151

When I spend $1.00 at a local store, some of that money goes as salary to a local person, and some as taxes (property, income, sales etc) to my local government. When I buy the same item for 10% less online, as little as none of the 90 cents goes to those things. (There may be sales tax collected for my country or province/state.) For some people, the total ...


93

There are several reasons, but in my view they all basically boil down to this: the "purpose" of each buyer is not, as you say, "to maximize savings". Rather, each person's goal is to have a good life. When viewed narrowly, buying from large stores offers the best savings on the individual purchase; however, when viewed more broadly, the lower price may ...


45

A great deal of analysis on this question relies on misunderstandings of the market or noticing trends that happened at the same time but were not caused by each other. Without knowing your view, I'll just give the basic idea. The amount of active management is self-correcting. The reason people have moved out of actively managed funds is that the funds ...


31

Currencies are indeed "actually" traded basically on what is called the "Interbank Market" Here's a quick read on that: https://en.wikipedia.org/wiki/Foreign_exchange_market Let us compare and contrast! Stocks (like AAPL) are (as a rule) traded on the two or three huge "stock exchanges" such as "Nasdaq", which everyone has heard of. Commodities like gold ...


23

One aspect of a buyer's concern is knowing what they are buying. Eggs are a pain point for me. I can afford a premium egg price to satiate my morality. I don't like the idea of chickens in battery cages; I don't want to eat eggs from chickens in battery cages. I don't want to eat eggs from chickens in "furnished/enhanced housing" (large battery cages). I ...


22

Many factors go into the methods banks use to determine what interest rates they charge on loans. Many other factors go into determining how profitable those loans are, or how readily consumers use them under given conditions. It's tempting to over-simplify this, but the only simple truth is that it's complicated. Retail banks are essentially in the ...


17

Not much at all, especially an introductory level Microeconomics class. There are a few reasons for this: Finance and investing is not actually economics. Some of economics surrounds investing, but economics as a field is much wider than that. The class will likely cover the concepts behind how you theoretically make economic decisions, and not why putting ...


17

The short answer is that banking is complicated, but the bank really doesn't need your money because it can get it from the Fed almost free, it can only use 90% of the money you give the bank, it can only make money on that 90% from very low-risk and thus low-return investments, and as it has to show a profit to its shareholders it will take whatever cut it ...


17

Uber, FB and Airbnb are facilitators, since they, well, facilitate connections between the consumer and the provider. Alibaba and Amazon are in that role, too.


14

Would you mind adding where that additional value comes from, if not from the losses of other investors? You asked this in a comment, but it seems to be the key to the confusion. Corporations generate money (profits, paid as dividends) from sales. Sales trade products for money. The creation of the product creates value. A car is worth more than ...


12

Weddings are a lot more work for service professionals than other events. The drive to get everything right for a once-in-a-lifetime-event takes means more meetings and pressure. For example, a florist describes the difference between a corporate event and a wedding in a Huff Post article. A corporate event usually involves a couple phone calls and maybe ...


12

Here's a very simple way to determine the exchange rate between dollars and euros, assuming you have a few dollars: Go from place to place and ask them how many euros they'll give you for your dollars. Accept the best offer you get. Go from place to place and ask people how many dollars they'll give you for your euros. Accept the best offer you get. If you ...


11

The psychology around money is the subject of a lifetime of study. Your observations are not uncommon. The market daily fluctuation is out of our control. Hopefully, by the time the 1% volatility impacts you by say $1,000, you'll have grown accustomed to it, so when the 1% is then $10,000, you won't lose sleep. The difference between the $1000 up/down and ...


11

I am from Australia, so my answer is based on my experience over here, however it should be similar for the USA. Generally, what determines both the price of houses/apartments and the rents for them is supply and demand. When there is high demand and low supply prices (or rents) generally go up. When there is low demand and high supply prices (or rents) ...


11

The argument you are making here is similar to the problem I have with the stronger forms of the efficient market hypothesis. That is if the market already has incorporated all of the information about the correct prices, then there's no reason to question any prices and then the prices never change. However, the mechanism through which the market ...


11

No one applies the factors to calculate an exchange rate (for freely floating currencies) — it’s not calculated at all, but determined from what actually happens in the market. People who want to buy currency A with currency B bid on how much of currency B they are prepared to give in order to get currency A. Similarly, people who want to buy currency B with ...


10

When trading Forex each currency is traded relative to another. So when shorting a currency you must go long another currency vs the currency you are shorting, it seems a little odd and can be a bit confusing, but here is the explanation that Wikipedia provides: An example of this is as follows: Let us say a trader wants to trade with the US dollar and ...


10

So "Operation Twist" is actually a pretty simple concept. Here's the break down: The Fed sells short-term treasury bonds that it already holds on its books. Short-term treasury bonds refer to - bonds that mature in less than three years. Then: Uses that money to buy long term treasury bonds. Long-term treasury bonds refer to - bonds that mature in six ...


10

As more actively managed funds are driven out of the market, the pricing of individual stocks should become less rational. I.e. more stocks will become underpriced relative to their peers. As stock prices become less rational, the reward for active investing will increase, since it will become easier to "pick a winner". Eventually, the market will reach a ...


10

On a day where the Peso is spiking and your government is having talks with IMF and especially in a country that has had 8 defaults in the last 200 years I understand it may be hard to take the following advice, but I really urge you to take a little time consider your next moves carefully. I'm not sure if it helps but, even with the recent developments, ...


9

A central bank typically introduces new money into the system by printing new money to purchase items from member banks. The central bank can purchase whatever it chooses. It typically purchases government bonds but the Federal Reserve purchased mortgage-backed-securities (MBS) during the 2008 panic since the FED was the only one willing to pay full price ...


9

"Unemployed" are people who are actively searching for a job. A lot of people are not employed, but are not "unemployed" because they're not looking for a job. Being infants, housewives, retired, students, etc.


9

Fantastic question to be asking at the age of 22! Saving and Budgeting A very wise man suggested to me the following with regard to your net income save 10% for retirement, which you don't touch until you retire, but read about options you have for investing which I have written earlier save 10% for unplanned expenses (broken car, heath problem) save 10% ...


9

First of all, let me say that for me "local store" is no value in itself. That is, I've met local vegetable stores that had lower quality produce than the LIDL around the corner and then the decision is clear for me. Summary: while I can name a number of situations where I prefer the local store (which btw. then often isn't that local), I'd also like to ...


8

This is a very important question and you will find arguments from both sides, in part because it is still understudied. Ben Golub, Economics Ph.D., from Stanford answers "Is high-frequency trading good for the economy?" on Quoram quite well. This is an important but understudied question. There are few published academic studies on it, though several ...


8

Wikipedia has the definition of 1/100th of a percentage point. So, 8.75 percent is 875 basis points for one example. A quarter of one percent would be 25 basis points for another example.


8

Competition, or actually lack of competition, mostly due to a demand curve that has minimal change due to price. You would buy the equivalent, cheaper option if it was available, but the store has little interest in offering multiple, competing options that would drive their same store revenue down. And the competing stores (Grocery, Department, Drug, Card) ...


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