Learn to Value Stocks in 6 Weeks
The risk reward ratio is a key metric that helps you evaluate the potential return of an investment relative to the risk you are willing to take. Essentially, it quantifies how much you stand to gain versus
Blue chip stocks are reliable, large companies that you can count on over the long term. These stocks belong to leading companies with a history of stable earnings, solid financials, and robust market presence. Investing in blue
Over time, you may have encountered the term ‘bid ask spread’ in financial markets, but what does it really mean? The bid ask spread refers to the difference between the highest price a buyer is willing to
The concept of exponential moving average (EMA) is useful to learn if you’re involved in trading or data analysis. The EMA is a statistical measure that places more weight on the most recent data points, allowing you
It’s vital to understand the concept of diversification as it plays a significant role in managing your investments and reducing risk. Diversification involves spreading your assets across various investment categories, such as stocks, bonds, and real estate,
Over the past few decades, understanding macroeconomics has become necessary for anyone looking to grasp the broader economic trends that influence your financial well-being. Macroeconomics examines the overall performance, structure, and behavior of an economy, focusing on
Asset management refers to the systematic process of developing, operating, maintaining, and selling assets in a cost-effective manner. Understanding this concept is important for you to strategically manage your resources, whether they are financial investments, real estate,
Growth investing doesn’t have to come with exorbitant costs, and that’s where GARP, or Growth at a Reasonable Price, comes into play. This investment strategy offers you a balanced approach, allowing you to seek companies with strong
There’s a powerful metric that can significantly influence your investment decisions: the Price Earnings Ratio, or PE ratio. This financial indicator helps you evaluate a company’s valuation by comparing its current share price to its earnings per
As a day trader, you buy and sell financial instruments within the same trading day, aiming to profit from price fluctuations. This high-paced trading strategy requires keen analysis, quick decision-making, and a solid understanding of market trends.
Enterprise value (EV) represents a comprehensive measure of a company’s total value, taking into account not just its market capitalization but also its debt and cash reserves. As an investor or business owner, understanding EV can help
Liabilities refer to the debts and obligations you owe to others, whether it’s loans, mortgages, or credit card balances. Recognizing these financial responsibilities helps you assess your overall financial situation and plan for your future. Key Takeaways:
Just like in an auction, a bid is an offer you make to purchase an asset, security, or other goods at a specific price. In the financial realm, understanding what a bid means can give you insight
Just as you may seek to understand the world around you, the Just World Hypothesis offers insight into how you perceive justice and fairness in human experiences. This psychological theory suggests that people have a tendency to
Rationality in decision-making often hinges on the limitations in your cognitive abilities and the information available to you. Bounded rationality refers to the concept that while you strive to make rational choices, your decisions are ultimately
Overjustification occurs when external rewards or incentives diminish your intrinsic motivation to engage in an activity. This phenomenon suggests that if you’re rewarded for something you already enjoy, your enjoyment may decrease over time, as you begin
Optimism is a natural tendency that influences how you perceive risks and potential outcomes. When you experience optimism bias, you might underestimate negative events and overestimate positive results in your life. This cognitive phenomenon can affect your
Most people are unaware of the psychological principle known as the Decoy Effect, which significantly influences your decision-making process. This phenomenon occurs when you are presented with a third option, or “decoy,” that skews your perception of
It is a subset of Confirmation Bias. Perseverance of beliefs often leads you to cling to your original ideas even when faced with conflicting evidence. This psychological phenomenon can impact your decision-making processes and shape your perceptions
Hyperbolic Discounting is a psychological phenomenon that impacts your decision-making, particularly when it comes to choosing between immediate rewards and future benefits. Hyperbolic discounting explains why you might favor a smaller, instant reward over a larger, delayed
Many people experience a fascinating psychological phenomenon known as the Benjamin Franklin Effect. This effect suggests that when you do a favor for someone, you are more likely to develop a positive attitude towards that person. As
Most people are unaware that pluralistic ignorance is a phenomenon where individuals hold a false belief about the attitudes or behaviors of others in a group. This misunderstanding can lead you to think your own opinions or
Fixedness in your thinking can significantly impact your problem-solving abilities. Functional fixedness refers to the cognitive bias that limits your perception of an object’s potential uses to its traditional functions. This mental block can prevent you from
Philosophy often explores how you perceive the world around you, and one intriguing concept is Naive Realism. This theory posits that you see the world as it truly is, believing that your perceptions are a direct reflection
Over time, you may have encountered scenarios where your judgments were influenced more by specific information rather than general statistical data. This cognitive error, known as the Base Rate Fallacy, or Base Case Fallacy, occurs when you
