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Behavioral Finance Finance Long-Form Article Series

History is not the Future

Setting the Context In this week’s article, we explore a plethora of topics, from “End of History Illusion” to “Pluralist Ignorance Effect”, concept of “Alternative Histories” and other such fluff from interdisciplinary domains, pivotal for investors to be cognisant about in the world of Finance. This particular read is tilted towards Behavioural Economics, Human Psychology, […]

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Finance Investment Strategy Portfolio Management

The Law of All or Nothing

Introduction In probability theory, the Kolmogorov’s zero–one law, named in honour of Andrey Nikolaevich Kolmogorov (yeah, I couldn’t pronounce that either), specifies that a certain type of event, called a tail event, will either almost surely happen or almost surely not happen; that is, the probability of such an event occurring is zero or one. The significance of this law is more pronounced in […]

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Finance Investment Strategy Portfolio Management

Statistical Arbitrage

What is Statistical Arbitrage? This is one of the strategies employed by Hedge Funds and High Frequency Traders, wherein they profit from mispricings in the market. The core idea being, prices of financial securities revert to their long-term historical average value over time (mean-reversion). To shed more light, let’s quickly walk through the mechanics of […]

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Finance Fixed Income

Fixed Income Part II

Guest Post by Vrushank Setty Key ideas discussed As we have discussed the basic terminologies of what Fixed Income instruments are in the previous post, lets dive deeper and understand the following concepts in this post: What is a Yield Curve? What are the common shapes a Yield Curve can take on? What is a […]

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Finance Portfolio Management

Portfolio Management Theories

Setting the context: In this article, let’s delve into the history of Portfolio Management. We will explore the different theories which etched their mark in the domain of portfolio management. Theory 1 – Dow Theory Charles Dow the ex-editor of the Wall Street Journal, presented his theory on the influences on Stock Market movements. His […]

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Finance Investment Strategy

Sustainability & Investing

Setting the Context: With the rise of collective awareness of the importance of sustainability in our social, corporate and economic actions, Environmental, Social & Corporate Governance (ESG) based Investing has amassed vast popularity. This concept is definitely not a new one and the thought of being more “environmentally-friendly” or “consciousness” has prevailed for decades, however, […]

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Books Finance

Mastering the Market Cycle by Howard Marks

Setting the context: Howard Marks is a legendary billionaire investor and has received acclamations for his memos by Warren Buffet himself. He is the Co-Founder and Co-Chairman of Oak Tree Capital Management and has about 50 years of investing experience under his belt. Through his books “Mastering the Market Cycle” and “The Most Important Thing”, […]

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Finance Investment Strategy

Derivatives 101

Setting the Context Derivatives are part of the Alternative Investment asset class and provide a very interesting dynamic in hedging investment portfolios. In this week’s article let’s go over “What exactly Derivatives are?”, “What are Forwards, Futures and Options?” and examples of using Forward Contracts and Call Options as hedging instruments. What is a derivative? […]

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Finance Investment Strategy

Hedge Funds 101

Introduction This week, let’s gain a good understanding about “What exactly Hedge Funds are?”, “What they do?” and “Who they cater to?”. Hopefully by the end of this article, you’d associate the term “Hedge Funds” with more than just fancy cars, an elite lifestyle and humungous mansions (that’s what most movies portray right?) Alright, let’s […]

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Behavioral Finance Finance

Behavioral Finance Series Part II

Part I gave a good introduction to what Behavioural Finance ACTUALLY is. As a recap, Behavioural Biases can be divided into TWO categories namely, (I) Cognitive Errors and (II) Emotional Biases. In this post, let’s delve deeper and understand what our “Emotional Biases” are shall we? EMOTIONAL BIASES Emotional Biases are the types of behavioural […]