dismal
causing gloom or misery; depressing
vociferous
loud and noisy; compelling attention
Economics is a social science that studies the p_ of e_, p_, e_, d_ and c_ of goods and services. In a figurative sense, economy means r_ and moderation of expenses; savings.
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The concept of economy encompasses the notion of how s_ use scarce r_ to produce goods with value, and how they d_ goods among individuals.
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Double Entry Accounting----------------------------The double entry system is an accounting method that consists of r_ an operation twice, once in d_ and once in c_. This way, some relationships are established between the different patrimonial (any quality that is inheritted) masses. In this method, every i_ operation invovles an o_ operation.Accounting Equation: A_ = E- LAccording to the double entry rule, we must take into account that it will be entered in for the registration of accounts:Debt: _ in assets, _ in liabilities and equityCredit: _ in assets, _ in liabilities and equity.The double entry system is based on a number of principles:1) In every accounting event, there is always a d_(s) and a c_ for the same amount.2) In all accounting operations, the r_ is the d_ and the delivery c_. 3) In every point, the sum of the amount o_ must be = to the sum of amount p_.4) Sum of d_ must be = to sum of c_.
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Opportunity Cost-------------------"Intelligent people make decisions based on opportunity costs" - Charlie MungerThe opportunity cost is the cost of the a_ that we give up when we make a certain decision, including the benefits that we could have obtained by choosing the alternative option.Therefore, opportunity cost is those resources that we stop p_ or that represents a cost due to the fact of not having chosen the best possible a_, when there are limited resources. This term is also referred as "value of the best o_ not selected""The difference between successful people and really successful people is that really successful people say no to almost everything" - Warren BuffetOn certain occassions, it will be s_, so when accessing the opportunity costs, it is very important to keep in mind which are the o_ you want to maximize, and the v_ that what we stop gaining has for us.
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Circle of Competence (Important in Management of an Investment Portfolio)------------------------The circle of competence is the group of c_ and/or sectors in which an i_ is interested, and who is also capable of understanding. In short, the companies of which we have competence or k_.Buffet proposes making three lists when building a portfolio:1) In: Business that are very well u_2) Out: Companies that have tried to u_ without success3) Too Hard: Companies that are too c_ and in whichthe investor is not willing to devote part of his time to study them."What kills you is not what you know, it is what you think you know, but you don't know.
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Pareto Principle (80/20 rule)------------------The principle establishes that 20% of what is entered or invested is r_ for 80% of the results obtained.It is an axiom of business management that 80% of sales come from 20% of clients.More generally, the Pareto Principle is the o_ (not law) that most things in life are not evenly distributed.
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Creative Destruction-----------------------The five cases of innovation are:1) Introduction of a new good2) Introduction of a new method of production or marketing of existing goods3) Opening of new markets4) Conquest of a new source of raw materials5) Creation of a new monopoly or the destruction of an existing oneCreative destruction is the process of industrial m_ that incessantly r_ the economic structure from within, incessantly destroying the old one, incessantly creating a new one.
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Supply and Demand-----------------------The supply and demand model describes the i_ in the market of a given good between c_ and p_, in relation to the p_ and s_ of that good.The model establishes that, in a free and competitive market, the price is determined based on the r_ for goods, and services by c_ and the quantity provided by the p_, generating an e_ point in which consumers will be willing to purchase. Everything that p_ offer at the price set by that point, and p_ are willing to deliver the levels of p_ that c_ require, estabishing and maintaining a point of e_.In a free competitive market, the quantity of products offered by p_ and the quantity of products demanded by c_ depend on the market price of its product. The law of s_ indicates that the s_ is directly p_ to the price --> The higher the price of the product, the more units will be offered for sale.The law of d_ indicates that the demand is inversely p_ to price --> The higher the price, the less consumers will demand.The price of a good lies at the i_ of the supply and demand curves. If the price of a good is too low, and c_ demand m ore than what p_ can put on the market, a scarcity situation occurs, and therefore consuemrs will be willin gto pay more. Producers will then r_ prices until the level is reached at which consumers are unwilling to buy more if the prices continue to rise. and reverse.Read Book
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Moats-------The economic moat is the c_ a_ that allows a company to protect its value and achieve higher long-term returns. Warren Buffet defines them with a parallel between the defensive moats that were dug around the castle to protect them frofm threats and the s_ advantages that companies have in order to defend their profit against their competition.
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Network Effects------------------Network Effects are said to occur when the value of a good of service depends on the number of p_ who use it.In general, when there is a network effect, the greater then number of u_, the greater the value or utility that good or service will have.Thereby, the value of a product or service for a user depends on not only the p_ or service itself, but the number of u_ who use it.
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Switching Costs------------------Change costs are those faced by the c_ when changing a product, supplier or brand.The switching costs are not only m_, but also p_ cost, effort and time. They can manifest themselves in various forms such as: cancellation penalties, the need to learn how to use a product/technology, face the risk that normal operations will be interrupted or the risk that the change will not leave us satisfied.
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Specialization----------------Work specialization consists of a_ the different tasks of a particular production p_ and its derived activities to different individuals or work groups according to their c_, a_ or resources.Companies that opt for specialized work systems design an o_ chart where each task is developed by a specialist. Academic and professional p_ for according to what position is i_, distinguishing qualified and unskilled workers.Three circumstances come from this specilization:1) Increased dexterity(learning by doing)2) Saving time (lose time when you move to different operations)3) Invention of machines (fosters incentiveness)
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Tragedy of the Commons----------------------------The tragedy of the commons describe a situation in which individuals, m_ only by the p_ in_, end up overexploiting a limited r_ that they share with other individuals.It reflects a social c_ over the use of common resources where p_ i_ c_ with the common interest."Ruin is the destiny to which all men run, each seeking his best advantage in a world that believes in the freedom of common resources. The freedom of common resources is the ruin for all.
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Mr. Market-------------Graham encourages us to imagine the market as an omnipresent p_, emotionally unstable and from which the invesstor must make the most of his mood swings. Mr. Market is an i_, who carries out daily p_ and sales of stocks. He is very attentive and everyday tells the i_ what he considers his share package worth, and even offers to buy it or sell him a portion of the p_ that he also owns based on his own valuation."The true i_ is the one who is in every position when he owns one common share. You can take a_ of the daily prices of the quotes or d_ them, carried out by your own judgement and inclination."This allegory explains in a simple way how the stock market fluctuates. Meaning that the prices of the quotations are i_ by e_ of the market participants.
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Principal-Agent Problem---------------------------The agency problem consists, basically, in solving how the principal can ensure that the agent performs the action, in an optimal way for his interests, and not his own.There are many ways to mitigate or try to solve the agency problem. Ultimately, it is about looking for m_ so that the i_ of the agent align with those of the p_, who is the one who u_ chose ihm and paays him.
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Skin In The Game-------------------Having skin in the game means taking a r_ while participating in the achievement of a goal.If decision-makers have skin in the game in their decisions, we guarantee s_ between actors, both benefits and risks are shared, information co_ is reduced and the transfer of problems to the future is d_, improving the r_ of the stakeholders.Taleb solves the principal-agent problem by principalizing the agent."Do not expose others to costs unless you are also, directly or indirectlyl exposed to them
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