Author: GG
-
How mortgage duration and interest rates impact property prices.
One of the main drivers of real estate prices is the availability and structure of credit. Mortgage loans are the credit used to finance residential real estate purchases. Government policies, economic conditions, and banking regulations significantly influence the availability and cost of mortgages. While owning a home outright is appealing, most homebuyers rely on mortgages…
-
Time Value of Money (Earning Capacity of Time)
The “Time Value of Money” is a foundational principle in finance and economics. It states that money available today is worth more than the same amount in the future due to its potential earning capacity. But why? What does this mean? Why does money have time value? In the prior essay, “What is Money?”, I…
-
What is Money?
We all have heard “Time is Money” or the financial professional phrase “Time Value of Money.” “Time is Money” suggests that time is a valuable resource, just like money, and should be used wisely. The proverb is often attributed to Benjamin Franklin, who used it in his essay “Advice to a Young Tradesman” in 1748.…
-
Why, by definition, active investors cannot outperform passive investors?
“You all can’t beat the average because you are the average.” The financial market is a vast arena where participants buy and sell securities based on their beliefs and financial needs. While some investors prefer active management, which deviates from market weights, others opt for passive management, which mirrors the market weights. The concept of…
-
Does active investing outperform in down markets?
The short answer is no. One of the prime active manager’s pitches against passive investing is that they outperform in bear markets. The argument is that active managers can foresee downturns and position their portfolios accordingly, adding value through better selection into more defensive securities, compared to an index fund manager who must track the…