Investing Basics
A return has two parts, and only one of them shows up in the price
What an investment pays out and what it changes in value are separate components, and confusing the two…
· 3 min read
Investing Basics
The first principles, with the risks stated as plainly as the returns.
Investing Basics
The return an investment made and the return an investor made are different numbers
Because money goes in and comes out at chosen moments, the experience of a holding depends on timing as…
· 3 min read
Investing Basics
Owning a share means owning a claim on what a business earns later
A price on a screen is easier to watch than the thing it refers to, which is a fractional stake in the…
· 3 min read
Investing Basics
Lending money to an institution behaves nothing like owning part of one
A bond is a loan with a schedule attached, and because its payments are fixed in advance its price moves…
· 4 min read
Investing Basics
How easily something can be sold is a property of its market, not of the thing
Liquidity is the ability to convert a holding into money quickly at a price close to its stated value, and…
· 4 min read
Investing Basics
A home you live in is an unusual asset to hold in a portfolio
Property that a household occupies is concentrated, illiquid, expensive to transact and often bought with…
· 3 min read
Investing Basics
An asset that pays nothing can only be valued by what someone else will pay
Holdings that produce no income have no stream to discount, which means their price rests entirely on what…
· 3 min read
Investing Basics
What a household can absorb and what it can tolerate are two separate measurements
Capacity for loss is arithmetic about circumstances, tolerance is temperament, and the amount of risk a…
· 3 min read