From concept to calculation
Short learning paths connect the vocabulary to a worked example and a tool. Every example is hypothetical, and costs and execution limits still matter.
Start before the stock pick
Begin with your purpose, understand the environment, and only then decide what to own and how to express the idea.
What are you investing for—and when will you need the money?
Is activity improving, weakening, or sending mixed signals?
How can a policy decision reach the company you own?
Why can a good business fall after good news?
What earns the cash—and what assumptions are already in the price?
01 · Plan risk
An account-risk percentage describes a planned cash budget, not the percentage of your account invested. A 1% budget on 10,000 is 100. With 5 of price risk per unit, that supports 20 whole units before costs.
A stop does not guarantee the exit price. Gaps and liquidity can increase the realized loss.
Try position sizing →02 · Understand a projection
Compounding applies each period’s return to the accumulated balance. With no deposits, 1,000 growing at a constant 5% effective annual rate for ten years becomes approximately 1,628.89.
The constant return is an assumption, not an investment forecast. Taxes, fees, and variable returns change real outcomes.
Try compound return →03 · Read a business
Revenue, operating income, net income, and cash generation answer different questions. Begin with a consistent reporting period, then investigate why the figures diverge.
Use the footnotes and original filings before forming a view about earnings quality.
Read the earnings guide →Change one input, predict the direction of the answer, and calculate again. If the result surprises you, return to the formula and units before using it in a decision. A polished output does not make the assumptions true.