When you buy a stock, you’re investing in a business. You’re becoming an owner of that business. Amid the excitement and glamour of the stock market, however, we often forget this basic fact. And that can have big consequences for investment success. Imagine that, after some early working years in employment, you decide to quit … Continue reading Buying a stock is investing in a business →

Economic theory suggests that inflation and employment should be positively correlated with one another, and for the most part this has been true in practice. The relationship between the two variables isn’t quite as strong as theory would suggest, however, and this has big implications in the real world.Imagine everyone who wanted a job had … Continue reading How is inflation related to unemployment? →

Gross domestic product (GDP) represents the value of all goods and services produced in the economy over a given period. The latest data point – released quarterly - is usually a growth rate, quoted as an increase or decrease from the previous quarter (QoQ), or from the previous year (YoY). It is quoted in nominal … Continue reading How to interpret… US GDP →

We’ve become uncomfortable with how often we hear things like “divesting from a company’s stock doesn’t have an impact on the company”, “short selling doesn’t undermine the health of a company”, “buying a stock doesn’t improve that company’s prospects”. We think these are nonsense. We’ve never agreed with these notions. They are statements that regularly … Continue reading Divestment does matter →

This is a guest article from our friends at The Mwayi Project, a non-profit organisation that we support.Development is more than just impact. Positive shocks to an economy dissipate quickly and the economy returns to its established growth trajectory unless multiplier effects kick in and the initial shock is propagated into becoming a more permanent … Continue reading What does ‘sustainable’ development really mean? →

Durable goods – generally those goods with a life span of more than 3-5 years and often used in the manufacturing of other goods - make up a key part of business investment spending. Since the other part, nondurables, is less cyclical and so less predictive of future manufacturing activity, durable goods orders are one … Continue reading How to interpret… US core durable goods orders →

We explained in another article that price doesn’t always equal value and, in fact, it rarely does.When there are mispricings, however, there are normally attentive investors operating in the market that will act to either buy or sell the asset, depending on whether the price was above or below the investors’ estimate of fair value. … Continue reading What makes a market efficient? →

Financial markets don’t just move on their own. Prices of assets on exchanges, such as stock exchanges, change because investors are buying and selling them. An increase in the price of a given asset reflects an excess of demand for that asset over supply - or, put another way, if there’s more buyers than sellers … Continue reading What makes the price of a stock move? →