What is Cost of Capital – Properly Considered
Cost of capital is the concept that a real cost exists for the use of every source of a company’s funds. As an manager or investor, I want to use the funds I have available to me as efficiently as…
What Business Owners Should Do With Their Business’s Earnings
Business owners and managers have only five ways to use the earnings from their business. They are: How to determine what do to with business earnings: Determining what to do with earnings is a simple calculation for shareholders. Management should…
Paradox of Investment Skill
The Paradox of investment skill is the concept that as individuals become better at investment activity, the difference between the best, average and worst gets smaller. As skill of the group increases, luck plays a bigger role. Telling the difference…
Illiquidity Premiums and Investor Psychology
An illiquidity premium the concept that an investor will require additional return for holding or acquiring an investment that cannot be easily sold. A liquidity premium by contrast is additional value an investor would be willing to give up for…