Posts by Eric Reed:
Random walk theory holds that short-term and mid-term price movements of a specific stock appear to be random and thus are unpredictable. Using a share price’s past movements, for example, is an unreliable means of projecting its future direction. Understanding random walk theory can help retail investors focus their investment strategy. Read more
Efficient market theory, or hypothesis, holds that a security’s price reflects all relevant and known information about that asset. One upshot of this theory is that, on a risk-adjusted basis, you can’t consistently beat the market. The theory, which is controversial, has significant implications for investment strategy. Here is an overview of the theory that provides potential insights into how to invest. Read more
Data collection is one of the least appreciated but most important services the federal government provides. Much of its research focuses on business, economic and financial phenomena, and its data are disseminated at no cost to help U.S. companies, academics, journalists and investors understand what is happening in the economy at large. Federal Reserve Economic Data is perhaps the most important source for that information. Here’s a primer on this highly regarded resource. Read more
A successful portfolio requires a consistent strategy for analyzing stocks (or any security). Successful investors create long-term goals and metrics to help them decide which stocks and funds to buy… Read more
A transaction order is a set of instructions to buy or sell a security, such as a stock, and it sets the conditions under which you want that transaction to happen. If a broker manages your portfolio… Read more
Business students call them the “quants.” They’re the people who can look at the world through a complex frame of numbers. They make investment choices based on reams of data that spin most people’s… Read more
Interest rate changes can have a huge impact on your personal finances, income, investments – even employment. They affect how much you pay for loans, from credit cards to mortgages; they influence… Read more
Blockchain, the digital technology behind cryptocurrencies like Bitcoin, is finding profitable applications in more and more industries. Blockchain is often described as a decentralized currency… Read more
Investors have long relied on trading instructions, also known as orders. A basic trade instruction establishes what you want to happen in your portfolio. The most basic order is a market order,… Read more
There’s a reason Wall Street firms recruit from MIT. For many investors, the financial markets are governed entirely by mathematical equations applied to aspects of a security’s price and trading… Read more
Shares of publicly traded corporations are not all created equal. Some shares, which are also called stocks or equities, give owners greater benefits or voting rights than owners of other classes of… Read more
Timing the market is more commonly known as the investor’s golden rule: Buy low, sell high. It is the practice of building your purchases around expected changes in the price of an asset. (For the… Read more
In simple terms, a conservatorship is a way for someone to assume legal guardianship over an adult. Families often use conservatorships to help deal with the mounting medical, financial and mental… Read more
Municipal bonds (or “munis”) are a fixture among income-investing portfolios. Investors who want a higher returns can invest in high yield municipal bonds. These bonds pay more than investment-grade… Read more
High-yield bonds, also known as junk bonds, are corporate or government debt securities that analysts believe are likely to default. Junk bonds are suitable for investors comfortable with high risk.… Read more
Bond duration is a double-edged sword. Companies that issue bonds repay their debts over 10, 20 or even 30 years. For investors bond coupons generate limited but steady returns for years. They also… Read more
You most likely heard about quantitative easing during the Great Recession. With talk of recession more common recently, you will likely hear about it again. Quantitative easing is when central banks… Read more
Equity refers to the value of a company’s ownership shares. This is most often utilized in the context of a company’s balance sheet, and there is a specific calculation that dictates its valuation.… Read more
There are some financial chores you might have down to a science, like budgeting, filing taxes or auto-payments. And if you’re an investor, you should add portfolio optimization to this list. With… Read more
Many investors build their portfolios around index funds. These bundled assets provide a return that tracks some third-party metric such as the price of gold, the bond market or, commonly, the U.S.… Read more
You get in the shower and turn on the hot tap. The water’s cold, so you turn the tap a little further. Still nothing, so you give it another nudge. Then, all that hot water bursts out at once. You… Read more
Smart beta knows that every investor wants to beat the market. Few actually pull it off. Most of the time, a long-term, passive strategy built around reliable index funds will outperform most active… Read more
The bond market is a safe harbor when the stock market starts going pear shaped, or just feels a bit wobbly. They come in all shapes and sizes from Treasury to junk, and are often a very strong… Read more
Investing smart means using the right tools. Whether that’s considering a stock’s volatility metrics or its price history, you won’t invest as well without the proper resources. One such resource?… Read more
In options trading, “delta” represents volatility. It is one of a set of variables, collectively known as “the Greeks, that traders use to assess the risk of a derivative. Here’s what you need to… Read more
