Financial Theory Articles

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  1. How To Lie With Financial Statistics

    Can you really trust what the financial services industry puts out? We tell about some tricks that hide the truth.
  2. The Basics of Options Profitability

    The adage "know thyself"--and thy risk tolerance, thy underlying, and thy markets--applies to options trading if you want ...
  3. 4 Psychological Traps That Are Killing Your Portfolio

    Sometimes your largest financial hurdle is our head. Learn about the common mind-traps that trip up investors.
  4. 4 Steps To Creating A Better Investment Strategy

    Make your trading safer and more streamlined by following these simple guidelines.
  5. What Are The Odds Of Scoring A Winning Trade?

    Just because you're on a winning streak doesn't mean you're a skilled trader. Find out why.
  6. 5 Investment Risks Created By Global Warming

    Climate-change deniers and believers alike would be wise to prepare for the worst.
  7. Digging Into The Dividend Discount Model

    The DDM is one of the most foundational of financial theories, but it's only as good as its assumptions.
  8. Understanding The Sharpe Ratio

    This simple ratio will tell you how much that extra return is really worth.
  9. Spotting Companies In Financial Distress

    What are the warning signs that a company is struggling - or worse, sinking - financially? Read on to find out.
  10. The Rise Of The Modern Investment Bank

    Get to know a little bit about the institutions whose actions help to guide free markets.
  11. The Uptick Rule Debate

    This rule was deemed ineffective and repealed in 2007, but critics argue it protects the market from bear raids.
  12. A Clear Look At EBITDA

    This measure has its benefits, but it can also present earnings through rose-colored glasses.
  13. The 3 Moral Types Managing Your Money

    Your financial fate is influenced very substantially by whether your broker or firm is immoral, amoral or moral.
  14. Projected Returns: Honing The Craft

    Find out how to forecast long-term returns on the three major asset classes.
  15. Eliot Spitzer - Man Of A Thousand Scandals

    Learn about the Wall Street scandals Eliot Spitzer prosecuted before perpetrating his own.
  16. 5 Mental Mistakes That Affect Stock Analysts

    They know more about stocks than the average person, but analysts are still affected by biases. Find out what they are.
  17. Taking Shots At CAPM

    Find out why many investors think the capital asset pricing model is full of holes.
  18. The Uses And Limits Of Volatility

    Check out how the assumptions of theoretical risk models compare to actual market performance.
  19. Andre Kostolany: Germany's Stock Market Guru

    We can learn a lot from Kostolany and his "steady or shaky hand" investing philosophy.
  20. The Problem With Financial Journalism

    One of the most serious problems facing the general investing public is that that they fail to learn enough about investments ...
  21. Take On Risk With A Margin of Safety

    More common risk theories can lead to missed opportunities. Find out how margin of safety can propel your portfolio.
  22. The Unique Ways Women Approach Finance

    Understanding gender differences and how they are changing is fundamental to understanding the investing world.
  23. A Primer On Private Equity

    Private equity investing is becoming more accessible for individual investors; find out how you can get involved.
  24. The Getty Oil Takeover Fiasco

    It was the largest takeover in history and one of the most dramatic. Learn all about the fate of Getty Oil.
  25. Dissecting The Bear Stearns Hedge Fund Collapse

    Learn how a deadly mix of greed and leverage cost investors millions.
  26. Modern Portfolio Theory vs. Behavioral Finance

    Modern portfolio theory and behavioral finance represent differing schools of thought that attempt to explain investor behavior. ...
  27. The Evolution Of Banking

    Banks are a part of ancient history. Find out how this system of money management developed into what we know today.
  28. Microfinance: What It Is And How To Get Involved

    This growing industry is full of opportunities for the socially conscious investor.
  29. What Is Market Efficiency?

    The efficient market hypothesis (EMH) suggests that stock prices fully reflect all available information in the market. Is ...
  30. Getting On The Right Side Of The P/E Ratio Trend

    Buying at the right time is crucial, but how do we know when that is?
  31. Herding Tendencies Among Analysts

    Just like private investors, analysts are sometimes guilty of following the herd and failing to think independently.
  32. Understanding Leveraged Buyouts

    LBOs are often presented as predatory by the media, but it really depends on which side of the deal you're on.
  33. How The Sarbanes-Oxley Era Affected IPOs

    After the infamous collapse of companies like Tyco, Enron and WorldCom, the government responded to try and prevent it from ...
  34. Where's The Market Headed Now?

    Whether up, down or sideways, learn about some of the factors that drive stock market moves.
  35. Does Higher Risk Really Lead To Higher Returns?

    Learn about what is being dubbed the low-volatility anomaly, why it exists and what we can learn from it.
  36. Invest Like Madoff - Without The Jail Time

    This Ponzi scammer's professed strategy has been vilified, but it actually works.
  37. Avoid ETFs With These Traits

    Deciding which ETFs to avoid can be as important an investment decision as deciding in which ones to invest.
  38. The Most Accurate Way To Gauge Returns: The Compound Annual Growth Rate

    The compound annual growth rate, or CAGR for short, represents one of the most accurate ways to calculate and determine returns ...
  39. Accelerating Returns With Continuous Compounding

    Investopedia explains the natural log and exponential functions used to calculate this value.
  40. A Study On The Wealth Effect And The Economy

    The notion that the wealth effect spurs personal consumption makes sense intuitively. After all, wouldn’t you be more inclined ...
  41. Diversification Beyond Stocks

    If you think holding several stocks means you're diversified, think again - there's much more to be done to reduce portfolio ...
  42. Calculating Covariance For Stocks

    Learn how to figure out how two stocks might move together in the future by calculating covariance.
  43. Seven Market Anomalies Investors Should Know

    Though they're unpredictable and heavily contested, market anomalies can often work in an investor's favor.
  44. Financial Markets: Random, Cyclical Or Both?

    Are the markets random or cyclical? It depends on who you ask. Here, we go over both sides of the argument.
  45. The Intelligent Investor: Benjamin Graham

    Learn about the man who mentored Warren Buffett, who eventually became the investing "Oracle of Omaha".
  46. The Optimal Use Of Financial Leverage In A Corporate Capital Structure

    The amount of debt and equity that makes up a company's capital structure has many risk and return implications.
  47. How Risk Free Is The Risk-Free Rate Of Return?

    This rate is rarely questioned - unless the economy falls into disarray.
  48. Top 4 Most Scandalous Insider Trading Debacles

    Here we look at some of the landmark incidents of insider trading.
  49. Nobel Winners Are Economic Prizes

    Before you try to profit from their theories, you should learn about the creators themselves.
  50. 7 Controversial Investing Theories

    We take a closer look at the theories that attempt to explain and influence the market.
  51. Tracking Volatility: How The VIX Is Calculated

    When market volatility spikes or stalls, newspapers, websites, bloggers and television commentators all refer to the VIX®. ...
  52. Giants of Finance: Charles Dow

    Find out how this financial visionary helped everyday people enter the world of finance.
  53. Exploring The Current Account In The Balance Of Payments

    Learn how a country's current account balance reflects the country's economic health.
  54. Breaking Down The TSP Investment Funds

    For investors seeking growth, income AND capital preservation, the Thrift Savings Plan offered by the U.S. government is ...
  55. Introduction To International CAPM

    ICAPM is one of several models used to determine the required return on an asset, discover its limitations and how to use ...
  56. 4 Behavioral Biases And How To Avoid Them

    Here are four common common behavioral biases for traders and how to minimize their effects on your portoflio.
  57. Cash: A Call Option With No Expiration Date

    Cash is generally regarded as a drag on investment returns, but sometimes it may be preferable to hold a substantial cash ...
  58. Using The Price-To-Book Ratio To Evaluate Companies

    The P/B ratio can be an easy way to determine a company's value, but it isn't magic!
  59. Should You Invest Your Entire Portfolio In Stocks?

    It is true that stocks outperform bonds and cash in the long run, but that statistic doesn't tell the whole story.
  60. Risk Tolerance Only Tells Half The Story

    Just because you're willing to accept a risk, doesn't mean you always should.
  61. Invest Like A Pro

    By following the strategies of the pros, even a beginner can learn to invest like an expert.
  62. 5 Nobel Prize-Winning Economic Theories You Should Know About

    Here are 5 prize-winning economic theories that you’ll want to be familiar with.
  63. Finding Your Margin Investment Sweet Spot

    Borrowing to increase profits isn't for the faint of heart, but margin trading can mean big returns.
  64. Quantitative Analysis Of Hedge Funds

    Hedge fund analysis requires more than just the metrics used to analyze mutual funds.
  65. Choosing Between Dollar-Cost And Value Averaging

    These are two investing practices that seek to counter our natural inclination toward market timing by canceling out some ...
  66. DCF Valuation: The Stock Market Sanity Check

    Calculate whether the market is paying too much for a particular stock.
  67. Fundamental Speed: The "Duck-And-Jab" Approach To Forex

    By using economic releases in a timely way, buyers can beat the "big players" without endless chart analysis.
  68. How To Evaluate A Micro-Cap Company

    Learn how to think big by investing in smaller stocks.
  69. Understanding Social Impact Bonds

    Social impact bonds are powerful investment vehicles for the solving of social issues in a sustainable fashion.
  70. Equity Investing For The Buy-And-Holder

    The buy-and-hold investment strategy requires investors to disregard their emotional responses to market movements.
  71. Find The Right Fit With Probability Distributions

    Discover a few of the most popular probability distributions and how to calculate them.
  72. The Stock Market Loves The Olympics

    Over the last 26 Summer Olympics, the average rate of return of the DJIA during the games was an impressive 4%.
  73. Why Companies Change Exchanges

    Companies don't elect to leave an exchange so much as they're asked. Find out why.
  74. Overcoming Compounding's Dark Side

    Understanding how money is made and lost over time can help you improve your returns.
  75. States That Spend A Lot On Fourth Of July Celebrations

    Whether it's fireworks, parades or festivals, Fourth of July celebrations in these states are often big and expensive.
  76. Shifting Focus To Sector Allocation

    Investing in sectors may trump international investments for providing diversification.
  77. Low Vs. High-Risk Investments For Beginners

    Understanding risk is key to better investing.
  78. 8 Good Intentions With Bad Outcomes

    Here are some historical examples of companies that tried to do the right thing and failed miserably.
  79. Teaching Kids About Financial Literacy

    Financial literacy is an important subject to teach kids. It is now being taught in some schools.
  80. Is Stock Picking A Myth?

    Find out if mutual fund managers can successfully pick stocks or if you're better off with an index fund.
  81. How To Invest Like An Endowment

    Historically, Ivy League endowments have had a successful investment strategy. Will it work for you?
  82. The Basics Of Bonds

    Bonds play an important part in your portfolio as you age; learning about them makes good financial sense.
  83. The Lowdown On Penny Stocks

    Think penny stocks will make you rich? If you don't understand the risks, you could end up penniless.
  84. Psychopaths In The Trading Room

    Learn about a study that compares the behaviors of some stockbrokers to that of certifiable psychopaths.
  85. Why U.S. Home Prices Rely On Supply And Demand

    Look for factors that influence supply and demand and you might be able to predict which way housing prices will trend.
  86. 5 Stock Market Metrics Explained

    Learn how to evaluate a company's performance using metrics such as ROE, EPS and P/E ratio.
  87. Financial Careers Without A College Degree

    Credentials like on-the-job experience and licenses can be much more important for some financial careers.
  88. A Guide To Global Investment Performance Standards

    Is your investment management firm GIPS compliant? Learn more here.
  89. Bettering Your Portfolio With Alpha And Beta

    Increase your returns by creating the right balance of both these risk measures.
  90. Volatility's Impact On Market Returns

    Find out how to adjust your portfolio when the market fluctuates to increase your potential return.
  91. The Evolution Of The Gaming Market

    The gaming market has a rich history in America, from lotteries in colonial settlements and card games in old west saloons ...
  92. The Key To High Returns Is A Disciplined Strategy

    Learn about different investment strategies and how to pick the right one for you.
  93. The History Of The Modern Portfolio

    Learn how the writings of John Burr Williams and Harry Markowitz led to the creation of the investment portfolio.
  94. An Evaluation Of Emerging Markets

    Get the full story on this asset class before you write it off as too risky.
  95. The Basics Of Business Forecasting

    Discover the methods behind financial forecasts and the risks inherent when we seek to predict the future.
  96. Viewing The Market As Organized Chaos

    Find out how a cat and a ladybug prove markets are both random and efficient.
  97. What Investors Can Learn From M&A Payment Methods

    How a company pays in a merger or acquisition can reveal a lot about the buyer and seller. We tell you what to look for. ...
  98. 5 Ways To Protect Your Portfolio From Volatility

    Sometimes the best defense is the lack of offense. Here are the best boring ways to protect your portfolio in volatile markets. ...
  99. Key Players In Mergers And Acquisitions

    Strategic acquisition is becoming a part of doing business. Discover the different types of investor groups involved.
  100. 4 Types Of Money Market Yields

    We give you four equations to help figure out the yields on your investments.
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