Bottom-up investing is an investment strategy where an investor focuses on analysing individual stocks and not the industry it’s in or the general economic condition. This is due to the notion that an individual stock or industry can do well despite whatever’s going on in the general economy.
Institutions generally are better positioned to do bottom-up [...]
Double taxation is the taxation of the same earnings at two different levels. For example, a corporation’s earnings are taxed and its dividends to shareholders are taxed as well, so the same source of earnings is taxed twice.
A black swan is an extremely small probability event that has a higher probability of occuring than normal distribution models suggest or is normally anticipated. Examples include stock market crashes, financial crises etc. Some people even believe that great investors like Buffett are black swans too, getting rich mostly due to luck.
While some aspects of [...]
Ponzi scheme is a type of illegal investment scam where an investor is promised high returns, but old investors are actually being paid with new investors’ money. The scheme can go on and on until the propagator of the scheme takes the money and disappears, or there is not enough new money to provide the [...]
Pyramid scheme is a type of illegal investment scam where one level of investors recruits new investors which pay them. The scheme continues as long as there are enough new recruits to provide returns, but as new recruits slowly dry up, so does the flow of money and the scheme collapses.
Pyramid is the act of increasing one’s position in a security as the price goes in a favorable direction. For example an investor who is long a stock as it goes up, may buy more of it. This would be called pyramiding, and is usually done to increase profits in a winning investment.
Valuation analysis is the process of analyzing a security’s(usually a stock) intrinsic value. This can be done by various measurements such as discounted cash flow etc. It can also be done by comparing a stock’s valuation with others in its industry or the broad market. It should be kept in mind that none of these [...]
Price action is the movement of a security’s price. Technical analysts tend to focus on price action because they believe price action reflects all-known information about a stock and that important information will show up in price action before it shows up in the newspapers. They focus on what’s happening(price action) instead of why it’s [...]
Chapter 13 is a bankruptcy proceeding where the debtor files to get an extension to his debts usually with a plan to repay those creditors back in within the next few years, with the debtor’s income as a guarantee. This is usually by debtor’s with significant income who do not want to liquidate their assets.
Chapter 11 is a bankruptcy proceeding where a business files for bankrupty, but is not liquidated. Instead it goes through reorganization of the business’s assets and operations. This is usually done by companies who want to buy time to restructure their debts.
