Dash Chang developed world models as a sophomore at MIT, developed and taught graduate students the statistical methods behind the core of today's Google page-rank method that solves billions of simultaneous equations. After ten years on Wall Street helping investment companies develop economic and financial models using regression and ARIMA methods, he moved to California to attend Stanford where he worked with William Sharpe and other professors on the models that led to their efficient model publications and the Nobel prize for Mr. Sharpe.
After a long entrepreneurial career that includes the invention of the first spreadsheet, clairvoyant search, and other standard methods of computing, Mr. Chang has agreed to become the subject expert behind our financial series of apps. He is also a successful investor, having equal success from personal investing and start-up ventures.
Please welcome Mr. Chang.
About the Financial Sector
Consumers have suffered through this recession with high unemployment and mortgage defaults; yet the larger companies report ever stronger earnings. This means that smart investing becomes more critical to one's financial welfare.
Measured in capitalization, the financial sector represents about 20% of the S&P 500. It is one of the largest economic sectors and major employer through out the world.
The recent problems with the financial sector does not diminish the need to learn about active investing; and to develop millions of professionals who keep the financial systems efficient around the world. With the new consumer regulation of deriviatives and mortgages that has just been past by Congress, more experts will be needed to both buy and sell in these well established markets.
Simple Motivations to Learn
Investing is important to all individuals. Careful management can earn more than a job.
Consider $100 saved per month for 10 years at marginal tax rates of 30%:
- Saving post-tax money at 5% pretax rates, $14,385 accumulates in after tax savings.
- Investing the pretax equivalent of $100 in stocks with an agressive 30% tax deferred return, would accumulate $105,375. (Note that this math is consistent with modern portfolio theory that addresses scaled returns - not individual returns.) The accumulated amount is 100% pretax, but usually taxable at lower capital gains rates and only when used.
- If one could double the value of the investment each year for ten years, the same investment stream becomes $27,008,152 pretax over the same ten years - that's $27 million. This is the basic driver of wealth behind successful start-ups.
What a huge difference among these outcomes - all starting with the same $100 saved per month! When this thinking is applied to stock selection, can you see the difference in valuation for a company whose earnings are growing at 30% - versus 5%?
Further, the professionals in the financial sector typically earn more than non-financial employees.
Money is a always a welcome motivator to learn more about finances.
The Learning Challenge
Like each subject that we have undertaken, this sector is overwhelmed by vague, redundant, and recursive terms - as evidenced by the 15,000 that we have collected. Industry leading websites have compounded the problem by plumping their glossaries with every combination of terms that they have ever heard - regardless of significance or correctness.
As has been noted by Mr. Chang and other advisors, careless definitions frequently flood the web - particularly those relating to statistics and the relevancy of that data. Despite credentialed professors backing web web glossaries, many are shockingly wrong. As a professor at Stanford who prefers to stay unnamed has said, "if you want the public misperception of a subject, use the web." With these experts advising our current efforts, and as our Keys staff has suspected from our prior research on other subjects, I'm afraid this observation is factual.
Web users should be warned.
Beyond learning volume of terms, finance requires basic algebra; and calculus for advanced users. Learning math has been a challenge for the vast majority. Mr. Chang is working on his next innovation to aid this challenge - as well as advising on the content of the apps below.
We hope to make learning math easy.
Financial Series (Keys)
We will be releasing four apps:
- Invest 1001: basic app with 4 chapters and about 250 terms that teaches the language of analyzing, valuating, and trading stocks. The main chapter starts with diversification including modern portfolio theory and tried and true fundamentals for stock selection.
- Active Investor: advanced app with 10 chapters and 600 terms that expands the knowledge base around options, stocks, bonds, funds, IRA's, statistical methods, charting, and other aspects of both safe and aggressive investing.
- Pro 6: professional app that addresses the topics of those seeking Series 6 certification or on-going education requirements. Topics include markets, regulations, detailed investment company products, variable annuities, tax laws, ... in short all the requirements as specified by FINRA for fund representatives.
- Pro 7: professional app that addresses the topics of those seeking Series 7 registration. Topics include more focus on stocks, bonds, options, portfolio managment, derivatives, hedges, margin requirements, and the regulations for securities brokers.
Please download these apps at the usual app stores.