The World's Best Book Summaries
What was the tulip craze? How could flowers become so valuable in such a short space of time? The tulip craze in 17th-century Holland is widely known as the very first economic bubble. The price of tulips escalated so much that people sold their valuables to buy tulips, and could buy assets like houses with them. This might seem absurd, but here’s an explanation of what happened. Learn more about the tulip craze below.
What is the difference between technical vs fundamental analysis? Why might a combination of both be the best approach? Technical vs fundamental analysis are the two main methods of security analysis. Technical analysis aims to predict future stock prices using graphs of past price movements, while fundamental analysis opts for an in-depth study of the firms’ balance sheets, taxes, and earnings. Each approach has its advantages and disadvantages. Keep reading to find out the difference between technical vs fundamental analysis.
What is a risk tolerance level? What types of investments are best suited to you? Your risk tolerance level measures how comfortable you are with risk and determines the stocks you should invest in. If you’re nearing retirement (or you want to sleep well at night), you might choose investments with “Low” and “Moderate” levels of risk. If you still have many working years ahead of you (or you’re a thrillseeker who’s willing to suffer sleepless nights), then you might opt for assets with “High” risk levels. Keep reading to find out your risk tolerance level and recommended investments.
What is guaranteed basic income? What are the objections to universal income? Guaranteed basic income is a practice where the government pays each citizen a bare minimum wage every year. The hope is that the guaranteed income will remove the constant worry for survival that leads to depression. Critics have objected on the grounds that it will be very expensive and will make people lazy. Read on to learn more about the advantages and criticisms of guaranteed basic income.
Where do governments get the money they spend? What are the tax revenues used for? And what happens when governments go into debt? Generally, to pay for current benefits like the military and civilian personnel, governments use tax revenues, allowing those benefited to pay. For investment projects like highways and schools, governments sell bonds, go into debt, and essentially push the cost onto future generations who will benefit from the investment. Keep reading to learn about the economics of government spending, what happens when governments go into debt to finance current expenditures, and the implications of taxation.
What was the housing bubble of 2008? What caused this devastating financial crash? The stock market crash and housing bubble of 2008 saw a huge decline in house prices from the 2006 peak. The fallout was huge, with many big financial institutions facing considerable losses. The causes are debated, but essentially too many people took on loans they couldn’t afford, leading to an inevitable crash. Here’s what happened during the housing bubble of 2008.
What is autopilot investing? Why is it the best investment method, according to Burton Malkiel? Autopilot investing involves buying broad index mutual funds or exchange-traded funds, rather than buying active individual stocks. This is Burton Malkiel’s preferred method of investing, as he advises building a portfolio around index funds. Learn about autopilot investing below.
What are some examples of historical stock market returns? What can you learn from these examples? The best way to understand returns at work is to examine examples of historical stock market returns. Looking at examples of historical stock market returns will show you how prevailing market conditions affected stock market returns. Keep reading for a guide to historical stock market returns.
What is a speculative bubble? How has irrational optimism caused some of the biggest stock market crashes in history? A speculative bubble is a sudden rise in stock price fuelled by public speculation and unfounded optimism. From the tulipmania of 17th Century Holland to the more recent “dot-com” crash, speculative bubbles have led to some of history’s biggest financial disasters. When it comes to speculative bubbles, some get lucky but most are left holding the bag. Learn about speculative bubbles below.
How are resources allocated in a market economy? What is the advantage of price-based resource allocation? In a free-market economy, resources are allocated by prices. In this way, a market economy is self-regulating, allowing real-time coordination across millions of goods and services, without any central authority knowing and setting all the prices. In this article, you’ll learn how prices allocate resources and how supply and demand respond to prices.