Money Archives

Warren Buffett: Value Investing and His Long-Term Strategy

How did Warren Buffett become one of the most successful CEOs of all time? And what is the Warren Buffet value investing strategy? Born in 1930 in Omaha, Nebraska, Warren Buffett was the son of a stockbroker and the grandson of a grocery store owner. His early entrepreneurial activities included paper routes and reselling soft drinks. His business grew over time, and so did Warren Buffett’s value investing strategy, moving from strictly value investing into and investing style that included more complex stocks for the long term.

Capital Allocation Process: Winning Strategies of Great CEOs

What is capital allocation, and how does it work? Why does a strong capital allocation strategy make for a great CEO? Capital allocation is the practice of distributing and investing a company’s resources in a way that will make further profits. For the Outsider CEOs, an unorthodox capital allocation strategy was the building block on which they developed other strategies that resulted in higher profits.

CDO Managers: Worth the $26 Million Paycheck? (Big Short)

What does a CDO manager do? How much can CDO managers make? What role did one CDO manager play in The Big Short? A CDO manager is someone who manages collateralized debt obligations. A CDO manager may also repackage original CDOs (themselves repackaged bundles of mortgages) into new towers of bonds. We’ll cover what CDO managers do, how much they can make, and why one CDO manager was ridiculed in the book and movie The Big Short.

Myth of Socioeconomic Mobility in America (Hillbilly Elegy)

How flexible is socioeconomic mobility in America? Is socioeconomic mobility a myth? And when is economic mobility detached from social mobility? Hillbilly Elegy sets out to explore the struggles of the rural white working class in 21st-century America and the barriers to socioeconomic mobility. The book tells a story of dysfunctional families; substance abuse; the material, spiritual, and moral decline of Appalachia; and the struggles to achieve true economic and social mobility in the United States.

Gaussian Curve: Why It Fails to Explain the Real World

What is a Gaussian curve? In which situations can it accurately describe the world? Where does it fail, and what are its limits? The Gaussian curve is another name for the classic bell curve, or normal distribution curve. It’s named after German mathematician Carl Friedrich Gauss, and it describes many phenomena accurately. We’ll look at where the Gaussian curve is accurate and where (and why) it fails.

Hayek’s Economic Theory: The Problem Is with “Experts”

What was Friedrich Hayek’s economic theory? Why did he spend so much of his career railing against socialism? Economist Friedrich Hayek argued that a dynamical system like the economy was simply too complex for a single entity to master. This was in contrast to the prevailing rational choice theory. We’ll cover the basic elements of Hayek’s libertarian economic theory and explore why uncertainty makes prediction impossible.

Barbell Strategy: The Safest Way for Maximum Profits

What is the barbell strategy? What is a barbell investing approach? How can you adopt the barbell strategy to mitigate risk in investing and in life? The “barbell strategy” is an approach designed to minimize the pain of a negative event while, potentially, reaping the benefits of a positive event. The barbell strategy is commonly used in investing, but it’s also applicable to life more generally. We’ll cover the nature of the barbell strategy and other strategies for mitigating risks.

Rational Choice Theory: Definition and Example

What is rational choice theory? What is a good rational choice theory example? Rational choice theory is an economic theory that holds that, when faced with an economic decision, individuals will choose the option that gives them the greatest economic benefit. There are many critics of rational choice theory–after all, individuals aren’t always rational. We’ll cover a rational choice theory example and explore the above rational choice theory definition further.

Black Swans in Finance: What They Are, How to Prepare

What is a black swan in finance? Is there a way to predict and prepare for black swans in finance? We’ll look at some examples of black swans in the financial world and business and explore how to best prepare for future black swans.

Why Capitalism Is Failing You and Making Society Vulnerable

Some say capitalism is failing. Is it? How can we tell? Is there anything we can do about it? Capitalists have reason to champion the system. It’s spurred economic, scientific, and imperial growth the way few other imagined realities have. But what happens in situations when it fails to work? We’ll cover two critiques of capitalism that say that capitalism has failed.