Hi there, Boaz is away and so I’m filling in for the next few days. I want to tell you about something that has been making me incredibly nervous since I found out about it over a month ago. Aside…

BALTIMORE – The stock market got a healthy bounce on Monday. Where it goes from here is anyone’s guess. But you don’t have to guess. Because you don’t make money in the stock market from short-term moves. You’ll guess wrong…

HAMILTON, BERMUDA – Stocks rattled around on Monday; investors didn’t know where they wanted to go… so they went mostly nowhere. We turn to the newspapers… Invitation to Claptrap Opening a newspaper is always an invitation to claptrap. The New…

What are Treasuries? Treasuries are the common name for the United States Treasury securities. These are government debt instruments issued to finance the national debt of the US, the equivalent of British gilts or German bunds. US Treasuries are considered…

What is fiscal policy? Fiscal policy refers to ways of using government revenue collection, namely taxes, and spending it with the aim of influencing the economy. By altering the levels of taxation and public expenditure, a government’s goal is to…

What is a swap? A swap is a derivative in which two parties exchange financial instruments, in most cases involving cash flows between them. These cash flows are calculated over a notional principal amount. Each cash flow is commonly referred…

What is a defensive stock? A defensive stock is a type of stock that generates a constant dividend and stable earnings independently of the state of the stockmarket performance. Defensive stocks are typical of firms that produce or distribute consumer…

What is correlation? In the finance and investment industries, correlation is a statistic that measures the degree to which two securities move in relation to each other. Correlation is computed into what is known as the correlation coefficient, which has…

What is deleveraging? Deleveraging is when a firm or individual aims to decrease its total financial leverage. The simplest way for achieving deleverage is to pay off any existing debt on its balance sheet. When this is not possible, the…

What is private equity and how does it work? In finance, a private equity is a way of raising investment capital from high net worth individuals and institutions for the purpose of investing and acquiring equity ownership in companies. A…

What is a credit rating? A credit rating is a way of measuring the likelihood of a prospective debtor paying back a debt.  In practice, it represents an evaluation of the creditworthiness of the debtor and the risk of defaulting….

What is a CFD trade? In finance, a contract for difference, or CFD, is a type of financial derivative that allows traders to profit from movements in asset prices. Speculations on prices moving up are known as long positions, and…

What is a ‘handle’ in trading? In trading, a handle is the whole number part of a price quote, disregarding the decimal. For example, if a quote for a stock is £78.42, the handle will be £78. Traders often refer…

What is the DAX? The Deutscher Aktienindex, commonly referred to as the DAX index, or simply DAX, is a blue-chip stockmarket index consisting of the 30 largest German companies trading on the Frankfurt Stock Exchange. Big names like Adidas, BMW,…

What is Deflation? In economics, deflation is a sustained decrease in the prices of goods and services and a contraction in the supply of circulated money within an economy. It is the opposite of inflation – in fact, deflation only…

What is Money Supply? The ‘money supply’ is the total amount of monetary assets available, like currency in circulation and demand deposits convertible into cash, in an economy at a specific time. This definition may vary, as sometimes it is…

What is liquidity? In economics, liquidity refers to the amount of cash, cash equivalents or other assets that can be converted into cash without difficulty. Money, or cash, is the most liquid asset out there. It can be easily exchanged…

What is a dividend? In finance, dividends are company profits that are paid to its shareholders. Usually, they can be distributed as cash deposited into a bank account (cash dividend) or in the form of further shares (stock dividend), if…

What is a margin? In finance the definition of ‘margin’ varies depending on the context. Buying on margin, or simply “to margin”, means buying an asset using borrowed funds provided by a broker. For example, if I want to buy…

What is an Index? In finance, an index is a statistical indicator for a change in value of a securities market. It is computed by weighting the prices of all stocks or bonds within a certain sector in order to…

What is an option? In finance, an option is a contract that gives the right, but not the obligation, to buy or sell a quantity of an asset or instrument – be that a bond, commodity, stock, or currency –…

What is a Bond Yield? A bond yield is the return that an investor expects when buying a bond. A commonly used term is “yield to maturity” (YTM). The YTM is expressed as a figure which takes into account the…

What is Quantitative Easing? Quantitative easing (QE) is a radical form of monetary policy where a central bank generates new money electronically to purchase financial assets, such as government bonds. The aim is to increase private sector spending to stimulate…

What is a Moving Average? Moving averages, also known as rolling averages or running averages, are a way of examining an asset’s price action while ignoring short term noise. They let an investor look at the general direction of an…

What is spread betting? Spread betting is a way of making a profit from the price action of an asset, like a share, an index (such as the FTSE 100), or even a cryptocurrency like Bitcoin without ever owning the…

What is Leverage? In finance, leverage refers to the use of borrowed funds to purchase an asset, with the aim that its price appreciation and/or income it generates after taxes from the asset will exceed the borrowing cost. Leveraging is…

What is an investment trust? An investment trust is a public limited company. Its goal is to invest and generate a return for its shareholders, through the supervision of a fund manager. Investment trust shares can be purchased and sold…

What is EBITDA? Earnings before interest, tax, depreciation and amortisation (EBITDA) tries to achieve this by taking operating profit and adding back two subjective costs: depreciation and amortisation. Even though these charges can be arbitrary sometimes, EBITDA helps to reflect…

What is a Zero Coupon Bond? A zero-coupon bond (accrual bond, deep discount bond or discount bond) is a debt security which pays no interest or coupon (annual dividend). The holder receives income annually or semi-annually from coupon payments. Most…

Definition of Utilities: Utility is an organisation that maintains the infrastructure for a public service, such as electricity, water, sewage and natural gas. In recent years, mobile and fixed-line broadband services are being called utilities. Often, the same company in…

What is a spread in business? In finance, spread means the gap or difference between two prices or interest rates and can be applied to multiple trades. In stock trading, the bid-offer spread (also bid-ask, buy-sell or bid-offer spread) is…

What is the S&P 500? The Standard & Poor’s 500, the S&P 500, or just “the S&P”, is an American stockmarket index based on the market capitalisations of 500 large companies having common stock listed on the New York Stock…

What is a SIPP? SIPPs Explained A self-invested personal pension (Sipp) is a type of pension in which the individuals are allowed to make their own investment decisions, with a large degree of flexibility. This DIY pension is approved by…

What is a Recession? An economic recession is a marked decline in gross domestic product (GDP) for two or more consecutive quarters. Usually, a recession scenario includes a fall in GDP (inflation-adjusted GDP), household income, inflation, stockmarkets, general investment spending,…

What are the basics of monetary policy? Monetary policy is the process of controlling the supply of money (the size and rate of growth of the money that circulates in the economy) in a given country. Usually, it is carried…

What is a gilt in finance? Gilts are a type of government bond issued to raise money. As the government is unlikely to default on its payments, gilt-edged securities are considered one of the safest long-term investments. Their lower risk…