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Nonsystematic and Systematic Risk

On 05/18/2010, in Investment Concepts, by Jordan Wilson

When making investment decisions, one should always perform both quantitative and qualitative analysis.

By investment decisions, I include financial instruments such as stocks and bonds. But it also refers to any decisions you make when operating a business.

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A Brief Introduction to Risk

On 05/03/2010, in Investment Concepts, by Jordan Wilson

The concepts of risk and return are core to understanding the investment process.

Investors wish to maximize their returns while minimizing risk. Asset classes are compared on the basis of their risk and their risk-return expectations. Hedging activities are conducted to reduce risk while leveraging helps to increase risk.

Everything investors do relates to risk and return.

But what is risk?

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Brokerage Firms

On 02/08/2010, in Investment Concepts, Investment Strategies, by Jordan Wilson

With few exceptions, if you wish to buy or sell publicly traded investments, you will need an agent to do so on your behalf.

That agent is a brokerage firm.

Brokerage houses fall into two broad categories; full service or discount. In both cases, you will pay a service charge, known as a commission, to the agent when buying or selling investments.

Which is right for you?

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Avoiding an investment bubble is not as easy as it may seem. If it were, investors would take appropriate steps and the bubble would never be created in the first place.

So what can you do to avoid losing a lot of money quickly?  Let us consider some common sense avoidance tips.

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Learning to Spot an Investment Bubble

On 01/07/2010, in Investment Concepts, by Jordan Wilson

Learning how to invest while young is likely the best investment in time you will ever make. You can attempt a variety of strategies on paper. If they succeed, they may be used with real money once you have some to invest. If they do not, you learn a valuable lesson without losing any money.

Today, let us look at ways to practice identifying investment bubbles.  

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Investment Bubbles

On 12/21/2009, in Investment Concepts, by Jordan Wilson

Following on from “Three Common Investment Mistakes” and the impact of behavioural finance on investing, let’s take a quick look at investment bubbles.

Most of you are familiar with the US housing crash over recent years. Some of you may also remember the dot.com craze in the 1990s. Those would be examples of bubbles breaking.

In his very interesting work, The Ascent of Money, Niall Ferguson lists 5 stages of an investment bubble. The headers are his. The editorializing is all mine. So do not blame Niall.

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Many people think that investing is all about calculations and analysis. Poring through financial statements, expert analysis, and news releases to determine the best investments.

While true to a certain degree, investor behaviour also has a tremendous impact on portfolio returns. At times I think behaviour has more clout than either technical or fundamental analysis.

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Compound Returns in Action

On 12/11/2009, in Investment Concepts, by Jordan Wilson

Want to become a millionaire?

Unless you are counting on that big inheritance or playing the lottery every week, your best shot is through investing.

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Avoid Basic Investing Mistakes

On 12/11/2009, in Investment Concepts, by Jordan Wilson

Beginning to invest while you are young is a smart thing to do.

It takes self-discipline to consistently set aside a portion of your earnings each month. As you see the total asset growth that a relatively small monthly contribution brings, it will reinforce that discipline to save for the rest of your life.

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Compound Return Investment Lessons

On 12/10/2009, in Investment Concepts, by Jordan Wilson

In my post, The Power of Compounding, we looked at simple versus compound returns. Now let us examine some very important investing lessons resulting from the power of compounding. If you can adhere to these lessons, you will greatly enhance your investment returns.

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