BC GENERICLEARNINGS
Saved by @SAnngeri

It's the weekend!

Grab a cup of coffee, in this thread I will explain

1. What is a Yield Curve?
2. Why is it an important indicator of Recession?
3. Is an Economic Recession around the corner?

Lets dive right in!

 Before we understand a Yield Curve, lets get some of the basic terminology out of the way
1. What is a Bond?

A bond is a fixed income financial instrument which represents a loan made by an investor to a borrower

The investor typically receives payment in the form of interest and a lumpsum (principal) on maturity

The interest rate on a bond is known as coupon rate.
There are many types of bonds like

1. Zero Coupon : Pays both interest and principal at maturity
2. Sovereign Bonds : Issued by a Government or a Quasi Government Institution
3. Corporate Bonds : Issued by corporate like banks, established companies etc.
Coupon (Interest Rates) on a bond are decided based on the issuer's credit rating

The higher the credit worthiness of the issuer, the lower the coupon rate

Credit Rating on a Bond is usually assigned by credit rating agencies like Moody's or Standard & Poor's (S&P)
US Treasury Bonds are always assigned a rating of AAA (Triple A) as they are backed by the Government and are considered default free

Anything with a credit rating of BBB (Triple B) or lower is considered as 'junk bond' or a 'high yield bond' as they have high risk of default
2. What is Yield?

Yield is simply the return an investor of a bond realizes over the course of the bond holding period
Formula for calculation of a Bond Yield

Bond Yield = Interest Payments / Bond Price

Since, coupon (interest) payments on a bond along with tenure of a bond is fixed

your yield on a bond simply depends on the change in its price
Let me explain this concept with an example of a Dividend Yield (easier to relate to)

The logic and concept followed for calculation and estimating a Dividend Yield can be directly applied to a bond yield as well.
Take for example, Dividend Yield calculation of ITC

ITC as per its policy issues out 85% of its profits as Dividends to its Shareholders, this comes to around ~Rs 10/share

When ITC was trading
at 180/share, the Div. Yield was 5.5%
at 254/share, Div. Yield is 3.93%
In the above calculation, the dividend didn't change but because the price in denominator of our formula changed, it led to a change in Dividend Yield
If Bond Prices go up, the Yield on the bond will decrease
If Bond Price come down, the Yield on the bond will increase
Just like stock prices, bond prices keep on changing depending on economy, Central Bank interest rates, demand + supply etc.
3. What is a Yield to Maturity?

Suppose if you buy a 10 year Govt Bond that pays 5% interest yearly for Rs 1000

If instead of selling the bond when bond price rises to Rs 1100, you held on to your bond until its maturity date till end of 10 years
The present value of all the coupon (interest) payments that you will receive on the bond along with the principal repayment at the end of 10 years, is called Yield to Maturity.
You can learn more about the concept of present value at the below link https://t.co/G8TvhDjKDh
4. What is Yield Curve?

A Yield Curve is just a graphical representation of Yields of various bonds with similar credit rating but differing maturities
When the media talks about a Yield Curve, they are primarily talking about the US Treasury Yield Curve

which depicts the Bond Yields on US Treasury Bonds for varying maturity dates ranging from 1 Month to 30 Years
So now that you have understood the basics, lets try and answer a burning question

Why is Yield Curve used to predict a Recession?
Yield Curve are typically of three types:

a. Upwards Sloping (Most of the Time)
b. Flat (Rare)
c. Inverted Yield Curve (Very Rare)
The shape of the Yield Curve is dependent on a simple logic

Yields on longer term bonds should be much higher compared to Yields on shorter term bonds

as

with longer term bonds you are taking more risk and hence need more interest as return
As such in a normal economic environment, we have upwards sloping Yield Curves like shown below
Inverted Yield Curves happen when yields on short term bonds rise above Yields on Long Term Bonds

implying that near term risk in the economy is higher compared to long term
Because near term economy is considered risky

Bond Investors start dumping their short term bonds in favour for longer duration bonds
As such

Demand for Short Term Bonds decreases, causing Bond Prices to collapse and Yields to Increase

While

Demand for Longer Term Bonds Increases, causing Bond Prices to rise and Yields to Decrease

Thus, creating the inverted Yield Curve.
Inverted Yield Curves are an excellent tool to predict upcoming Recessions as per US Federal Reserve

Here are some of their publications on this subject

https://t.co/exRUKrkeYi

https://t.co/7dvY2PQOwE

https://t.co/iqxbeaqJg4
An Inverted Yield Curve has successfully predicted every recession since 1957

It even inverted right before the pandemic!
Typically an economic recession follows after 7 to 24 months since the Yield Curve Inversion

Most recently the US Treasury 2 and 10 yr Yield Curve Inverted on 29th March 2022

imply the onset of a recession anytime between end of 2022 to 2024.
This brings me to the last Question of this thread

IS AN ECONOMIC RECSSION AROUND THE CORNER?
Short Answer : Nobody knows
All Economies, work on a Peak to Trough cycle and as much as Expansions are part of the Economic Cycle, so are Recessions

Without Recessions, we wouldn't have the opportunity to reset and economy would overheat and turn into a bubble which when popped could bring depression.
For a Recession to happen, you need several ingredients

1. Slowing Economic Growth
2. High Unemployment Rate
3. High to Medium Fed Interest Rates
None of the characteristics today satisfy the onset of a Recession
For example,

US last week reported the lowest joblessness since 1969!
World Economic Growth isn't slowing down
And Fed Interest Rates are at the bottom they have ever been with the only option for Fed to Increase them and not decrease them as they would to prevent a recession
Inflation is rampant throughout the world today but that inflation is not caused by lack or overdemand in the economy (as it would during a peak of an economic cycle)

The inflation today is purely a result of supply side shortages cause by the onset of the pandemic
Considering all of the above, will we face a recession as predicted by the Yield Curve?

I don't know and I am not sure if anybody does.
Thank you for reading!

I hope you've found this thread helpful. Follow me @itsTarH for more.

Please Like/Retweet the first tweet below if you can: https://t.co/2zDVPC7lus
I write a new thread every weekend simplifying investing concepts.

All my previous work, can be found here

https://t.co/LV5EyiqlCw
I also write occasional deep dives and long form articles on stocks and emerging investing trends, you can subscribe to them for free here

https://t.co/3OwTRkY8BZ
Occasionally, conduct webinars that deep dive into a sector in its true sense

Here is a 5 hour long webinar on Green and Renewable Energy ☀️

Lots of India, Chinese and US companies covered along with Global Demand and Supply scenario

https://t.co/rkiK2iHlS0
Thank you for reading, see you in the next thread 🧵
You can read the unrolled version of this thread here: https://t.co/MCbGPgov3S

More from Tar ⚡

Tar \u26a1
Tar ⚡
@itsTarH
It's Laurus Bio

Brand new website, click on ➡️ https://t.co/P122IAgwbV https://t.co/NzSLpEi4PG


https://t.co/xLvOxPuUOD
LAURUSLABS
Tar \u26a1
Tar ⚡
@itsTarH
It's the weekend!

Grab a cup of coffee, in this thread I will explain

1. Peter Lynch's Six Categories of Stocks
2. How to identify the type of stock you own?
3. How to think and decide about the runway for growth of a company?

Lets dive right in.


For those who do not know (I doubt there will be many), Peter Lynch is one of the most successful fund managers of all time.

He managed a fund called Magellan at US Investment Giant Fidelity Investments and during his 13 yr tenure, he delivered an average CAGR of 29.2%.


Sadly the fund couldn't keep up post Lynch's retirement and his successors weren't able to keep up with his returns.

That's how good Lynch was!


In 1989, a year before retirement, Lynch wrote and published a book called 'One Up on Wall Street'.

Almost 32 years later, the teachings of the book remain relevant.

(Highly recommended read)


Chapter 7 of the Book Titled
"I've Got It, I've Got It - What is It?"

talks about the need to classify stocks.

Peter's argument is that you need to know what kind of stock you hold in your portfolio.

Not all stocks are the same - and he is right!
STOCKSLEARNINGS , LEARNSTOCKS , LEARNING
Advertisement
Tar \u26a1
Tar ⚡
@itsTarH
Axis Capital on #BorosilRenewables
BOROSILRENEWABLES , STOCKSTOWATCH
Tar \u26a1
Tar ⚡
@itsTarH
It's the weekend!
Grab a cup of coffee, in this thread I will explain

1. What are ETFs?
2. How are they different from Mutual Funds?
3. What are factors to consider while investing in ETFs?

Lets dive right in.


ETFs stand for Exchange Traded Funds

The easiest way to understand them is to think of them as Mutual Funds that are traded on the exchange just like stocks.

(technically, ETFs are nothing like Mutual Funds)


ETFs are structured as pools of investment that are inclined to

a. lower the fees associated with investment
b. shift the bulk load of fees to frequent traders of the ETF than holders
c. allow investors to invest in diverse set of securities / asset classes easily


ETFs originated after the stock market crash of 1987 in US

'Passive Investing' was the new shiny thing and investors wanted a low cost way to invest in the index without any manager actively managing their investments


Enter Nate Most

Nate Most is known as the father of ETFs
A physicist by training, Nate got the idea of ETF from warehouse receipts
ETF
Tar \u26a1
Tar ⚡
@itsTarH
120: It's just a power exchange
250: Electricity in India won't grow
300: It just makes 4paise per trade
350: MBED will erode it's profitablilty
500: Maybe what @itsTarH said about IEX = NSE + Zerodha was right
570: Buys IEX

#JourneyOfAPessimist
IEXINFO

More from Genericlearnings

Shree Ram Raut
Shree Ram Raut
@SreeRamRaut
Position Size, inputs requested;
@Trendmyfriend2 @SouravSenguptaI @wakeupsidbaba
GENERICLEARNINGS
Abhishek Kar
Abhishek Kar
@Abhishekkar_
The Important Thread⚡
Writing this thread because this is the need of the hour. If you belong to investing/trading community,read it till the end and do help in spreading awareness by RETWEETING this post if you too relate and want to help those affected.
THE TRADING PROFITS👇

These days you must have seen several traders posting profits,beyond imagination. There are 3 obvious thoughts that too in sequence -
🙂Are they even Real?
🙂Why am I not able to do so?
🙂What the hell am I doing with my life?

Preparing for that gov exam or looking for that private job or even running a business,which is going to pay me just 1/10th of these profits in my entire lifetime?!! Damn,I guess trading is the ONLY thing I need to do.
👉Result : Anxiety,Fomo and feeling of self pitty.

Now to the first question,if they are real or not,yes although social media is filled with fake screenshots,edited profit videos and false p&l,let me tell you that there are SOME GENUINE TRADERS also out there.And to rest all the rumours,YES SOME OF THOSE PROFITS ARE REAL TOO...

👉But then the question is,why are you not able to do so? Instead,the moment you attempt to do so,you are either frustrated or one step closer to bankruptcy?
The reason is the ABILITY to take risk,which differs in both the cases. Let me explain:(Read next)👇
GENERICLEARNINGS
Advertisement
Piyush Chaudhry
Piyush Chaudhry
@piyushchaudhry
Concept of Standard Deviation, simplified.


Next time when I talk about Mean +/- 1 or 2 or 3 Standard Deviation, you'll know what exactly am I talking about, especially whenever I mention Regression Channel. Concept is used in Bollinger Bands as well.
While all indicators plot, it's always good to know the background.
GENERICLEARNINGS
Steve Nison
Steve Nison
@nison_steve
A general guide to position sizing for beginners. There is nothing new which I am sharing. Everything is already in the public domain or many books elsewhere.
GENERICLEARNINGS
Rahul Valand
Rahul Valand
@RahulTheVoyager
Thread :

Logarithmic v/s Linear scale chart.

Tried to capture the most important (but most ignored) concept in simplest language.

For many people, this is going to be an eye opener.

U may share this thread so that it can reach to maximum people of our traders community.

Story :

Assume that you have been recruited as an Engineer in 1990 in XYZ company with salary of 4 k.

Next year (i.e. 1991) you got 20% salary hike and now your salary is 4k + 20% % rise = 4.8K.

You got extremely happy due to salary increment of 800 INR.

Now after 30 years in 2021, Your salary is 1.2 lac and today your boss has approved salary hike of whooping 800 INR.

But wait, the strange thing is, You are not happy today.

Bt Why??

The reason is simple.

Hike of 800 INR in 1991 was 20% of salary and the same amount now is less than 1% of current salary.

I hope you got my point.

This is where the "Log" chart comes into the picture.

Log chart depicts the price (Y axis of chart) with unit spaced in percentage terms.

Means the distance between 1-100 is bigger than 1100-1200.

While in normal chart the distance between numbers/unit is uniform.

linear chart treats 800 INR in same way irrespective of year.
GENERICLEARNINGS

You May Also Like

Professor
Professor
@DillikiBiili
Some ofthe biggest breakouts occur after Volatility Contraction, the analogy is that more a spring is pressed, higher it jumps whenever it gets released.

There is a VCP Scanner on chartink (Not mine). This may also be used to find potential Breakouts.
SCREENERS , TA SCREENERS
Coffee Sloth \u2615
Coffee Sloth ☕
@CaseyExplosion
*Heads-up that this thread will feature some extreme examples of homophobia and transphobia.*

Hey folks, have you ever wondered why trans people face constant accusations of fetishism, sexual predation and child abuse/grooming? Well, today let's talk about stochastic terrorism.

So, first we have to talk about what stochastic terrorism actually is. Remember when there was a conspiracy that there was a pedophile ring operating out of a pizza parlour basement, and a crazed gunman showed up? It's that sort of incitement that stochastic terrorism describes.

It's the demonisation or incitement against a group of people or individuals with the intent that other, unaffiliated parties will act upon it; it's the releasing doctored footage and a shooter show up at Planned Parenthood as a direct result of what he's been led to believe.

So with that in mind, let's talk about Russia's extreme anti-LGBT laws that banned the "promotion" of LGBT lifestyles to children. A move that specifically marked LGBT people as a threat to children, and resulted in neo-nazis meting out vigilante "justice" against gay men.


Groups such as this would lure unsuspecting gay men via dating sites, and brutalise and humiliate them on camera. They did so under the guise of combating child abusers, one group calling themselves "Occupy
SOCIETY
Advertisement
antifa.drone
antifa.drone
@antifa_drone
Fake chats claiming to be from the Irish African community are being disseminated by the far right in order to suggest that violence is imminent from #BLM supporters. This is straight out of the QAnon and Proud Boys playbook. Spread the word. Protest safely. #georgenkencho


There is co-ordination across the far right in Ireland now to stir both left and right in the hopes of creating a race war. Think critically! Fascists see the tragic killing of #georgenkencho, the grief of his community and pending investigation as a flashpoint for action.


Across Telegram, Twitter and Facebook disinformation is being peddled on the back of these tragic events. From false photographs to the tactics ofwhite supremacy, the far right is clumsily trying to drive hate against minority groups and figureheads.


Declan Ganley’s Burkean group and the incel wing of National Party (Gearóid Murphy, Mick O’Keeffe & Co.) as well as all the usuals are concerted in their efforts to demonstrate their white supremacist cred. The quiet parts are today being said out loud.


The best thing you can do is challenge disinformation and report posts where engagement isn’t appropriate. Many of these are blatantly racist posts designed to drive recruitment to NP and other Nationalist groups. By all means protest but stay safe.
TRADING
Patrick Chovanec
Patrick Chovanec
@prchovanec
I'm going to do two history threads on Ethiopia, one on its ancient history, one on its modern story (1800 to today). 🇪🇹

I'll begin with the ancient history ... and it goes way back. Because modern humans - and before that, the ancestors of humans - almost certainly originated in Ethiopia. 🇪🇹 (sub-thread):


The first likely historical reference to Ethiopia is ancient Egyptian records of trade expeditions to the "Land of Punt" in search of gold, ebony, ivory, incense, and wild animals, starting in c 2500 BC 🇪🇹


Ethiopians themselves believe that the Queen of Sheba, who visited Israel's King Solomon in the Bible (c 950 BC), came from Ethiopia (not Yemen, as others believe). Here she is meeting Solomon in a stain-glassed window in Addis Ababa's Holy Trinity Church. 🇪🇹


References to the Queen of Sheba are everywhere in Ethiopia. The national airline's frequent flier miles are even called "ShebaMiles". 🇪🇹
CULTURE
Anu Satheesh \U0001f1ee\U0001f1f3
Anu Satheesh 🇮🇳...
@AnuSatheesh5
Samayapuram Mariamman Temple
#Trichy
#Tamilnadutemples 🚩

Samayapuram Mariamman Temple is located in Samayapuram of
 Tiruchirappalli district.  Mariyamman here is worshipped as Samayapurathal a form of Parashakti.
Amman vigraham here is made of sand and clay so


no abhishekam done to the main vigraham. Samayapuram Mariamman Temple is one of the famous Shakthi Sthal of Tamilnadu.

Story says that paramashiva created Kali, out of the poison that he drank during samudra mathanam.  As Devi originated from the Kaalakoota/ halahala poison,


thus the name Kaali. Mariamman is believed to be a form of Kaali, and is also known as Mahamayi. It is also believed that Maharaja Dasharatha offered his prayers here.

Mariamman is Parashakti herself who blesses with prosperity and she is believed to cure all diseases.


Paramashiva, Mahavishnu and Brahma Deva are believed to have taken blessings of Mariamman here.

Om Shakti Para Shakti
🙏🕉🙏
ALL