Finance and Investing Fasts Facts

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Inflation means that £1 pound today will be worth less next year by the rate of inflation. Inflation must be countered by interest rates.
Interest rates are set by the Central Bank, whose job it is to control inflation and the quantity of money in the economy.
UK inflation in 1975 was 24.24%. UK average inflation for 2021 was 5.4%.
UK inflation over the last 100 years has been 4.08% on an average (source ONS).
UK interest rates today are 3.0%. US interest rates are 4.0% Euro interest rates are 2.0%.
UK inflation is 11.1%, US inflation is 8.5%. The Eurozone inflation is 10.7%
The current loss of purchasing power or REAL RATES (in economic lingo) now are:
UK – 8.1% (+3%-11.1%)
US – 4.5% (+4%-8.5%)
Europe - 8.70% (+2%-10.7%)

The Treasury is responsible for handling:

The Treasury decides on and is responsible for public spending on infrastructure (roads, bridges, ports etc), schools and hospitals (NHS).

The Treasury pays for public spending by:

Raising taxes on individuals (via income tax, NHS contributions, property tax and capital gains tax) and businesses (via corporation tax), and by
Borrowing on the capital markets.

The UK now has a total debt of almost £2.4 trillion, which is just about 103% of GDP, meaning we spent 3% more than we earned collectively. In 2016 the UK still made 15% more than it spent.

In comparison, the US has a $30.5 trillion national debt, equalling 127% of GDP.

You can never start saving early enough. Really.
Build the discipline of putting away a small sum every week.
Saving is hugely satisfying and helps build budget skills.
Having some money for a rainy day boosts mental health.
Get some interest on a savings account (1%, better than nothing)
And old-fashioned piggy bank is also good as you can literally see how every little bit helps.

SPACs list on the Stock Exchange as an empty shell / blank cheque company with only cash in it, which is provided by some cornerstone investors.

The SPAC aims to buy – acquire a company – and reverse merge it into the SPAC after which the SPAC will take the name of the acquisition company.

SPACs and their target companies largely escape the intense scrutiny from Financial Authorities normally applied to companies that want to list on the stock exchanges

SPACs were popular in the red hot 2021 stock market around $88 billion was raised via SPACs.
Cornerstone investors in SPACs get allocated shares in the target company at a heavily discounted rate.

70% of SPACs have underperformed the market, with relative below market returns in 2021 and 2022 ranging from -5% to -68%.

Global assets under management are about $111.2 trillion (yes trillion) today and are expected to reach about $145.4 trillion in 2025.
$4.5 trillion is allocated to hedge funds, most of them based in the US.
There are about 26,896 registered hedge funds globally.
1,467 hedge funds are managing assets of $1 billion or more.
Hedge funds – unlike mutual funds – can short sell the market via the use of derivatives.
Hedge funds are only accessible to high-net-worth individuals with a good understanding of risks associated with investing and particularly ‘shorting’.
Hedge funds charge high fees, in the form of a pay-out threshold. On average the first 16/17% of the trading gains go to the hedge fund manager.
The short selling by hedge funds does hurt regular investors who are ‘long’ a stock as they don’t have equal fighting power.
The first time a hedge fund ‘lost’ against normal, small, investors, was in the big GameStop short squeeze.

HODLE: means to hold a stock and not be tempted to sell, sometimes against the odds as HODLErs expect a stock to go to the moon. This has become a new term for insiders, although originally it was a typo for HOLD….
DIAMOND HANDS: those who HODLE and are unafraid of the established funds moving against them.
PAPER HANDS: the ‘weaklings’ who sell.
FUD: Fear, Uncertainty and Doubt. When rumours are spread on message boards, like Reddit, aimed to encourage Diamond Hands to become Paper Hands.
WREKT: losing badly, meaning losing a chunk of money in an investment.
DYOR: very importantly, Do Your Own Research.

$61.1 trillion is the value of stocks traded on the world’s stock exchanges every year (source Worldbank, 2019)
FAANG stocks is an acronym for the stocks of Facebook, Apple, Amazon, Netflix and Google.
FAANG stocks make up 19% of the total value of the S&P500.
The S&P500 has a total value of $40.73 trillion of all the stocks in its index combined (Dec 2021).
Apple is the biggest stock in the index (ever) with a value of $2.66 trillion.