Breaking the Big Four

Once, the Big Four was a term used to describe the biggest accounting firms. Today, it is widely used to describe the biggest firms, overall. The Big Four are Apple, Amazon, Google, and Facebook (sometimes referred to as the Big Five, together with Microsoft) – the four largest companies in the world in terms of market capitalization (well, Microsoft is also there in the middle) but most importantly, in terms of influence, power and success. These companies have something in

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Market Cap to GDP – a Somewhat Overlooked Indicator

One way to check if the market cap of American publicly traded companies has not disconnected altogether from their real incremental value is comparing their market cap to the total GDP. This ratio can be used to understand whether the market is overvalued – in the U.S, the lion share of the companies are publicly traded, at least the big ones, thus we can expect to find a correlation between both the movement and the size of the stock market

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2017 in Numbers

This year has not yet ended, but we all know that nothing too important happens during the holiday. The financial world is mostly on vacation, volumes in the market are very low, and trading stocks takes a backseat for most people. The decision-makers are also on vacation—the interest rate decision for this month has already been made, and tax reform talks will probably stagnate during the break. So, we can now summarize the year that’s about to end. So, how’s

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Accuracy of Economic Projections

The current year is about to end, and economic papers are full of predictions for 2018. In general, most are pretty good. The world economy is in the midst of a mini-boom, and most economies are growing fast but not too fast. Unemployment is relatively low, and the inflammatory pressures are being held in check. The growth in GDP has accelerated lately, and the latest forecast of the International Monetary Fund for global growth is 3.6% for 2017 and 3.7%

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Have I Changed My Mind About Bitcoin?

Well, no, why would I? What has changed fundamentally about Bitcoin? When I wrote a post about cryptocurrencies four months ago, the price of bitcoin was $2,400. Now it’s $11,000, but does it change anything in my thesis? Absolutely not. The risks of the bitcoin are still too high to be considered negligible, and the price of bitcoin is still on a roller-coaster that no one knows when or how it will reach its last stop. The only thing that

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The Goldilocks Economy

Goldilocks and the Three Bears is not only a fairy tale but also a term used to describe the state of the global economy today. A Goldilocks economy is an economy that is somewhere between the tides—not too high and not too low—and that is what makes it sustainable. How can the economy remain in this Goldilocks position? Growth—first, the economy needs to grow but at a moderate pace so as not to become overheated, which can affect the second point—relatively low inflation.

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Will the new Chairman of the Federal Reserve change anything?

No. But that’s only the short answer. Donald Trump has picked the new chair of the Federal Reserve, one of the most prestigious and significant positions in the economic world. The happy winner is Jerome Powell, who has been a member of the Federal Reserve Board of Governors since 2012. Powell is considered to be a “monetary dove.” Such people are generally more in favor of the expansionary monetary policy, including low-interest rates, while hawks are inclined to favor a tight monetary

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Why is it So Easy to Beat Wall Street Expectations?

Last Friday was one of the best days for capital markets in recent years and especially so for those holding some tech stocks, which gained the most. The Nasdaq 100 rose by almost 3%, led by technology juggernauts, such as Amazon, Google, Microsoft, and Intel. All of them beat the “Street Expectation,” which is a term used to describe the average estimate for a company’s quarterly revenues, earnings, and other important financial data that a public company has to report

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A Bubble with no one to blame

This is how a bubble with no address looks like. A new article by The Economist focuses on a less spoken aspect of the recent potential bubble in the stock market – Unlike previous bubbles, all assets are expensive today. People cannot place their money in reasonably prices financial vehicles, because none of them is. We keep hearing about the run of the stock market, but real estate and fixed income markets have had great runs as well, and solid

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What if NBA teams were stocks?

The NBA season has just started, which made me want to try to combine two of my favorite things—sports and capital markets. The NBA has 30 teams, and guess who also has 30 something? The Dow Jones. They both have tradition. While the NBA league was founded in New York in 1946, the Dow Jones had been founded 50 years before, also in New York. What’s more interesting is that they both have a relatively steady list of teams/stocks. The

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