How does portfolio rebalancing work, step by step?
Markets quietly change your mix: winners grow, losers shrink. Rebalancing puts the percentages back where you chose them. Here is the arithmetic and a step-by-step routine.
Read the noteThe notes, page 3
Notes No. 021–030, in reading order.
What is herd behavior, and how does it feed market bubbles?
When everyone seems to be buying, joining in feels safe. That feeling can push prices far above what the business supports — and the trip down is often faster than the trip up.
Read the noteWhat is a recession, and what does it mean for investors?
A recession is a broad, significant fall in economic activity that lasts more than a few months. In the U.S. it is dated after the fact, which is why markets rarely wait for the official word.
Read the noteWhat is bitcoin, and how does it actually work?
Bitcoin is a digital currency with no central issuer, a public ledger and a fixed supply schedule. Here is how it works, where new coins come from and what can go wrong.
Read the noteHow does inflation affect your money and your investments?
Inflation does not take money out of your account; it takes buying power out of every dollar. Here is how to measure that loss and think about it as an investor.
Read the noteHow do dividends work, and when do you actually get paid?
A dividend is part of a company's profit paid to shareholders. Here are the dates that decide who gets paid, the yield arithmetic, and why dividends are never guaranteed.
Read the noteWhat is an expense ratio, and how much does it really cost you?
The expense ratio is the yearly percentage a fund takes from its assets to run itself. It looks tiny, but it compounds. Here is what it covers and what it costs.
Read the noteWhat are Treasury bills, notes and bonds, and how do they differ?
Bills, notes and bonds are all loans to the U.S. Treasury. The difference is mostly how long they last and how they pay you. Here is a side-by-side guide with worked numbers.
Read the noteWhat is dollar-cost averaging, and when does it help?
Investing the same amount every month buys more shares when prices are low and fewer when they are high. Here is the arithmetic, and an honest look at when a lump sum does better.
Read the noteWhat is overconfidence bias, and how can it cost investors money?
Most investors rate their own knowledge highly, yet average fewer than half right on a basic quiz. That gap can lead to trading too often, betting too big and missing fraud warning signs.
Read the note