In Part 1 we covered the four types of informed traders: value traders, news traders, technical traders, and arbitrageurs. Now we get to the really good stuff. What happens when all these informed traders compete? How efficient do prices actually get? And why can markets never be perfectly efficient?
Chapter 9 is the fun one. After eight chapters of yield curves, credit derivatives, and inflation swaps, the authors decided to end the book with something completely different: a collection of trading wisdom organized from A to Z.
Chapter 14 of Behavioral Finance and Investor Types by Michael M. Pompian takes a step back from psychology and biases. Instead it asks a very basic question: do you actually have a plan? Not an investment strategy. Not a stock pick. A plan. Because financial planning and investing are not the same thing, and a lot of people confuse the two.
The title of this chapter is “The Generator,” and it works on two levels. There is a literal generator involved in Galt’s torture. And there is the question that has haunted the entire novel: who generates the power that keeps the world running, and what happens when they stop?
So the book ends with a bonus chapter. And honestly, it’s one of the most practical parts of the whole thing. Mike Hartley drops 50 tips for REIT investors, split across five categories with 10 tips each. Think of it as a cheat sheet for everything the book covered.
This is the last post. Fifteen posts covering one book. That feels like a lot. But Systems Thinking for Social Change by David Peter Stroh is that kind of book. It has layers. It rewards going slow.
This is a retelling of Chapter 12 (Fintech) from “Behavioral Finance for Private Banking” by Thorsten Hens, Enrico G. De Giorgi, and Kremena K. Bachmann (Wiley, 2018).
Chapter 8 of Investing Psychology is where Tim Richards takes everything from the book and turns it into a myth-busting session. Ten myths. All of them things most people believe. All of them wrong. Or at least, way more complicated than we think.
Book: Financial Markets and Institutions, 11th Edition Author: Jeff Madura Publisher: Cengage Learning, 2015 Series: Chapter 14 Review
Options give you the right, but not the obligation, to buy or sell something at a specific price by a specific date. That “not the obligation” part is what makes them different from futures. Chapter 14 covers call options, put options, what drives their prices, and how they are used to speculate and hedge.
Book: Real Estate by the Numbers | Authors: J Scott and Dave Meyer | Chapter: 24
← How to Compare Real Estate Investments | Capital Stacks and Equity Financing Explained →