The Securities and Exchange Commission, better known as SEC, is a US independent, federal government agency responsible for protecting investors and maintaining fair and orderly functioning of securities markets. Created in 1934 with the Securities Exchange Act, after the Great Depression started in 1929, as the first federal regulator of financial markets in the United States, … Continue reading What is the Securities and Exchange Commission?
A hedge fund is an alternative investment vehicle that employs numerous different strategies in order to achieve a positive return, called "alpha", for its investors. These kind of funds are actively managed and they usually make use of derivatives and high leverage with the goal of enhancing profits from trades. Hedge funds are generally only accessible … Continue reading What is a hedge fund?
Long-Term Capital Management, also known as LTCM, was a large hedge fund, started in 1994 by John Meriwether, former vice chairman and head of bond trading at investment bank Salomon Brothers, with the intent of providing investors with absolute returns using trading strategies combined with high financial leverage. Alongside Meriwether, the fund was led by … Continue reading The rise and fall of Long-Term Capital Management
A Ponzi scheme is a fraudulent investing system promising high rates of return with little risk to investors. In brief, a Ponzi scheme generates returns for older investors by acquiring new investors. In this, a Ponzi scheme is similar to a pyramid scheme, since both are based on using new investors' funds to pay the earlier ones. Companies that engage … Continue reading What is a Ponzi scheme?
A short position, usually simply called short, is an investment or speculative strategy where an investor sells shares of a borrowed stock in the market. The investor expects that the price of the stock to decrease over time, so that in the future he will be able to purchase the shares in the open market … Continue reading What is a short position?
After the Great Depression, started with the famous stock market crash of 1929, American people became so afraid of losing again all their saving that they left the markets, being replaced by institutional investors, such as insurance companies, pension funds, hedge funds, mutual funds and commercial banks. Moreover, the Securities and Exchange Commission (SEC), created … Continue reading Black Monday: the stock market crash of 1987
It was May 1st , 2012 when David Einhorn, a well-known hedge fund manager, founder and president of Greenlight Capital, asked accurate questions about Herbalife International's business and sales models during the first quarter's earnings call, setting off suspicions that he had a short position on the stock. In fact, in January 2013 Einhord revealed that … Continue reading Is Herbalife a fraud? Bill Ackman says it is a huge one