Nivine Richie, Ph.D., CFA is an Associate Professor of Finance at the University of North Carolina Wilmington. She teaches courses in corporate financial management, derivatives, fixed income, and commercial bank management. Her research interests include cost of capital, banking, and derivatives. She has published studies in the Journal of Economics and Finance, Journal of Futures Markets, Review of Futures Markets, and Journal of Trading, among others.
Healthcare is an important sector of the S&P 500. With the new administration, healthcare industry is likely to go through a significant change, and investments in healthcare firms will face uncertainty in the days and months ahead.
This video from Goldman Sachs discusses investments in the healthcare industry.
(1) What factors will affect investments in the healthcare section?
(2) How is the new presidential administration likely to affect the healthcare sector?
(3) What is the impact of the macroeconomy on this sector?
Making financial policy decisions based on different schools of economic thought have consequences. This infographic below describes the Keynesian school of economic thought as compared with the Austrian school.
(1) What is the origin of each theory
(2) What are the basic premises of each school of thought
(3) How might you invest if you believed one school of thought over the other?
(4) What policy implications exist for each school of thought?
source: zerohedge.com via dailyinfographics.com
A typical venture capital (VC) firm invests in start-ups in high growth industries like technology. But this is the story of a VC firm that invests in Vietnam with a goal of not only making money but also doing some social good.
This video shows the benefits and challenges of investing in Vietnam.
(1) What social benefits are associated with the projects described in this video?
(2) What challenges are faced by VC firms in countries like Vietnam?
Financial planning is often reserved for individuals who have millions of dollars, but people who live paycheck to paycheck are more in need of financial advice than those who can afford to make financial mistakes.
This video describes financial planning for the masses.
(1) Do you think an online financial advising firm would be trusted by Americans?
(2) Why do you think that most individuals do not save or engage in any financial planning?
A quick search on Amazon for "personal finance" turns up over 100,000 books. There's no end to the supply of financial advice.
However, according to Mint.com, all the personal finance advice in all the books can be boiled down to the following four habits:
(1) spend less than you earn, i.e. save
(2) watch your debt
(3) invest your savings, and
(4) diversify your investments
This video explains that a shift to reflation may be on the horizon.
1. What is reflation?
2. Why has this shift taken place?
3. What do Goldman Sachs economics expect going forward?
4. How is this expected to impact the stock market?
This video from Goldman Sachs explains what the neutral rate is and why it matters.
According to the San Francisco Fed:
At what rate or range of rates does a change in the federal funds rate go from being low enough to be “accommodative” to being high enough to dampen economic activity? The answer is the neutral rate, often defined as the rate or range of rates consistent with full employment, trend growth, and stable prices. An economy in this state presumably wouldn’t need to be stimulated or slowed by monetary policy.
The neutral rate is often explained using the story of Goldilocks searching the home of the three bears; as Janet Yellen, president and CEO of the Federal Reserve Bank of San Francisco, recently observed in an interview in The International Economy Magazine, “monetary policy should be at neutral only when economic conditions are ‘just right’.”
In this video, Dave Ramsey gives some great ideas of how to become a millionaire. You probably make enough money to become a millionaire--the trick is to find $100 every month. And finding $100 per month is not too hard if you think about how much we throw away on lattes and other impulse shopping excursions.
Your credit score is a number used by lenders to determine how likely you are tor repay a loan. The higher the number, the less risky you are. The lower the number, the less likely the bank is to be repaid. From Experian, one of the credit reporting agencies:
For a score with a range between 300-850, a credit score of 700 or above is generally considered good. A score of 800 or above on the same range is considered to be excellent. Most credit scores fall between 600 and 750. Higher scores represent better credit decisions and can make creditors more confident that you will repay your future debts as agreed.
Credit scores are used by lenders, including banks providing mortgage loans, credit card companies, and even car dealerships financing auto purchases, to make decisions about whether or not to offer your credit (such as a credit card or loan) and what the terms of the offer (such as the interest rate or down payment) will be. There are many different types of credit scores. FICO® Scores and scores by VantageScore are two of the most common types of credit scores, but industry-specific scores also exist.
This infographic describes what goes into a credit score:
Young people can solve puzzles faster than older people, but older people know a lot more about the world. These two kinds of "intelligence" compensate for one another in our ability to make financial decisions.
In this interview, academic Eric Johnson explains how the different types of intelligence shift as we age and how that affects our ability to make wise financial decisions
Financial decision making does not improve consistently as we age, however. From Forbes:
You might not know it, but financial capacity — the ability to manage your money to meet your needs and match your values — is one of the first things to go when you have mild cognitive impairment.
What you need to know about money changes as you get older. As a kid, you learn that to earn money you need to work. Then as you get older, you learn the lessons of comparing value and making credit decisions.
This infographics shows the different lessons that are appropriate for different age groups:
What are some other lessons you can add to the list below?
In this Dave Ramsey Show episode, the caller asks what to do with an extra $65,000 just sitting in a bank account not earning any money.
Dave Ramsey gives some good answers, such paying off any remaining debt, setting aside money for a rainy day fund, and then investing for retirement.
1. How much money should you have in a rainy day fund?
2. What goals should you set for the rest of your savings?
3. How much money should you save each year towards retirement?
Have you seen Rogue One yet? If you haven't, you may find yourself in a movie theater watching it this Christmas season. You and many others.
Disney has hit another home run with Rogue One: A Star Wars Story, second in largest grossing opening weekend for film releases in December behind Star Wars: The Force Awakens last year.
You will find more statistics at Statista
How has Disney stock performed at each of these releases? Is there a trading strategy that you might recommend based on your expectation regarding future movie revenues?
The foreign exchange or "forex" market is where foreign currencies are traded. From FXCM:
Forex, also known as foreign exchange, FX or currency trading, is a decentralized global market where all the world's currencies trade. The forex market is the largest, most liquid market in the world with an average daily trading volume exceeding $5 trillion. There is no central exchange as it trades over the counter. Forex trading allows you to buy and sell currencies, similar to stock trading except you can do it 24 hours a day, five days a week, you have access to margin trading, and you gain exposure to international markets.
The infographic below explains some of the details of the forex market:
Why do some nations prosper while others do not? Are banks necessary for investment? These questions and others are answered in this video from the Atlanta Fed about the history and motivation for the banking system.
What do people who have money in their 401K have in common? Is it the rate of return or their level of income?
The reason is simpler than that, and this video explains:
The CME Group is the global exchange for derivatives. From the CME website:
CME Group is the world's leading and most diverse derivatives marketplace, handling 3 billion contracts worth approximately $1 quadrillion annually (on average). The company provides a marketplace for buyers and sellers, bringing together individuals, companies and institutions that need to manage risk or that want to profit by accepting risk.
A bank earns a revenue and makes a profit by earning interest on the money it lends to borrowers. Because banks are vital institutions for the health of our economy with their very special role in financial markets, it is important for bank regulators to protect bank stability and health.
In this video, the tools used by the Fed to monitor the health of the banking system are explained:
1. What is the "call report?"
2. What is a bank stress test?
3. What are the CAMELS ratings and what do they tell regulators about the health of a bank?
4. What does it mean for a bank to be insolvent?
5. How does the Fed protect consumers?
Here are some personal finance questions that Dave Ramsey answers in this video interview: