1) What’s the difference between the Firm Foundation and the Castle-In-The-Air theories of investing?

The Firm Foundation theory focuses on an “intrinsic value” and how much something will cost in the future based on current analysis while the Castle-In-The-Air theories relies on trends to predict when the public will be most susceptible towards investing in market stocks.

2) Economist John Maynard Keynes famously once said, “In the long run we’re all dead.” How can this line be understood in the context of the castle-in-the-air theory he popularized?

Although the castle-in-the-air theory relies on predicting speculative bubbles, when stock prices are too highly inflated this bubble will ultimately “burst” and the stock market could potentially crash as prices significantly decrease.

3) In the context of investment theory/economics, describe the concept of manias aka crazes aka speculative bubbles. What are those?

Speculative bubbles are periods of time where people are most likely to highly invest in the stock market game, causing stock prices to rise significantly.

1) What does random walk mean in terms of investing?

A “Random Walk” is used to describe the theory that past trends and changes cannot be used to predict future prices in the stock market.

2) What’s the difference between investing and speculation?

Speculating involves a high-risk investment for potentially huge profits while regular investment is a low-risk financial decision that uses past data and analysis to predict the outcome.

3) If my investments worth $10,000 in 1995 were worth $10,100 in 1999, what happened to the purchasing power (how much stuff I can buy) of my investments over this time?

Because the price is not heavily inflated over time, the purchasing power would not be affected in a devastating manner. 

This is an example post, originally published as part of Blogging University. Enroll in one of our ten programs, and start your blog right.

You’re going to publish a post today. Don’t worry about how your blog looks. Don’t worry if you haven’t given it a name yet, or you’re feeling overwhelmed. Just click the “New Post” button, and tell us why you’re here.

Why do this?

• Because it gives new readers context. What are you about? Why should they read your blog?
• Because it will help you focus you own ideas about your blog and what you’d like to do with it.

The post can be short or long, a personal intro to your life or a bloggy mission statement, a manifesto for the future or a simple outline of your the types of things you hope to publish.

To help you get started, here are a few questions:

• Why are you blogging publicly, rather than keeping a personal journal?
• What topics do you think you’ll write about?
• Who would you love to connect with via your blog?
• If you blog successfully throughout the next year, what would you hope to have accomplished?

You’re not locked into any of this; one of the wonderful things about blogs is how they constantly evolve as we learn, grow, and interact with one another — but it’s good to know where and why you started, and articulating your goals may just give you a few other post ideas.

Can’t think how to get started? Just write the first thing that pops into your head. Anne Lamott, author of a book on writing we love, says that you need to give yourself permission to write a “crappy first draft”. Anne makes a great point — just start writing, and worry about editing it later.

When you’re ready to publish, give your post three to five tags that describe your blog’s focus — writing, photography, fiction, parenting, food, cars, movies, sports, whatever. These tags will help others who care about your topics find you in the Reader. Make sure one of the tags is “zerotohero,” so other new bloggers can find you, too.