Somewhat meta comment, when I read all the conflicting recommendations here (seriously, for almost all recommendations there’s an anti-recommendation somewhere in this thread), it makes me question the value to me in really trying to understand the financial system. I mean, I’m not completely financially illiterate. I understand compound interest. I stick with sinking most of my money into passive investing, saving x…
Yeah, I would make a distinction between learning about the financial system for investment purposes- which as a non-professional in that space I think is pointless- vs learning about to understand what's happening in the world. Whatever domain you're in, whatever interests you have- having something of a model of the financial machinery that basically underlies all human activity, both in the small and in the large,…
What’s strange is I’m generally in favor of “staying informed”. But I typically skip most financial news. For example, looking at last week’s issue of The Economist, there are several articles in the finance section. I summarized these below, but my reaction to most is “yup, sounds like the logic I saw in my first-year econ class”.
Maybe my issue is that I rarely feel like I learn anything from these articles; they mostly read as applications of basic theory that might work. In this case, my read on finance is there’s a set of basic principles that explain most of the decisions made and then just beyond that lies an enormous set of more complex but also controversial material.
In contrast, I think of other areas as having a lot of “basic information” that I don’t know, with the controversial bits much further out. So if I’m trying to accumulate useful and relatively uncontroversial info, finance is not the best place.
(Those summaries:
1. interest rate cuts may not suffice to avert recession, governments may add in spending, tax cuts, and credit to banks to increase liquidity
2. fear has led to price increases for safe haven assets like gold, bonds, and stable currencies and drops for economic activity trackers like oil and copper; share price changes have varied depending on debt levels and how different companies are expected to react to societal slowdowns
3. might be a good idea to pivot between stocks and bonds as market rises or falls; downturns can be opportunities if your horizon is long enough
4. if the economy slows, how should banks deal with reduced payment abilities, especially when they may be legally required to not have too many bad-looking liabilities?
5. something about corporate bond trading [this one was most confusing]
6. some special bonds offer yields to investors with the catch that if some defined disaster strikes the investors will not get money back; these bonds have not yet been useful to covid because of stringent conditions on duration and impact of the disaster before payout, and complications of prevention (countries who respond well may get paid less)
7. covid has particularly hurt commodities markets, and by extension economies that rely on commodities (like Saudi Arabia))