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From The Archives: Leverage, The Efficient Market Hypothesis, and Emergency Funds


Lets Talk About Leverage -Leverage allows you to use a small amount of your own money to make an investment that you expect to increase in value. In that way, leverage can increase your buying power and give you control of potentially valuable assets.

What is the Efficient Market Hypothesis? -EMH suggests that the army of analysts and fund managers whose job is to actively manage portfolios are engaged in a futile exercise because everything they find out is rapidly transmitted around the market, and share prices instantly reflect the common knowledge.

Do You Need an Emergency Fund? -We typically hear that everyone should have an emergency fund equal to three to six months (or more) worth of basic living expenses. But, do you really need such an emergency fund? I’m not sure you do.

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  •  In finance, leverage refers to the ratio of debt to equity. The higher the proportion of debt, the more leverage. Leverage allows you to use a small amount of your
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  • Setting up an Emergency Fund
  •  Having emergency money that is easily accessible in an event such as a lay off or medical situation where you will not be able to work for awhile is important

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