The Importance of Price Elasticity of Demand in Investing
“The single most important decision in evaluating a business is pricing power. If you’ve got the power to raise prices without losing business to a competitor, you’ve got a very good business. And if you have to have a prayer session before raising the price by 10 percent, then you’ve got a terrible business.” –Warren […]
3 Leading Indicators for Markets – Why FedEx’s Latest Release is a Big Signal
FedEx’s latest preliminary earnings release sent the stock down 21.4% on Friday, September 16th as management withdrew their forecast on worsening business conditions. The news of forecasts being pulled at FedEx helped send the broad S&P down 0.72% because FedEx is a key company in the transportation industry and a component of the Dow Jones […]
Purchase Managers Index (PMI) as a Leading Indicator of Economic Growth
The Purchase Managers Index (PMI) is a great economics tool for investors to wrap their heads around as it can be watched as a leading indicator of changes in the economy. The changes in PMI data can indicate many things including changes in GDP, inflation, and employment which can all be used when making investment […]
The Misery Index is at 12.7%, Highest Since 1970’s
The misery index in economics is used to describe the severity of the negative effects of inflation and unemployment on the population. The misery index is the combination of adding together the inflation rate and the unemployment rate. Let’s explore what the misery index means, its history, and how investors can mitigate the effect on […]
Hawkish vs. Dovish and Why Investors Should Watch For Cues
Monetary policy, and the people who decide on it, are often described as hawkish or dovish depending on whether the proposed policy is restrictive or stimulative, respectively. As we will touch on later, restrictive monetary policy and higher interest rates have a twofold effect on stock valuations and investors should learn to watch for cues. […]
Fiat Money vs. Commodity Money: A Breakdown of the Pros and Cons
“Money, it’s a crime.” Pink Floyd My grandparents used to say that money makes the world go around, but what do we know about the money we use today? We currently use fiat money but also deal with commodity money as well. And then, we add Bitcoin and other types of electronic currency, and we […]
Economics 101: Macro vs. Micro Economics
Understanding the basic concepts of economics is critical to making smart investment decisions both at the stock-picking level and also at the portfolio asset allocation level. There are two major fields of economics; microeconomics and macroeconomics, and the laws of supply and demand play a factor in both which we will discuss as well. Microeconomics […]
Types of Inflation: Demand-Pull vs. Cost-Push Inflation
With inflation now running over 4% in the U.S. and other developed countries, investors are wondering how to classify the seriousness of the situation. As this article will discuss, the two main types of inflation are demand-pull inflation and cost-push inflation. Both demand-pull inflation and cost-push inflation are likely contributing to the economic environment we […]
Quotes about Inflation from Famous Investors – What We Can Learn
The most successful investors in the stock market probably know a thing or two about inflation. Of the many great quotes about inflation from these investors, perhaps no single quote sums it up better than this one from Charlie Munger: “I remember the $0.05 hamburger and a $0.40-per-hour minimum wage, so I’ve seen a tremendous […]
You see Austin Powers, I love GOLD! The taste, the smell, and the Gold ETF!
With all of this talk of stimulus talks being reignited, it makes me wonder if we’re about to experience some major inflation as a nation. If so, one potential way that people will try to combat that is by investing in a previous metal such as gold. So, with that being said, what would be […]
