Abu Yahya's definitions
(FINANCE) a situation in which an investor stands to gain if a particular investment instrument (stocks, bonds, gold, real estate) goes up in value. One "takes a long position" with respect to a particular item.
There are several ways of taking a long position; an obvious way to go long is to actually own the thing itself. Supposing you are taking a long position on Intel common stock (NASDAQ:INTC), here are some other ways:
* Buy a call option for INTC, especially with a strike price higher than the current spot price.
* Write a put option for INTC, committing yourself to buy more INTC stock if the price goes down over the near term
* Buy a futures contract for INTC at spot (or more).
CAVEAT LECTOR: there are many _potential_ definitions of long position; I have given the broadest one available.
There are several ways of taking a long position; an obvious way to go long is to actually own the thing itself. Supposing you are taking a long position on Intel common stock (NASDAQ:INTC), here are some other ways:
* Buy a call option for INTC, especially with a strike price higher than the current spot price.
* Write a put option for INTC, committing yourself to buy more INTC stock if the price goes down over the near term
* Buy a futures contract for INTC at spot (or more).
CAVEAT LECTOR: there are many _potential_ definitions of long position; I have given the broadest one available.
MICHAEL: I want to flatten my long position on T-bills.
ANNA: I would recommend buying a covered interest swap with another major currency, like yen.
ANNA: I would recommend buying a covered interest swap with another major currency, like yen.
by Abu Yahya April 10, 2010
Get the long positionmug. influenced by the economic theory of John M. Keynes (1883-1946); in particular, Keynes' book *The General Theory of Employment, Interest, and Money* (1936). The main point of Keynes' general theory (GT) was that market economies are not usually self-correcting, and occasionally require some sovereign intervention to prevent inflation or depression.
One of the policy prescriptions of the GT for curing recessions was to lower interest rates; another, more potent tool, was to deliberately run a fiscal deficit as a strategy for increasing aggregate demand. The GT was too late to have much of an impact on the Great Depression, but it did have a major impact on the economic policies of the Western Democracies from 1946 to the present.
During the period 1979 to 2001, Keynesianism was supposedly discredited, but national governments continued to use stimulus packages and monetary policy to resolve recessions. The policy has evolved, but remains the cornerstone of actually existing government behavior.
Attacks on Keynesianism: the most famous adversary of the GT was Friedrich von Hayek (1899-1992) of the London School of Economics, who insisted that an authentically free market would be self-correcting if it were only allowed to. Hayek's objections were ideological, but other economists such as John Muth argued that the GT expected people to make irrational, or unreasonable errors.
During the late 1970's, Keynesianism was eclipsed by the Rational Expectations Hypothesis; but REH failed to develop satisfactory policy proposals, while Neo-Keynesian economics evolved to address many of the original REH criticisms.
One of the policy prescriptions of the GT for curing recessions was to lower interest rates; another, more potent tool, was to deliberately run a fiscal deficit as a strategy for increasing aggregate demand. The GT was too late to have much of an impact on the Great Depression, but it did have a major impact on the economic policies of the Western Democracies from 1946 to the present.
During the period 1979 to 2001, Keynesianism was supposedly discredited, but national governments continued to use stimulus packages and monetary policy to resolve recessions. The policy has evolved, but remains the cornerstone of actually existing government behavior.
Attacks on Keynesianism: the most famous adversary of the GT was Friedrich von Hayek (1899-1992) of the London School of Economics, who insisted that an authentically free market would be self-correcting if it were only allowed to. Hayek's objections were ideological, but other economists such as John Muth argued that the GT expected people to make irrational, or unreasonable errors.
During the late 1970's, Keynesianism was eclipsed by the Rational Expectations Hypothesis; but REH failed to develop satisfactory policy proposals, while Neo-Keynesian economics evolved to address many of the original REH criticisms.
The treasury secretary wanted to respond to the inflationary spiral with a Keynesian strategy of tax increases, spending cuts, and interest rate hikes.
by Abu Yahya February 14, 2009
Get the Keynesianmug. a false allegation of murder; the term refers specifically to a recurring rumor from 12th century Europe that Jews were kidnapping Christian children and using their blood for ritual purposes. A famous example of the blood libel is recounted in the "Nun Prioress's Tale" from Chaucer's *Canterbury Tales*. In this and other versions of the story, the events are absurd and feature perverse miracles.
Frequently occurrences of the blood libel were accompanied by a wave of mass murder of Jewish residents of the city. In many cases, the zealots would force the authorities to try random Jews for the alleged crime; these trials were, naturally, travesties.
The last case of a blood libel resulting in murder was the Kielce pogrom of 1946. 200 Jewish survivors of the Final Solution were being transported back to Poland when a boy (who had disappeared for a couple of days) told the police he had been kidnapped by Jews. The police went to a hostel where returning Holocaust survivors were staying, and massacred 37 of them.
Sometimes the phrase "blood libel" is used to refer to similar allegations against primarily non-Jewish groups; for example, many nationalities have been accused of kidnapping children to harvest their organs and sell them to rich patients in the developed world.
Frequently occurrences of the blood libel were accompanied by a wave of mass murder of Jewish residents of the city. In many cases, the zealots would force the authorities to try random Jews for the alleged crime; these trials were, naturally, travesties.
The last case of a blood libel resulting in murder was the Kielce pogrom of 1946. 200 Jewish survivors of the Final Solution were being transported back to Poland when a boy (who had disappeared for a couple of days) told the police he had been kidnapped by Jews. The police went to a hostel where returning Holocaust survivors were staying, and massacred 37 of them.
Sometimes the phrase "blood libel" is used to refer to similar allegations against primarily non-Jewish groups; for example, many nationalities have been accused of kidnapping children to harvest their organs and sell them to rich patients in the developed world.
Although the details have changed over the last millenium, the blood libel retains core elements of sadistic fantasy, psychological projection, and crass opportunism.
by Abu Yahya February 15, 2009
Get the blood libelmug. (ECONOMICS) An emergency in which a financial or government institution cannot meet its current obligations in an acceptable form of payment. Different from insolvency, which is where that same institution cannot be realistically expected to EVER meet its obligations.
A good example of the difference is a run on a bank, especially in the days before deposit insurance. A perfectly honest, well-run bank could have all of its books in order, and be paying its depositors in legal tender, when suddenly a panic strikes and everyone wants their deposits all at once. This is necessarily impossible, and forces the bank's officers to default on their debts.
Often, the bank could resume operation later when it was established that it held performing assets greater than deposits. More recently, liquidity crises have been a problem suffered by countries facing capital flight
A good example of the difference is a run on a bank, especially in the days before deposit insurance. A perfectly honest, well-run bank could have all of its books in order, and be paying its depositors in legal tender, when suddenly a panic strikes and everyone wants their deposits all at once. This is necessarily impossible, and forces the bank's officers to default on their debts.
Often, the bank could resume operation later when it was established that it held performing assets greater than deposits. More recently, liquidity crises have been a problem suffered by countries facing capital flight
In 1997, several countries in East Asia were stricken with a liquidity crisis. In many cases, such as Malaysia, the panicked response had nothing whatever to do with fundamentals; it was sheer herd mentality.
by Abu Yahya May 5, 2010
Get the liquidity crisismug. (FINANCE) when a financial derivative has intrinsic value to the person who holds it. There are two examples:
* when the strike price of a call option is less than the spot price of the underlying stock, it is worthwhile to exercise it;
* when the strike price of a put option is more than the spot price of the underlying stock, it is worthwhile to exercise it.
Please remember that an option being "in the money" does not mean it was a good investment. You might have bought the option when the difference between the strike price and the spot price was MORE than it is now. If it's expiring, you might as well exercise it because to not do so is just throwing money away. But it still could have been a loss for the investor.
* when the strike price of a call option is less than the spot price of the underlying stock, it is worthwhile to exercise it;
* when the strike price of a put option is more than the spot price of the underlying stock, it is worthwhile to exercise it.
Please remember that an option being "in the money" does not mean it was a good investment. You might have bought the option when the difference between the strike price and the spot price was MORE than it is now. If it's expiring, you might as well exercise it because to not do so is just throwing money away. But it still could have been a loss for the investor.
PHIL: Sweet! My call options are back in the money. Now I'd better exercise them.
MIGUEL: You must be rolling in the cash, Holmes!
PHIL: Not even close. The forex rate for the UK pound nosedived and I got hosed pretty bad. It's not where it was when I bought these rat droppings, but I need to get out before they expire.
MIGUEL: You know, when you first told me about options they sounded like a sweet deal, but...
PHIL: Yeah... the guy who wrote the option always seems to know what's going down better than us dilettantes.
MIGUEL: You must be rolling in the cash, Holmes!
PHIL: Not even close. The forex rate for the UK pound nosedived and I got hosed pretty bad. It's not where it was when I bought these rat droppings, but I need to get out before they expire.
MIGUEL: You know, when you first told me about options they sounded like a sweet deal, but...
PHIL: Yeah... the guy who wrote the option always seems to know what's going down better than us dilettantes.
by Abu Yahya April 15, 2010
Get the in the moneymug. the sum of the capital account balance and the current account balance; put another way, the net change in financial reserves of a country, whether in the form of income (current account) or foreign investments (capital account)
For example, in all years since 1980, the USA has run a large-to-huge current account deficit, but in most years it has run a capital account surplus that is almost as big as the current account deficit. As a result, the USA has run a medium-to-large balance of payments deficit over this period.
A commonly-overlooked byproduct of BoP is that it determines whether or not a currency can be used as an international reserve currency. Despite repeated efforts by the governments of the EU and Japan to get their currencies established as such, they have failed to dent the US dollar's global primacy as the money for international transactions. This is because EU member states and Japan (as well as other major economies) run very large surpluses in their BoP. Japan, in particular, imports extremely little, and retains huge reserves rather than invest all of its net export earnings overseas. As a consequence, overseas holdings of euros or yen are much to small to serve as an alternative to the US dollar.
For example, in all years since 1980, the USA has run a large-to-huge current account deficit, but in most years it has run a capital account surplus that is almost as big as the current account deficit. As a result, the USA has run a medium-to-large balance of payments deficit over this period.
A commonly-overlooked byproduct of BoP is that it determines whether or not a currency can be used as an international reserve currency. Despite repeated efforts by the governments of the EU and Japan to get their currencies established as such, they have failed to dent the US dollar's global primacy as the money for international transactions. This is because EU member states and Japan (as well as other major economies) run very large surpluses in their BoP. Japan, in particular, imports extremely little, and retains huge reserves rather than invest all of its net export earnings overseas. As a consequence, overseas holdings of euros or yen are much to small to serve as an alternative to the US dollar.
Since the oil embargo of the 1970's, the US has run a balance of payments deficit because its trade deficit was enormous; prior to the embargo, the US BoP deficit was large because the US exported such an enormous amount of finance capital. As a consequence, the balance of payments deficit has persisted since the end of the Korean War (1953).
by Abu Yahya February 14, 2009
Get the balance of paymentsmug. (FINANCE) when a corporation "goes public"; the first sale of stock by a corporation. All sales of stock or bonds on the stock market require the services of an underwriter, or investment bank. Outside of the USA and China, it is common for regular banks to offer underwriting for corporations.
Incorporation is a legal status that allows (but by no means requires) a firm to issue stock. Moreover, once a corporation lists stock, it does not necessarily do so on a major exchange. Some corporations areclosely held, which means they have a small number of shareholders who are mostly affiliated with management; other corporations are "private," which means they have no stock issues at all, and control/shares of profits are determined contractually.
Some corporations have issues of stock, and that stock is traded, but it is not listed. Instead, it is traded on the "pink pages." Such companies are usually in a bad way, but not necessarily.
An IPO is the first issue of stock by a corporation THAT DOESN'T ALREADY have a listed stock. If a company is "taken private" (i.e., bought out by a PE fund and de-listed) then it can have another IPO (or "sponsored IPO"). Most likely, however, if a listed company will need to raise money on the stock market, it will have a "follow-on offering."
Incorporation is a legal status that allows (but by no means requires) a firm to issue stock. Moreover, once a corporation lists stock, it does not necessarily do so on a major exchange. Some corporations areclosely held, which means they have a small number of shareholders who are mostly affiliated with management; other corporations are "private," which means they have no stock issues at all, and control/shares of profits are determined contractually.
Some corporations have issues of stock, and that stock is traded, but it is not listed. Instead, it is traded on the "pink pages." Such companies are usually in a bad way, but not necessarily.
An IPO is the first issue of stock by a corporation THAT DOESN'T ALREADY have a listed stock. If a company is "taken private" (i.e., bought out by a PE fund and de-listed) then it can have another IPO (or "sponsored IPO"). Most likely, however, if a listed company will need to raise money on the stock market, it will have a "follow-on offering."
A fantasy of many entrepreneurs is "going public" with a big initial public offering, and retiring to a beachfront mansion.
by Abu Yahya September 2, 2010
Get the Initial Public Offeringmug.