Investing Foundations
The theory that underlies every asset class.
Investing Foundations is the theoretical spine of the Program. Before any asset class is examined, the Scholar must hold clearly the ideas that underlie all of them — the price of time, the compensation for risk, and the discipline of writing down what you believe before markets test it.
You will finish with a one-page Investment Policy Statement that governs every subsequent decision in the Program.
- 01
Explain risk, return, and the price of time.
- 02
Distinguish investing from speculating.
- 03
Write an investment policy statement in one page.
- — Program I — Financial Foundations.
1–2 weeks · ~5 hours plus the Lab.
- IModule · ~1.5 hours.
First principles
Time, risk, and the compensation for both.
Time, risk, and their price are the three ideas that generate everything else in the course. This module takes them slowly.
What You Will Be Able To Do- — Compute present and future value with intent.
- — Explain risk and return as inseparable.
- — State a personal discount rate defensibly.
Why hereEvery asset in the Program is priced with these three tools.
- IIModule · ~1 hour.
Investing vs. speculating
The distinction that keeps you honest.
Graham's line between investing and speculating is not moral — it is operational. This module makes it usable.
What You Will Be Able To Do- — State Graham's criterion.
- — Classify a proposed position honestly.
- — Set a size for the speculative bucket.
Why herePortfolios that never draw the line drift, over decades, toward speculation.
- IIIModule · ~2 hours plus the Lab.
The Investment Policy Statement
The document you write when you are calm.
The IPS is the document you write when calm so future-you can be held to it. This module produces yours.
What You Will Be Able To Do- — Draft objectives, constraints, and allocation.
- — Set a rebalancing rule you will actually follow.
- — Submit the IPS for peer review.
Why hereThe IPS is the compounding artifact of the Program; everything after refers back to it.
The IPS you write here is a document you will edit annually for the rest of your investing life.