Category: Learn

In this month’s AlgoMerchant Learn article, we will be sharing several valuable insights, with our AlgoMerchant community members, relating to Artificial Intelligence (AI), its adoption and what that means for global economies over the coming decade:

1. What is AI and how can it positively impact global productivity and contribute to higher GDP?

2. What effects can AI have on leading macroeconomic variables such as inflation, interest rates and employment?

3. How are central banks coping with this new reality? In what ways are monetary policymakers using these technologies to support decision-making?

With a net worth of over $100 billion, Warren Buffett is perhaps the best investor of all time.

But have you ever wondered what makes him so successful?

Most people believe that he just buys quality stocks at good prices and then holds them for years, and this is the only part of his investing success.

Well, they couldn’t be more wrong anymore….

He also profits by trading options, a type of derivative!

However, consistently making profits in options isn’t that straightforward.

Even though it follows the fundamentals of stock trading, there is quite a bit going on in the background that you need to understand and be aware of.

In this quick and essential guide to options trading, we will take you through everything you need to know to get started in options trading…

In the short run, a market is a voting machine, but in the long run, it is a weighing machine.”

-Benjamin Graham.

What did the father of value investing, Benjamin Graham, actually mean when he made up this quote?

He explained this concept by saying that in the short run, the market is like a voting machine – sizing firms based on fickle popularity. However in the long run, the market is like a weighing machine by assessing the substance of a company. The message is clear, what matters in the long run is a company’s actual underlying business performance (earnings) and not the investing public’s fickle opinion about its prospects in the short run.

Over the long term, when companies perform well, their shares will do so, too. And when a company’s business suffers, the stock will also suffer.

The next important question is – what does the weighing machine weigh?

The answer is EARNINGS. Interested to learn more about how earnings drive long term compounding of share prices?

If you ever heard of a “Robo Advisor” 10 years ago, perhaps you will think of it as a new title for a sci-fi movie.

“Hey, have you heard of the newly released “Robo Advisor?”

“Wow, is that a new sci-fi movie?”

“Oh no, it’s an AI investment portfolio manager.”

The idea of an Artificial Intelligence (AI) managing your investment portfolio in just a few clicks on your smartphone, whenever and wherever you are while handling your other financial affairs, seems like a dream come true for many people! (especially if you are an introvert like many of us)

Finally, you don’t have to set an appointment with a Financial Advisor and explain everything about your financial situation which might be uncomfortable for some people who have sensitive financial issues.

Over the last two years, crypto lenders have attracted tens of billions of dollars in bitcoin, ether, and other coins, which they lent out or invested in decentralised finance (Defi) projects with sky-high returns!

But as crypto markets tumble, Defi projects that claimed to disrupt the financial industry have taken a toll and are now poised to squeeze the entire crypto-sphere…

With that said, almost one month after the Terra Luna meltdown, another so-called crypto-bank, Celsius, grabbed the headlines with, of course, not-so-good news:

“Celsius Suffers Liquidity Crisis, Plummets 70% in less than one hour”

And left investors frantically trying to withdraw their frozen assets after it paused all withdrawals, swaps, and transfers, citing “extreme market conditions.”

On one day in May 2010, financial markets around the world tumbled simultaneously for no apparent reason, wiping out a trillion dollars’ worth of valuation in less than five minutes.

The Flash Crash, as it became known, was the fastest stock market drop ever.

The S&P 500 index plummeted more than 5% in four minutes. The Dow Jones index followed suit, falling even faster than it had in its entire 114-year history.

Finally, on April 21, 2015, almost five years after the incident, the US Department of Justice charged Navinder Singh Sarao, a British financial trader, for the aforesaid flash crash and market manipulation, along with 22 other criminal counts.

Wondering how he did it?

Buying Special Purpose Acquisition Companies (SPACs) was all the craze in 2020 and 2021. Many supposedly ‘up and coming’ high-growth start-ups took to the trend and excess capital available in the financial markets to get capitalised.

The electric vehicle (EV) industry was no different. Riding on the wave of strong public support in ESG and climate change areas, many EV companies took the path of least resistance to getting funded and listed.

In fact, SPACs are a way many companies can benefit from getting credibility by getting listed on the stock exchanges without jumping through hoops of due diligence and paperwork!

The past few years have seen an implacable rise of interest in investing based on “ESG” or environmental, social, and governance factors. 

With the promise of “making money while doing good,” ESG funds have drawn billions of dollars in investments, making the acronym one of Wall Street’s favorite buzzwords!

According to Bloomberg Intelligence, professionally managed assets with ESG mandates are expected to exceed over $50 trillion globally by 2025, accounting for one-third of total global assets under management!

The ESG-focused ETFs in the US alone, as reported by Morningstar, have racked up an estimated $360 billion in investments in 2021, compared to $236 billion in 2020, registering more than 50% YoY growth.

Great! But what exactly is “ESG investing” all about? Is it really something that can turn into an investing megatrend?

If it is, how can you take advantage of it?