Can you tell the difference between real and ‘fake’ stock prices? New study says that most people can
There's a neat online video game that tests whether you can identify real stock data from randomized, generated data. The game is called ARORA, an abbreviation for "a random or real array" of prices. (found via Technology Review) The purpose of the game Many economists argue that markets are efficient, meaning prices reflect ...

Do stocks bounce back after a recession?
They do, but that may not be as interesting as it sounds. Many advisers have recently circulated a chart illustrating how the stock market recovers. Though each company has added its own touch, the original data come from Ned Davis Research, Inc. Here is one version from Charles Schwab: source The data seem impressive. ...

3 important lessons from the financial crisis
It's hard to know what to think these days. I find myself overwhelmed sorting through all the data and predictions. It's time for reflection, so here are three of my lessons during this downturn: 1. Saving for emergencies: time to revive age old wisdom Ancient societies understood the need to save for ...

Calculating stock or investment returns: the difference between ROI and IRR
Whether you are investing in the stock market or a business project, you need to understand rates of return. Stock gurus talk about things like ROI and IRR, but what do they mean? I'll go through the logic of each method and explain why IRR is my preferred choice. Rate of ...

Age old wisdom for dealing with the financial crisis
photo credit: Brian-Progressive Spin Lately I've been fielding a lot of questions about the financial crisis. What should I invest in? When will the market recover? What is causing it? I pause before I answer. The truth is no one can answer these things with much certainty. My own opinion is to ...

Understanding the rule of 72: a popular rule that has little practical value
The Doubling Question: If your money grows at a certain rate, how long will it take to double? You can surprisingly answer this question without doing much math. All you need to know is the Rule of 72, which states: For instance, if an investment returns 6% annually, it will take 12 ...