• How Does an Electronic Exchange Work?

    Ever wonder how an electronic exchange like Nasdaq works? If there's no shouting in a trading pit as buyers and sellers meet, how do trades actually get executed?

    This video explains what goes on behind the scenes.

  • History of NASDAQ PHLX Exchange

    The history of the Nasdaq PHLX exchange is described in this video below. From the day when trades were managed manually to the electronic trading today, the mechanics of exchange trading has changed.

  • Goals-Based Financial Planning

    A shift in focus has been taking place in the financial planning industry. For years, financial advisors focused on performance, that is beating some pre-determined benchmark. But recently, financial advisors have been showing their expertise by helping their clients define and achieve their goals. Hence, the new focus on goals-based financial planning.

    From an article on Wealth Management (Britton, 23 May 2017):

    Advisors should look at a client's entire "balance sheet" beyond finances, he said. That includes their human capital, or the present value of future income (making an investment in developing a skill to advance a career may be better for some clients than making an investment in the financial markets.) Housing wealth and pensions are other areas where advisors need to look to maximize a client's ability to meet long-term financial goals.

    ...Advisors can also add value through tax efficiencies, or by making sure the tax characteristics of a particular investment match the account it is put in (for instance, putting municipal bonds, already free of federal taxes, in tax-efficient accounts doesn't often make sense).

    Some may argue that investors get hurt when advisors focus on goals-based investing because investors can't define their goals properly and have unrealistic expectations. Perhaps this is true to some extent, but then the role of the financial planner becomes educational in helping identify

    For discussion:

    What is the primary responsibility of a financial advisor?

    Should financial advisors pursue goals-based financial planning?

  • What Does the Fed Do?

    The Federal Reserve follows two key goals, known as the "dual mandate." This dual mandate is explained by the Chicago Fed like this:

    Our two goals of price stability and maximum sustainable employment are known collectively as the "dual mandate."The Federal Reserve's Federal Open Market Committee (FOMC), which sets U.S. monetary policy, has translated these broad concepts into specific longer run goals and strategies.

    Price Stability

    The Committee judges that inflation at the rate of 2 percent, as measured by the annual change in the price index for Personal Consumption Expenditures (PCE), is most consistent over the longer run with the Federal Reserve's statutory mandate. The Committee has also explicitly noted that the inflation target is symmetric and stated that it "would be concerned if inflation were running persistently above or below this objective."

    Maximum Sustainable Employment

    Many nonmonetary factors affect the structure and dynamics of the labor market, and these may change over time and may not be measurable directly. Accordingly, specifying an explicit goal for employment is not appropriate. Instead, the Committee’s decisions must be informed by a wide range of labor market indicators.

    Information about FOMC participants' estimates of the longer-run normal rate of unemployment consistent with the employment mandate can be found in the Summary of Economic Projections (SEP). Most recently, the median Committee participant estimated this rate to be 4.7 percent.

    This video from the Federal Reserve explains the important tasks that the Federal Reserve does.

  • The Naming of Wall Street

    Did you know that Wall Street was named after an actual wall? This short video tells the history of the naming of Wall Street.

    From Investopedia:

    As with many of the famous streets and roads in the world, Wall Street's origins have historical significance. Its name is a direct reference to a wall that was erected by Dutch settlers on the southern tip of Manhattan Island in the 17th century. During this time, a war between the English and Dutch threatened to spill over onto the island's American colonies. So the Dutch, located at the southernmost part of the island, decided to erect a defensive wall. Although this wall was never used for its intended purpose, years after its removal it left a legacy behind in the name Wall Street.

    This area didn't become famous for being America's financial center until the end of the 18th century, when 24 of the United States' first and most prominent brokers signed an agreement that outlined the common commission-based form of trading securities. Occurring under a "Buttonwood" tree, this marked the beginnings of the investment community of Wall Street and the creation of the New York Stock Exchange. Since then, "Wall Street" has come to denote much more than a street: it now represents the stock market and all its associated financial institutions.

    Read more: Where does the name "Wall Street" come from? http://www.investopedia.com/ask/answers/181.asp#ixzz4hijKNIIf

  • The Limited Reach of Apple Pay

    From a recent Business Insider article:

    Apple's service, which allows you to store your credit cards on an iPhone and pay for goods at retailers by just tapping your phones on a payment terminal, is gradually becoming available in more countries, as this chart from Statista shows. But it’s still nowhere to be found in wide swaths of the iPhone-using world. And even in the countries where Apple Pay is available, it's still a long way from being universally accepted.

    The iPhone maker has a fine line to walk with Apple Pay, balancing the interests of merchants, credit card networks, banks (from whom Apple collects a fee), and its customers. It's likely to take a while longer before retailer support for Apply Pay and mobile payments in general becomes ubiquitous.

    For discussion:

    What are the benefits and risks associated with electronic forms of payment?

     You will find more statistics at Statista

  • The Business of Flowers for Mother's Day

    The biggest event for the floral industry is Mother's Day. This video discusses the competition between the big players like FTD and the small florist on main street.

  • The Price of Goods Around the World

    This infographic compares goods across the world and shows that the price is not necessarily the same as you cross borders.

    For discussion:

    Why do we believe that prices SHOULD be the same across the world?

    What causes prices to differ across the world?

    Embedded from BestInfographics.co

  • Careers in Financial Planning

    In this video, a financial planner describes his responsibilities and what he loves about his work.

    This screenshot from the Bureau of Labor Statistics shows the job market outlook for financial planners.

    Source: Bureau of Labor Statistics

  • The Greatest Store of Wealth

    Gold is trading north of $1,200 per ounce. We don't know whether it is going up or down, but we do know it's a great store of wealth.

    What makes gold so valuable? What happened to the gold standard? How does gold relate to inflation? These topics are touched in this video below from CNN.

  • Financial Institution Face Bank Crime

    Bank crimes have been the inspiration for many movies over the years. Everyone loves a good heist film, but bank fraud is serious business and comes at significant cost to financial institutions.

    This infographic shows that most bank crime affects commercial banks and involves stolen cash.

    Bank Crime In The USA

    Source: infographiclist

  • Fixing Wall Street's Image

    In this interview with Morgan Stanley CEO, James Gorman, he explains why he believes that Wall Street continues to suffer from an image problem. In particular, Wall Street's involvement in financial crises of the recent past have soured the public. And though the economy is doing much better, the average citizen has a hard time embracing Wall Street.

    For discussion:

    In your opinion, what's the problem with Wall Street's image, and how can it be fixed?

  • What's Happening to Hedge Funds

    In this interview with Ken Griffin, CEO of Citadel, we see that second-tier hedge funds are closing due to competition. Everyone is seeking to beat the market and generate "alpha," but alpha is hard to find.

    For discussion:

    1. How can investment firms create alpha?

    2. Why is there less alpha available today?

    3. How does market efficiency affect alpha?

    4. What is causing markets to become increasingly efficient?