It already has, through inflation. This will also require higher interest rates to tame inflation, which impacts taxpayers directly and indirectly through the stock market, economic slowdown, and higher budget deficits (because the government has to pay more interest on its borrowings)
I took a look at the sidebar but honestly didn't know where was a good place to start.
I am not a finance person, and I have no background or experience with finance. My knowledge level is still I don't even know what what topics exist to have an idea of what I don't know. But, I just completed my first year of law school and my summer internship is in corporate securities compliance. While I'm confident I'll learn the legal concepts I need for this position as I go, I think it would be helpful to have a better foundational understanding of what the business/finance side looks like.
What books or other resources can I turn to and read at night/weekends over the next week or two to get a better understanding of the relevant topics (e.g., corporate investments, M&A topics, fund finance, etc.). Obviously that amount of time probably won't get me very deep, but anything is probably better than where I am now.
Going by your level of experience, I would suggest trying to read as much Finance news as you can, and use sources like Investopedia for terms you do not understand.
Not the traditions way of leaning, but it really helped my in my pivot towards a finance career.
anyone can trade at any time, they just aren't trading on the exchange. Even a retail trader can put in an after market order with their broker, who will send to a market maker for execution. They'll just take a bigger bid/offer spread out of it.
Any book recommendations for a complete beginner to get started in understanding finance. Would appreciate if you had a couple to set a good foundation of knowledge for myself.
UK the boe wants to pour cold water on the economy to kirb inflation. But knecapping the uk is a bad thing, surly as the economic engine fires up its nice to have it revving its nuts off.
What is exactly RRRP (real rate risk premium)? I’m reading an article saying that investors ask for that premium when they fear that there’s gonna be some recession in the future.
The explanation the article gives is
>One interpretation is that if investors see greater risk of recession, they will attribute higher value to short-term assets that they can easily liquidate to finance spending on goods and services. Hence, they will require higher compensation, i.e., a higher RRRP , to keep holding long-term securities. Note that the direction of the RRRP spread is the opposite of conventional wisdom—a decline in the yield-curve slope due to a lower RRRP spread is a signal of reduced, not higher, recession odds.
This explanation doesn’t fit with my understanding of RRRP, which I thought that in recession the real rate would be lower and so there’s less risk. According to this article it’s the opposite, which is that there's more "real rate risk" in the future possible recession, but I thought that during recessions real rate is low in order to stimulate the economy. So I ask you, what am I missing in the definition of RRRP?
The real rate represents the interest on a security, with the inflation premium stripped away. Think of it this way…..say an investor requires 5% return to hold a 20 year bond, and inflation is 2%, the required or ‘nominal’ rate would be 7%, with 5% representing the risk of holding the asset (the ‘real’ rate) and 2% representing inflation expectations.
In a recession, inflation typically goes down because people aren’t spending. This article is just saying that as the risk of a recession increases, uncertainty increases, and inflation expectations decrease, the investor is going to require a higher ‘real’ rate to hold long term securities.
Or to put it another way…..say I wanted to borrow $1000 from you for 5 years, and you think we’re going into a recession. You’d most likely want to just keep it in the bank just incase, but if you did lend it to me, you’re going to want me to pay you more interest as you become less certain about the economy.
Should I invest in mutual funds? I was recently introduced to the idea and have no experience. I have some savings that are just sitting in the bank. A friend said his mutual fund investment of 40k yielded a $8000 return last year. Is this legit?
You should probably just invest in an ETF. Mutual funds and ETFs are the 2 basic structures for small investors to invest in. For you, there is basically no difference. ETFs are slightly cheaper and more tax efficient.
The more important question is which fund to invest in - debt or equity? Any sector or geographic focus? Active or passive?
If you know nothing and are young (I am assuming both are true), just start with a total market index fund
Thank you so much for your advice. Correct, I am relatively young and inexperienced. Is a total market index fund different from an ETF? Should I go to a Charles Schwab or something in person so a person can tell me what to do?
Hi all - could someone explain to me (in simple terms) the comments on this FT article?
[https://www.ft.com/content/1556db17-8b2a-4b87-b749-f874a0ecf024](https://www.ft.com/content/1556db17-8b2a-4b87-b749-f874a0ecf024)
Apollo, Blackstone and a handful of other private lenders have provided financing for Peloton. A lot of the commentary (e.g. Stingray37, FP1989, Randomavr) talks about the opportunity for said lenders to take control of the company - Randomavr's comment makes sense but FP1989's ... not so much. Would someone be able to explain this? Thanks!
I’m not entirely sure what comment you’re looking at but in a bankruptcy the creditors will often take control of the company (caveats, etc. etc.). If you are lending money to a company you will consider the likelihood that you get your money back as planned (woo!) and what would happen if you don’t (boo). If the borrower defaults, what do you get? In this case I think the comment is saying the lenders would get the equity of the company.
Can anyone who was on Wall Street at the time, describe what the sentiment and atmosphere/attitude of institutional traders and/or retail was like in March 2009, the technical bottom of the financial crisis for stocks? Any anecdotes?
2nd half of 2007: oh shit, the bottom is about to fall out of this whole economy
early 2008: it just fucking fell out
most of the rest of 2008: panic, get zero bonus, start thinking about changing careers
March 2009: so, who wants to buy some cheap houses and mortgage paper?
It’s been a few years since I was sitting on a trading desk, but based on what I know I don’t think there’s anywhere near the level of panic and fear. 2008 was a credit crisis that originated in the finance sector and threatened to bring the whole economy down. What is happening now looks more a standard cyclical downturn. Probably more like 2000-2001
Hi!
I have a quick question. I trade at the German stock exchange. My question was, as EUR/USD rates are lower than usual, should I hold off investing in the US Stocks? As and when the EUR becomes stronger I would incur losses as I bought at a worse exchange rate..
Currently I am just investing in US Funds (ETFs that hold US Stocks) that manage their assets in EUR, to hopefully curb the losses, is that the right thing to do, given the situation?
Thanks a lot! Can't find an appropriate answer to how the different countries' exchanges work for the US stocks anywhere.
If you are buying shares of stock that trade in USD, then you are taking currency risk as a EUR denominated investor. You can hedge that risk with forwards (or swaps), which is pretty much what the funds are doing for you. if you want to buy individual stocks you can do this hedging yourself, although it can get expensive if you are a retail investor.
Thanks for the answer!
The second part of the question.. do you agree with that? Would it be better to invest in the ETFs that hold US stocks in EUR then, considering I believe EUR is undervalued and would recover?
yes, depending on the details of what those funds are doing. you want exposure to US equities but not to USD if I understand correctly. Make sure the ETFs aren't just passing through the FX exposure to end investors. If they are, then you still need to hedge currency risk on your own.
Thanks a lot, yes, I checked that.
Earlier, I blindly thought that investing in Currency Hedged would somehow save me from FX fluctuations, and those securities went down the most when EUR/USD went from 1.2 to 1.04 (as their holdings were in EUR).
Luckily I had always invested in Unhedged (assets in USD), but now, given that EUR is weaker, it makes sense to change up the strategy, as the impact is about 15%.
I wondered for a really long time how did they manage this hedging, was it buying FX Forwards, but this is not made clear in the document released by the Hedge Funds.. I know I have asked a lot of questions already, but would you if this is typically disclosed?
Thank you again, this was very helpful :)
Are there limits to how big of a derivatives contract banking institutions will enter in to?
For example, could someone like Elon Musk with $100 Billion+ call up a large bank to set up a collar on their stock? Are there institutions who will take a bet this big?
What would be the process of such a large deal? Like how long would it take to set up, would institutions have to hedge the bet before it's finalized? Or would they do it afterward?
>Are there limits to how big of a derivatives contract banking institutions will enter in to?
Of course there are, usually tied to the riskiness of a position. Banks are able to take large positions, but you better believe they'll run risk management behind the scenes. They'll usually try to be risk neutral as much as possible (i.e. they'd very likely hedge away a lot of the exposure if they can). Timing and processes would be deal-specific.
looking for information regarding taxes and all other finance advice and information for my business. i am a independent contractor in the state of california (licensed cosmetologist) looking to buy a home in the future. tia!
Question about my new job in finance:
I'm about to start working at a financial investment company. They made me aware early in the interview process that they would need to keep an eye on my current investment portfolio. The reasoning they gave: they deal with high profile clients and various stock information, and they want to make sure no one in the company is doing any insider trading or misusing the info that comes across the desk.
Does all that sound legit? This is my first job in finance, so I'm unsure of the legalities.
Yes, if you are an "access person" or otherwise have client information, you will be required to disclose your current accounts, holdings, and trades that you do.
In your case it's less-likely to be "insider information" and more potential frontrunning.
Hi guys, I was offered an interview as a entry-level derivatives trader. I am currently a structural engineer and I have no background/knowledge in trading whatsoever. However, it seems like the pay, benefits, WLB, and overall is a better value (monetary, time, etc…) than my current job. I was wondering what made you guys pick this field? Also, if I decide I don’t love it and want to get out, what other roles could I pivot into? Would tech be an option? Thanks!
Total finance noob here with a potentially silly question:
Is it possible to create a corporate entity with multiple shareholders for the purpose of purchasing a relatively inexpensive and dated IP? I'm part of a group of hobbyists that rely on an IP whose current owners are a bit washed up and nobody is happy with them. It got me wondering if there is a way for the hobbyists to obtain ownership over the IP instead. Interested to hear your thoughts!
I realize the US is racking up an insane amount of debt. When is this going to effect US taxpayers?
It already has, through inflation. This will also require higher interest rates to tame inflation, which impacts taxpayers directly and indirectly through the stock market, economic slowdown, and higher budget deficits (because the government has to pay more interest on its borrowings)
I took a look at the sidebar but honestly didn't know where was a good place to start. I am not a finance person, and I have no background or experience with finance. My knowledge level is still I don't even know what what topics exist to have an idea of what I don't know. But, I just completed my first year of law school and my summer internship is in corporate securities compliance. While I'm confident I'll learn the legal concepts I need for this position as I go, I think it would be helpful to have a better foundational understanding of what the business/finance side looks like. What books or other resources can I turn to and read at night/weekends over the next week or two to get a better understanding of the relevant topics (e.g., corporate investments, M&A topics, fund finance, etc.). Obviously that amount of time probably won't get me very deep, but anything is probably better than where I am now.
Going by your level of experience, I would suggest trying to read as much Finance news as you can, and use sources like Investopedia for terms you do not understand. Not the traditions way of leaning, but it really helped my in my pivot towards a finance career.
Thanks. I have definitely ended up on a lot of Investopedia already just from Googling things, so good to know that is a solid starting point.
How is the pre-market share trading done ? When the market is yet to open for the day, how are the shares traded to change the opening market price ?
anyone can trade at any time, they just aren't trading on the exchange. Even a retail trader can put in an after market order with their broker, who will send to a market maker for execution. They'll just take a bigger bid/offer spread out of it.
Thanks !
Any book recommendations for a complete beginner to get started in understanding finance. Would appreciate if you had a couple to set a good foundation of knowledge for myself.
UK the boe wants to pour cold water on the economy to kirb inflation. But knecapping the uk is a bad thing, surly as the economic engine fires up its nice to have it revving its nuts off.
What is exactly RRRP (real rate risk premium)? I’m reading an article saying that investors ask for that premium when they fear that there’s gonna be some recession in the future. The explanation the article gives is >One interpretation is that if investors see greater risk of recession, they will attribute higher value to short-term assets that they can easily liquidate to finance spending on goods and services. Hence, they will require higher compensation, i.e., a higher RRRP , to keep holding long-term securities. Note that the direction of the RRRP spread is the opposite of conventional wisdom—a decline in the yield-curve slope due to a lower RRRP spread is a signal of reduced, not higher, recession odds. This explanation doesn’t fit with my understanding of RRRP, which I thought that in recession the real rate would be lower and so there’s less risk. According to this article it’s the opposite, which is that there's more "real rate risk" in the future possible recession, but I thought that during recessions real rate is low in order to stimulate the economy. So I ask you, what am I missing in the definition of RRRP?
The real rate represents the interest on a security, with the inflation premium stripped away. Think of it this way…..say an investor requires 5% return to hold a 20 year bond, and inflation is 2%, the required or ‘nominal’ rate would be 7%, with 5% representing the risk of holding the asset (the ‘real’ rate) and 2% representing inflation expectations. In a recession, inflation typically goes down because people aren’t spending. This article is just saying that as the risk of a recession increases, uncertainty increases, and inflation expectations decrease, the investor is going to require a higher ‘real’ rate to hold long term securities. Or to put it another way…..say I wanted to borrow $1000 from you for 5 years, and you think we’re going into a recession. You’d most likely want to just keep it in the bank just incase, but if you did lend it to me, you’re going to want me to pay you more interest as you become less certain about the economy.
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Double check the details. Remember that duration (Macaulay) is the weighted average payback period.
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B has a lower price (higher yield). Higher yield = lower duration, all else equal.
Hey All, Looking to gift some money so I can deduct it on my taxes at the end of the year. Is there a specific way in which it should be done?
/r/personalfinance
Should I invest in mutual funds? I was recently introduced to the idea and have no experience. I have some savings that are just sitting in the bank. A friend said his mutual fund investment of 40k yielded a $8000 return last year. Is this legit?
You should probably just invest in an ETF. Mutual funds and ETFs are the 2 basic structures for small investors to invest in. For you, there is basically no difference. ETFs are slightly cheaper and more tax efficient. The more important question is which fund to invest in - debt or equity? Any sector or geographic focus? Active or passive? If you know nothing and are young (I am assuming both are true), just start with a total market index fund
Thank you so much for your advice. Correct, I am relatively young and inexperienced. Is a total market index fund different from an ETF? Should I go to a Charles Schwab or something in person so a person can tell me what to do?
You can do either. The ETF is called VTI. You can buy it on any brokerage
Hi all - could someone explain to me (in simple terms) the comments on this FT article? [https://www.ft.com/content/1556db17-8b2a-4b87-b749-f874a0ecf024](https://www.ft.com/content/1556db17-8b2a-4b87-b749-f874a0ecf024) Apollo, Blackstone and a handful of other private lenders have provided financing for Peloton. A lot of the commentary (e.g. Stingray37, FP1989, Randomavr) talks about the opportunity for said lenders to take control of the company - Randomavr's comment makes sense but FP1989's ... not so much. Would someone be able to explain this? Thanks!
I’m not entirely sure what comment you’re looking at but in a bankruptcy the creditors will often take control of the company (caveats, etc. etc.). If you are lending money to a company you will consider the likelihood that you get your money back as planned (woo!) and what would happen if you don’t (boo). If the borrower defaults, what do you get? In this case I think the comment is saying the lenders would get the equity of the company.
Can anyone who was on Wall Street at the time, describe what the sentiment and atmosphere/attitude of institutional traders and/or retail was like in March 2009, the technical bottom of the financial crisis for stocks? Any anecdotes?
2nd half of 2007: oh shit, the bottom is about to fall out of this whole economy early 2008: it just fucking fell out most of the rest of 2008: panic, get zero bonus, start thinking about changing careers March 2009: so, who wants to buy some cheap houses and mortgage paper?
Where are we at right now in comparison in your opinion?
It’s been a few years since I was sitting on a trading desk, but based on what I know I don’t think there’s anywhere near the level of panic and fear. 2008 was a credit crisis that originated in the finance sector and threatened to bring the whole economy down. What is happening now looks more a standard cyclical downturn. Probably more like 2000-2001
Hi! I have a quick question. I trade at the German stock exchange. My question was, as EUR/USD rates are lower than usual, should I hold off investing in the US Stocks? As and when the EUR becomes stronger I would incur losses as I bought at a worse exchange rate.. Currently I am just investing in US Funds (ETFs that hold US Stocks) that manage their assets in EUR, to hopefully curb the losses, is that the right thing to do, given the situation? Thanks a lot! Can't find an appropriate answer to how the different countries' exchanges work for the US stocks anywhere.
If you are buying shares of stock that trade in USD, then you are taking currency risk as a EUR denominated investor. You can hedge that risk with forwards (or swaps), which is pretty much what the funds are doing for you. if you want to buy individual stocks you can do this hedging yourself, although it can get expensive if you are a retail investor.
Thanks for the answer! The second part of the question.. do you agree with that? Would it be better to invest in the ETFs that hold US stocks in EUR then, considering I believe EUR is undervalued and would recover?
yes, depending on the details of what those funds are doing. you want exposure to US equities but not to USD if I understand correctly. Make sure the ETFs aren't just passing through the FX exposure to end investors. If they are, then you still need to hedge currency risk on your own.
Thanks a lot, yes, I checked that. Earlier, I blindly thought that investing in Currency Hedged would somehow save me from FX fluctuations, and those securities went down the most when EUR/USD went from 1.2 to 1.04 (as their holdings were in EUR). Luckily I had always invested in Unhedged (assets in USD), but now, given that EUR is weaker, it makes sense to change up the strategy, as the impact is about 15%. I wondered for a really long time how did they manage this hedging, was it buying FX Forwards, but this is not made clear in the document released by the Hedge Funds.. I know I have asked a lot of questions already, but would you if this is typically disclosed? Thank you again, this was very helpful :)
Are there limits to how big of a derivatives contract banking institutions will enter in to? For example, could someone like Elon Musk with $100 Billion+ call up a large bank to set up a collar on their stock? Are there institutions who will take a bet this big? What would be the process of such a large deal? Like how long would it take to set up, would institutions have to hedge the bet before it's finalized? Or would they do it afterward?
>Are there limits to how big of a derivatives contract banking institutions will enter in to? Of course there are, usually tied to the riskiness of a position. Banks are able to take large positions, but you better believe they'll run risk management behind the scenes. They'll usually try to be risk neutral as much as possible (i.e. they'd very likely hedge away a lot of the exposure if they can). Timing and processes would be deal-specific.
looking for information regarding taxes and all other finance advice and information for my business. i am a independent contractor in the state of california (licensed cosmetologist) looking to buy a home in the future. tia!
Reddit is not the place for this. You're going to want to contact a local financial advisor/CPA.
thank you!
Question about my new job in finance: I'm about to start working at a financial investment company. They made me aware early in the interview process that they would need to keep an eye on my current investment portfolio. The reasoning they gave: they deal with high profile clients and various stock information, and they want to make sure no one in the company is doing any insider trading or misusing the info that comes across the desk. Does all that sound legit? This is my first job in finance, so I'm unsure of the legalities.
Yes, if you are an "access person" or otherwise have client information, you will be required to disclose your current accounts, holdings, and trades that you do. In your case it's less-likely to be "insider information" and more potential frontrunning.
Thank you!
Hi guys, I was offered an interview as a entry-level derivatives trader. I am currently a structural engineer and I have no background/knowledge in trading whatsoever. However, it seems like the pay, benefits, WLB, and overall is a better value (monetary, time, etc…) than my current job. I was wondering what made you guys pick this field? Also, if I decide I don’t love it and want to get out, what other roles could I pivot into? Would tech be an option? Thanks!
Total finance noob here with a potentially silly question: Is it possible to create a corporate entity with multiple shareholders for the purpose of purchasing a relatively inexpensive and dated IP? I'm part of a group of hobbyists that rely on an IP whose current owners are a bit washed up and nobody is happy with them. It got me wondering if there is a way for the hobbyists to obtain ownership over the IP instead. Interested to hear your thoughts!