What is the Joseph Effect? The Joseph Effect, which derives its name from a Biblical reference, is a phrase created by Benoit Mandelbrot, a Polish-born French-American mathematician. The phrase asserts that variations over time are normal and often part of wider trends and patterns, instead of being random. In essence, the Joseph Effect indicates whether…
What is a Fiscal Deficit? A fiscal deficit occurs when a government spends more money than it takes in. Government expenditures are usually measured on an annualized basis. A deficit is said to be occurring if, within that one-year period, the government does not take in more revenue than it spends. The simplified formula to…
What is a Hedging Transaction? In finance, a hedging transaction is a strategic action that investors use to reduce the risk of losing money while executing their investing strategy. There are many types of hedging transactions, but they generally involve derivatives, such as options or futures contracts. They are frequently used for businesses looking to lower…
What is the Keltner Channel? Keltner Channel refers to a technical analysis indicator composed of three separate lines. It includes a central moving average line along with channel lines located above and below the central one. History of the Keltner Channel The Keltner Channel is named after American grain trader Chester W. Keltner, who described…
What is the Kelly Criterion? The Kelly Criterion is a mathematical formula for bet sizing, which is frequently used by investors to decide how much money they should allocate to each investment or bet through a predetermined fraction of assets. It is popular because it typically leads to higher wealth in the long run compared…
What is Hawala? Hawala, originating from an Arabic term for transfer or trust, is an informal method of transferring money without any money physically moving from one place to another. It is based on a system of money lenders known as hawaladars, which is generally used in the Middle East, Africa, and on the Indian subcontinent…
What is a Hard Fork? In blockchain technology that underpins cryptocurrencies, a hard fork or (hardfork) refers to a radical change to the protocols of a blockchain network. In simple terms, a hard fork splits a single cryptocurrency into two and can results in the validation of blocks and transactions that were previously invalid, or…
What is a High Beta Index? A high beta index refers to a market index made up of stocks with higher-than-average volatility compared to the overall stock market. Examples include the S&P 500 High Beta Index, the TSX Composite High Beta Index, the Hang Seng High Beta Index, and the S&P Emerging Markets High Beta…
What is Share of Wallet (SOW)? Share of Wallet (SOW) is a sales metric used by companies that retail goods or services indicating how much (on average) a consumer spends on a company’s product or service as compared to how much they spend on competing products or services. In other words, it indicates what percentage…
What is a Drawdown? A drawdown is an investment term that refers to the decline in value of a single investment or an investment portfolio from a relative peak value to a relative trough. It is an important risk factor for investors to consider, becoming more important in asset management in recent years. A drawdown…
