The most comprehensive educational resources for finance

Trading Mistakes to Avoid

As a trader it is always imperative to avoid / minimize mistakes and let the profits run. Its much easier said than done, here are some of the common mistakes we should try to avoid: Having the belief “I am better than others” so I will always be on the winning side. This false notion makes

Strip Hedge and Stack Hedge in Commodities Market

The concept of hedging in commodities markets is the same as in the financial markets and that is to mitigate the exposure to price movements due to the commodities positions. The most common instruments that are used for hedging purposes are futures contracts as they are highly liquid instruments. Futures contracts are the most popular

Bond Duration and Convexity Simplified – Part 2 of 2

As we learnt in part 1, the duration, as measured by the slope of the curve, changes as yields change. The slope of the curve is steeper (and the duration is larger) at low yield levels, and becomes flatter (and the duration becomes smaller) at high yield levels. This property is called convexity. Convexity is

JPMorgan Chase: Out of Control

This new report from GrahamFisher focuses on the risk management and internal control environment at JPMorgan Chase. The report kind of describes JPMorgan Chase as mostly a Criminal Enterprise. Since 2009, the Company has paid more than $8.5 billion in settlements for the various regulatory and legal problems discussed in this report. These settlement costs,

Why Commodity Index Strategies are Active Investments

In the equity portfolio management, indexing strategies are considered to be passive portfolio management strategies, since a portfolio manager just needs to follow the index and no active management is required. However, the same is not the case with commodity index strategies which are considered to be active strategies. This is so due to several

How Commodity Investments Can Help a Portfolio

There are several benefits that commodities offer to a portfolio manager as a potential long-term investment option. Some of these points are highlighted below: Commodities have negative correlation with other markets such as equities and bonds, which makes it a suitable choice for diversifying the portfolio. In the past, both equities have exhibited similar risk-return

Contango and Backwardation in Commodity Markets

In the commodity markets, the relationship between spot prices and futures prices is explained using the concept of contango and backwardation. Contango: Refers to the situation where the futures prices are higher than the current spot prices. Backwardation: Refers to the situation where the futures prices are lower than the current spot prices. Contango is

Sovereign Creditworthiness and Financial Stability: An International Perspective

Financial stability depends critically on the two-way interaction between banks and governments. Sovereign creditworthiness represents the ultimate source of insurance for the fi nancial system and provides a solid basis for the pricing of assets, by supplying a risk-free security. A sound banking sector ensures the smooth fl ow of credit to the economy as

Challenges of Financial Innovation

This reading is a part of the syllabus for FRM Part 2 Exam in the section ‘Current Issues in Financial Markets’. The ebook below is Challenges to Business in the Twenty-First Century. For FRM exam, only chapter 2 – Challenges of Financial Innovation is relevant. In this chapter, Myron S. Scholes argues that financial innovation

How to Make a Million Dollars an Hour

If you liked our article – Nine facts about Working on Wall Street – you will also like this video interview with Les Leopold, author of the book How to Make a Million Dollars an Hour. In the interview, Russia Today talks to Les Leopold – an author of a book exposing Wall Street’s super-profitable