit of a headache–that is, if you study them the way most people do. That can lead to costly mistakes, whereas understanding why these things exist and what they do won’t only help you master options questions on tests and at work, but it will also make you a much savvier investor and financial analyst.
Let’s Talk Options
Call and put options have ruined lives–they are, after all, some of the “weapons of mass destruction” that Warren Buffett famously called financial derivatives. The ruination of these powerful financial tools often comes from misunderstanding the logic behind them–which is surprising, because they are some of the most logical assets in financial markets! All it takes is a bit of time and thought to see the logic hiding behind them.
Defining Sources of Value
If you want to make a lot of money on Wall Street, you have to be good with numbers, right? Wrong. You have to have the skills needed to identify value, but are those math skills? It turns out that the real value in value creation on Wall Street isn’t about complex math but something else entirely.