Investing basics
Where an account begins: the broker, the depository, the first trade, and what separates investing from speculation.
20 articles
The Nixon Shock: why the dollar stopped being a claim on goldThe Nixon Shock is the name given to the decision by US President Richard Nixon announced on 15 August 1971.5 min
Sales per square metre: how much revenue the selling space generates, not the expansion programmeSales per square metre is a retail chain's revenue for a period divided by its average selling space over the same period.6 min
Financial Statement Fraud: Where Earnings, Cash and the Balance Sheet DivergeFalsified financial statements almost never show up in a single line item.6 min
Flat tax: why a single rate does not mean an equal burdenA flat tax is a system in which all taxable income is taxed at a single rate, however much a person earns.6 min
Income Tax on the Balance Sheet: What a Company Owes the Budget Now and What It Has DeferredIncome tax liabilities come in two forms: current and deferred.5 min
Notional value of a derivative: how much underlying exposure sits behind the marginThe notional value of a derivative is the value of the underlying asset covered by the contract: the price of the underlying multiplied by the quantity in one lot.6 min
Negative pledge covenant: what it promises a bondholder and where it leaksA negative pledge covenant is a borrower's promise not to pledge its assets to other creditors or, if security is granted after all, to secure the debt owed to bondholders with it equally alongside the new lender.6 min
The small retail investor on the exchange: where the losses come from mechanics, not forecastsA small retail investor trades in the same sessions and under the same rules as large participants, but costs weigh on them differently.5 min
The Maastricht criteria: the eurozone entrance exam, and why it is never marked to the letterThe Maastricht criteria are the set of conditions a European Union country must meet to adopt the euro: low and stable inflation, a moderate budget deficit, limited government debt, a stable national currency exchange rate, and long-term interest rates close to those of the most disciplined6 min
The Quantity Theory of Money: When New Money Feeds Into Prices and When It Doesn'tThe quantity theory of money holds that, in the long run, the general price level is determined by the amount of money in the economy: if the money supply grows faster than the output of goods and services, the difference shows up as rising prices.5 min
Cliff vesting of stock options: why an employee gets nothing before the first dateCliff vesting is a condition of a stock option plan under which the right to options does not accrue gradually from the first day of employment but arises all at once when an initial waiting period expires.6 min
Industrial REITs in Russia: what you are buying in a warehouse unit fundAn industrial REIT is a stake in a portfolio of warehouses, logistics and production facilities that gives its holder a share of the rental income.5 min
Emergency Fund: Where to Keep Money You Might Need TomorrowA financial emergency fund is a reserve of money set aside in case you lose your income or face a sudden large expense, and the key requirement for it is not return but accessibility.6 min
The accumulation phase: why an investor's main asset is their future earningsThe accumulation phase is the stage of an investor's life cycle when income from work exceeds consumption and the difference is regularly converted into financial assets.5 min
Leases under IFRS: why they end up in debt and inflate EBITDA at the same timeUnder the current IFRS standard on leases, in force since 1 January 2019, a lessee recognises almost every lease contract on its balance sheet as debt.5 min
Joint Ventures: How Shared Control Keeps Revenue and Debt off the Parent's Books7 min
Firm-commitment underwriting: who takes on the placement risk, and at what priceWhen an underwriter buys the entire issue (known in English-language practice as a firm commitment), the arranger purchases the securities from the issuer in full and at a fixed price before it has found buyers for them, then resells them to the market for its own account and at its own risk.5 min
Replacement Cost and Actual Cash Value: What the Insurer Pays For and Who Bears the Wear and TearThe difference between these bases comes down to one question: who pays for the wear and tear the property has accumulated by the time of the loss.5 min
Warrants: the right to buy shares from the issuer itself, and whose stake gets diluted as a resultA warrant is a right, issued by the company itself, to buy its shares at a price agreed in advance up to an agreed date.5 min
Borrower solvency: why lenders look at cash flow, not profitA borrower's solvency is judged by its ability to meet mandatory payments in cash and on time, and only second by the size of its profit.5 min