A recession is a significant, widespread decline in economic activity lasting more than a few months. In the US, the National Bureau of Economic Research (NBER) officially dates them, usually months after they begin. That delay already hints at the main lesson: recessions are hard to see coming, and markets often move before the economy … Read more
Options can act like insurance on stocks or ETFs you own. Used this way, they limit losses rather than chase gains. But insurance has a price, and options are complex, so it is worth understanding the mechanics before using them. The basics Brokers must approve you for options trading, and you receive the industry disclosure … Read more
Meme stocks are shares whose price is driven mainly by social media buzz rather than company results. The best-known episode came in January 2021, when retail traders on Reddit’s WallStreetBets pushed GameStop from under $20 to an intraday high near $483 in a few weeks, squeezing hedge funds that had bet against it. AMC, Bed … Read more
A bull market is a period of rising stock prices. A common definition is a rise of 20% or more from a recent low, lasting until the next drop of 20% (a bear market). Bull markets are driven by growing profits, a healthy economy and investor confidence, often helped by falling or low interest rates. … Read more
A bear market is commonly defined as a decline of 20% or more from a recent peak in a broad index such as the S&P 500. A drop of 10% to 20% is usually called a correction. Both are normal parts of investing in stocks. How often and how long Since World War II, the … Read more
Interest rates are often called the price of money. When they change, they ripple through the economy and through how investors value every stock. That is why markets watch every Federal Reserve meeting closely. Who sets rates The Federal Reserve sets a target for the federal funds rate, the rate banks charge each other overnight. … Read more
A stock split divides each existing share into several new ones. In a 2-for-1 split, every share becomes two shares, each worth half the former price. The company’s total value and your share of it stay exactly the same: you have more slices of the same pizza. An example You own 10 shares at $600, … Read more
“Alternatives” is a catch-all term for investments outside the traditional trio of stocks, bonds and cash. Large pension funds and university endowments use them heavily. Individuals are increasingly being offered them too, which makes it worth knowing their trade-offs. Main types The pitch The catches How individuals can get exposure How much is reasonable? For … Read more
US companies make up roughly 60% of the value of global stock markets. Investing only in the US means ignoring the other 40%: companies such as Toyota, Nestlé, Samsung, ASML or Novo Nordisk. International stocks are a standard part of a diversified portfolio. Why add them What is different Developed vs emerging markets A “total … Read more
Inflation is the general rise in prices over time. It means each dollar buys a little less every year. For investors, the question is not just “did my money grow?” but “did it grow faster than prices?” Real return: the number that matters Real return ≈ nominal return − inflation. A savings account paying 2% … Read more
