Category: Financial Markets

It comes to a surprise that Dutch East India Company was the first Company in the world that was traded regularly on a stock market. When people in Holland in 1602, when that company was first launched, when they discovered that they could trade the stock every day and watch its price go up and down, it developed a sense of excitement and possibility in their lives, and it led to the financing of many more corporations. Here came a point in time where the evolution of financial markets started. To get the insights I analysed the period of 2006 to 2012 very keenly and we were in a period of economic crisis. It’s been called the Great Recession. It was the biggest world recession since the Great Depression(Will talk about this later!) of the 1930s. Among the events which triggered the Great Recession was the 2007 sub-prime crisis in the United States, the 2008 Lehman Brothers crisis, the failure of an investment bank, Lehman Brothers. And then in 2009 and into 2010 and beyond, the European sovereign debt crisis which originated in Greece and rapidly spread to Spain, Portugal, Italy, and other places. These were the crises that launched the Great Recession. And these crises caused great dismay or you can even say anxiety because the,  the Great Recession caused millions of people to lose their jobs, or lose their  homes, and, and, and find that their career prospects were derailed.  And fingers were pointed at the financial community. That’s the problem. It seemed like the financial community was  the cause of our most serious problems, but I found myself thinking, yes, this is a problem, and I don’t mean to minimize it. But what about all of the strength that has developed this, preceding this crisis.

It portrayed “The strength of our economies”.

There were firms like the insurance company AIG(American International Group) which were bailed out for whopping $182 Billion by the US of A. This shows the might’s of the economies and also portrays that we always had the ability to make out of this stress.

This also boldly tells that professionals in financial industry must possess some work ethics which would make the industry more trust worthy(Let’s not go much deep into this aspect!!).

The world is going through an amazing revolution. we saw the development of financial capitalism all over the world. That development is real and important, and it has its ups and downs, it has crises, but those crises are manageable if one understands finance. My impulse was to plunge into some of the technology of knowing Finance. I wanted to, get right into, what I think is the core model underlying finance. It’s something that’s called the Capital asset Pricing Model (CAPM). And this model is the model that helps us understand how risk is spread and diversified and managed, and it helps us understand the really important concept of leverage, which tells us how risk can be magnified or reduced in very simple terms.

It also helps us understand our own individual investing decisions. What does it mean to invest well? How important is diversification? And what does it mean really to diversify anyway?

Welcome on-board the journey of Finance with me! I am sure you’ll will enjoy this one!