You open Robinhood, tap “Buy,” and 0.3 seconds later you own shares of Apple. Simple, right? But between your thumb tap and that trade actually happening, there is a whole chain of people and systems doing work for you. Chapter 7 is about those people. Brokers.
Volatility is one of those words that everyone uses but most people think about too simply. Prices went up and down a lot today? Volatile. VIX is high? Volatile. Your crypto portfolio lost 40%? Very volatile.
Dagny left paradise. Now she’s back in the real world. And the real world has gotten worse while she was gone.
Book: Financial Markets and Institutions, 11th Edition Author: Jeff Madura Publisher: Cengage Learning, 2015 ISBN: 978-1-133-94788-2
Chapter 8 is where Madura gets into the math behind bond prices. If Chapter 7 was about the types of bonds, this chapter explains how to figure out what they are worth, why their prices change, and how investors manage the risk. It is the most technical chapter so far, but the concepts are fundamental to understanding how fixed-income investing works.
You built the map. You identified the loops. You see why the problem keeps coming back despite everyone’s best efforts. Now what?
So you understand the metrics, you can read financial statements, and you know the risks. Now comes the fun part: actually building a REIT portfolio.
So this is the last post. Eight posts later, we have walked through the entire first half of Artificial Intelligence in Finance by Yves Hilpisch. AI fundamentals, neural networks, superintelligence, financial theory. A lot of ground.
This is post 23 of 23 in a series on Systems Thinking: Managing Chaos and Complexity by Jamshid Gharajedaghi (ISBN: 978-0-7506-7973-2).
Chapter 11 opens with a Reagan quote, “Trust but verify.” That pretty much sets the tone. You have spent hundreds of hours doing investment, operational, and risk due diligence on a hedge fund. But have you actually checked whether the people running it are who they say they are?
Chapter 5 brings us to the classic fixed income question: which bonds are cheap and which are rich? But the authors remind us right away that cheap-rich analysis is just one part of relative value. The bigger question remains: what is the best way to express a particular view?