Basic Finance intro

  From Benjamin Graham — “father of value investing,” Warren Buffett’s mentor, and “Dean of Wall Street.” The New York Times lists it as one of the must-read finance books.      Quotes & Take-aways “In the short run the market is a voting machine; in the long run it is a weighing machine.” A sound mental framework lets you make correct investment decisions; an iron discipline keeps emotion from wrecking that framework.   See Chapters 8 and 20. Never overpay. A low entry price is the surest way to minimize mistakes. The secret lies within: think critically, distrust Wall Street “facts,” invest with lasting conviction, and manage your behavior and emotions. “Those who forget the past are condemned to repeat it” — learn from others’ experience and real-world practice. Don’t let the market’s mood dictate your own; in value investing, volatility is always short-term. An industry’s obvious growth prospects do not automatically translate into obvious profits. Br...

  Five Major Banks · ICBC, ABC, BOC, CCB, BoCom 40 % assets · State‑controlled · Deposit stickiness · Long history, strong absorption Joint‑stock Banks · Flexible shareholding, differentiated · Credit card — CMB · SME loans — CMBC · Personal services choose JSBs City Commercial Banks · Rely on local economy · Local‑gov holding · Weak deposit, aggressive WMPs Deposit Insurance · Prevent run: ≤¥500k fully covered · Finance relies on confidence & expectation Interest‑rate Marketization · Market sets rates; gov guides via policy Lender of Last Resort · Central bank ends panic · Bagehot: good collateral + penalty rate Blockchain Technology · Distributed immutable encrypted DB · Cuts info asymmetry, lowers cost · Promising but not yet fully landed

  Banks: “Lying Down to Earn Money” ·  Four major state banks (ICBC, ABC, BOC, CCB) in China ·  Main profit: deposit–loan spread ·  Next: investing deposits into safe assets (90 % gov bonds) ·  Service channel fees ·  Stronger deposit ability = more profit Deposit–Loan Spread Factors ·  Scale of funds ·  Maturity matching ·  Risk management Golden Decade of Banking ·  High monopoly threshold, strict licence ·  China’s economy surged, high profits ·  Threshold now lower, competition rising Money‑Market Funds ·  Inter‑bank market short‑term huge sums, high rate ·  Retail barred, MMF pools money to enter ·  Yield > bank deposit; rate follows liquidity (ample → low, crunch → high) Fund Selection Tips ·  Look at macro: bull = index, bear = bond ·  Look at industry expertise ·  Look at timing: RRR/rate cuts favor bonds ·  Look at brand: long‑history, big houses Fund Pitfalls & Exper...

  First Law of Finance ·  Time has value ·  Financial tools price processed time ·  Every product choice = buying a different future value Second Law – Rapid Aggregation & Allocation ·  Civil‑War North won via bonds pooling funds; South printed money → hyper‑inflation ·  Banks, stocks, bonds are fast pooling channels Third Law – Shared Upside / Downside ·  Insurance disperses risk across many ·  VOC raised voyage funds via shares ·  2010 SpaceX massive funding sped development ·  VC invests early‑stage high‑risk/high‑growth ·  PE exits after value increase Summary: Finance processes time, pools capital, shares risk Matthew Effect ·  Leverage magnifies wealth gap Moral Hazard ·  Info asymmetry + greed → unfair gains Side Topic ·  Finance only cares about the future ·  Always weigh risk–return ·  High‑risk VC vs low‑risk bonds

  Finance Penetrates Every Aspect of Life ·  Wealth‑management ·  Education ·  Insurance ·  Banking ·  Employment ·  Investing ·  … Yet It Is Still a Game for a Elite ·  Complex mathematical models ·  Obscure terms ·  Result: more and more money falls into in fewer hands The Essence of Finance ·  Toolkit ·  Time‑machine: you buy future value ·  Life lever—high risk, high return ·  Incubator—shared risk LETS Embark!!!