Tag Archives: Financial Education

Financial Accounting Drill 1: Understanding Amazon through Form 10-K

Ability to comprehend a company’s financial statements is an important and sought-after skill whether you are a retail investor, equity analyst, or an investment banker. These statements are generally full of accounting jargon and long-winded.
In this video, I used Amazon’s most recent 10-K as an example to show you how to navigate through an 80-page financial document effectively and in a time-saving manner.
Important Note: People knowledgeable about financial accounting will find it easier to wade through such financial statements and in many instances financial accounting knowledge is a prerequisite as it facilitates the process immensely. This is also true for this video.
Total duration of the video: 27mins 44secs

Accounting for Crypto Assets: Assessing Current State of Affairs and Hypothesizing about the Future

Crypto assets are facing greater headwind day after day. Among many disparate difficulties and uncertainties they face, how to account for crypto assets is expectedly vague. While almost all definitions under GAAP fall short for the classification of cryptocurrencies, there are still many pressing problems related to investing in and reporting of cryptocurrencies, as well.
In this article, I substantiate current impossibility of accounting for crypto assets under GAAP and how cryptocurrencies, considering their current form, violate underlying foundations and assumptions of GAAP while I also investigate alternative ways of accounting for them and the profile of companies currently investing in them in order to assess the viability of cryptocurrencies. I will conclude my article, by comparing cryptocurrencies to gold with respect to financial accounting and reporting and other imminent problems they may face.

Reliability Issues in Crypto Market Data

Crypto markets have all the wherewithal to be transparent. They can capitalize on utmost digitization. However, despite some problems inherent in their infrastructures, they suffer from the lack of venues where one can find reliable, unbiased, and verifiable data. The number of data providers is limited and cross-checking is still needed and time-consuming. I will provide you with an example of why reliability issues still persist.

Understanding Fraudulent Schemes in Decentralized Crypto Markets: Three Recent Real-World Cases

In this paper, I wrote about three recent initial offerings, two IDOs and one IFO, which were brought to my attention. All offerings were launched on DeFi protocols acting as decentralized exchanges.
I will assess whether it is possible to take a profit either through using an option-like strategy or through participating as a market maker (more commonly known as LPs in crypto markets) in initial offerings.
These offerings, a kind of a zero-sum game, are rife with pump-and-dump schemes. While you are trying to grab a portion of someone else’s get-rich-quick scheme, seeking to sell to the next greater fool, your allegedly impermanent losses may become permanent.
A victim of the pump-and-dump scheme will be the savior of another’s get-rich-quick scheme. In the current market environment, it may seem that there is still plenty of money on the sidelines and that every dump will be followed by another pump. However, both money and time are not limitless in one’s lifetime. Understanding how these schemes are staged and unfold will save you both time and money.

Valuation of cash-flow bearing long-lived assets: Focus on Real Estate Property

In this video, I will explain how to value a real estate property. The method I employ is similar to that used by investment bankers in their enterprise and equity valuations. The complexity of valuing any cash flow bearing asset lies partly in the uncertainties related to cash flows and required rate of return representing the risk profile of the asset. I will show you how to mitigate the impact of these unknowns on the valuation model. With such a tool in your hand, you will be able to make your sell and buy decisions in a more informed and accurate way.

GameStop (GME) Part 2: Concluding remarks on GameStop: Further fact checking and demystifying illusions they want you to believe in & Lessons learned for retail investors

In this paper, I will share some additional facts helping you understand why GME case was hardly a landmark in the financial markets. Similar phenomena happened in the past and it is very likely that they will happen in the future. However, GME case is significant in that it has presented great lessons ranging from how to expect and spot financial irregularities and how to manage your risk capital to recent digitization in finance and its ramifications for retail investors.

GameStop (GME) Part 1: Financial Mechanics explained

In this paper, I will explain why such a pricing irregularity concerning the value of the GameStop’s stock happened and it happened fast although the buildup was manifest to the trained eye. Obviously, GameStop may not be on your radar considering the current state of the company, the size of its market cap and shares floating, and disruptions faced by retailers alike; however, the financial mechanics here are relatively complex and understanding them will make you more prepared for similar cases that very likely will happen in the future.
In the 2nd part of this series, against the backdrop of part 1, I will elaborate further on lessons that must be learned by retail investors and how this saga may end.