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All posts by Bill Campbell III, CFA

By breakeven analysis we mean a determination of whether or not a firm can earn a positive (or zero) profit given its demand curve and its cost structure.  By shutdown analysis we me a determination of whether or not a firm should continue to operate in the short run and in the long run given […]

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This will be a short article, mercifully. Accounting profit is the difference between accounting revenue and accounting cost, while economic profit is the difference between economic revenue and economic cost.  (I know: not very exciting.  Hang in there; it gets better.) Accounting revenue and economic revenue are the same: total revenue.  The amount you receive […]

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Let’s get the terminology out of the way first. “Marginal” means “for the next unit”.  Thus: Marginal Revenue: The increase in revenue (sales) from producing and selling one additional unit of whatever it is you’re producing and selling Marginal Cost: The increase in cost (expenses) from producing and selling one additional unit of whatever it […]

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This article contains a number of supply and demand graphs.  Before reading it, I encourage you to look at this short article I wrote on these graphs, so that you don’t risk suffering irreparable trauma when you see them. The idea of elasticity is fairly simple, yet it can be baffling to many candidates (primarily […]

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This is a very short article, but one that you should read before reading any other article that deals with supply and demand. In a nutshell, economists’ supply and demand graphs – price vs. quantity – are weird.  (By “weird” I mean “stupid”.)  For whatever reason, some economist a bazillion years ago decided that these […]

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Markets are interlinked.  There are strong correlations between prices in equity markets, fixed income markets, commodity markets, real estate markets, and so on.  (It’s too much to say, for example, that stock prices are affected by bond prices – which is how the curriculum states it – which imputes a cause-and-effect relationship when the correlation […]

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Cycles Business tends to move in cycles, from expansion to peak to recession to nadir (!) and back to expansion.  There are cycles of differing lengths that can influence capital markets; some of those cycles (such as the presidential election cycle in the US) have an obvious and rational reason to affect business and capital […]

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Be forewarned: there are many technical indicators, so this article is rather long.  What you what to get from it is an understanding of what each indicator is (i.e., its definition), and what each one signals (i.e., how technicians use it).  There are a few calculations along the way that you should know as well. […]

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Trends The single, most important idea underlying technical analysis is arguably trends: Is this security in an uptrend? Is this security in a downtrend? If this security is in a trend, how long will it last? And, most importantly, How can I make money from trends that I identify? Note, by the way, that when […]

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Technical analysts like charts, and CFA candidates like looking at pictures a lot more than reading boring words, so this should be a popular (and colorful) article.  At least, as popular as an article on technical analysis can be. Charts Line Chart These are very common and very easy to read: it’s simply the closing […]

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