Michael Frömmel - Finance Explained

This table nicely reveals what I explained in my video "Can the S&P500 Protect You?": The slight shock for AI-related stocks was much better absorbed by the equally weighted S%P500, than by its capitalisation-weighted standard version (and of course the NASDAQ). Why? Concentration and cluster risk. Watch the video for the full explanation!

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10 hours ago | [YT] | 3

Michael Frömmel - Finance Explained

Most people believe that retail investors dominate the ETF market, but in fact institutional investors do. Instead, retail investors dominate the mutual funds market. Why is this the case? See my new video!

2 days ago | [YT] | 3

Michael Frömmel - Finance Explained

It is a popular belief that a Sharpe ratio below one is bad, see screenshot. Really? I debunk this myth. And ask, what the Sharpe ratio tells us at all.
New video tomorrow, 23 October at noon!

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2 weeks ago | [YT] | 3

Michael Frömmel - Finance Explained

Thursday's video (12:00 CET): The Gold Market Explained

Before discussing whether gold is a good investment, it helps to understand the market itself.

Who trades gold? How is the price formed? What is the role of futures markets, ETFs, and mining companies? And why do investors often describe gold as a diversifier, hedge, or safe haven?

In this 20-minute video, we'll build a complete picture of the modern gold market from the ground up, from market structure and trading mechanisms to the different ways investors can gain exposure to gold.

Whether you're new to investing or simply want a deeper understanding of gold as an asset class, this video provides a clear and evidence-based introduction.

Premieres Thursday at 12:00 CET.

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1 month ago | [YT] | 1

Michael Frömmel - Finance Explained

Did the S&P 500 really protect investors during the dot-com crash? And could it still do so today?
Many investors hear "S&P 500" and assume they are automatically diversified because the index contains 500 companies.
But diversification is not only about the number of companies you own.
It is also about the number of independent risks you own.
During the dot-com crash, the S&P 500 fell much less than the Nasdaq. One reason was that the largest companies were still exposed to very different economic stories: technology, energy, banking, healthcare, and industrials.
Today, concentration is higher. But perhaps more importantly, many of the largest companies are increasingly exposed to the same broad investment theme.
This raises an interesting question:
Would the S&P 500 still provide the same diversification benefits it provided in 2000?
Watch my latest video (https://youtu.be/z07WR0Ji4dc), where I discuss:
✅ Concentration risk vs. cluster risk
✅ Why 500 companies do not necessarily mean 500 independent risks
✅ The diversification limits of the MSCI World and MSCI ACWI
✅ Equal-weighted alternatives and their trade-offs
Have you ever thought about diversification in terms of risks rather than companies?
#SP500 #Diversification #RiskManagement #IndexInvesting #ETFInvesting #PortfolioManagement #Investing #FinancialEducation #dotcombubble #AIBubble
In my

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1 month ago | [YT] | 2

Michael Frömmel - Finance Explained

Did the S&P 500 really protect investors during the dot-com crash? And could it still do so today?
Many investors hear "S&P 500" and assume they are automatically diversified because the index contains 500 companies.
But diversification is not only about the number of companies you own.
It is also about the number of independent risks you own.
During the dot-com crash, the S&P 500 fell much less than the Nasdaq. One reason was that the largest companies were still exposed to very different economic stories: technology, energy, banking, healthcare, and industrials.
Today, concentration is higher. But perhaps more importantly, many of the largest companies are increasingly exposed to the same broad investment theme.
This raises an interesting question:
Would the S&P 500 still provide the same diversification benefits it provided in 2000?
In my latest video, I discuss:
✅ Concentration risk vs. cluster risk
✅ Why 500 companies do not necessarily mean 500 independent risks
✅ The diversification limits of the MSCI World and MSCI ACWI
✅ Equal-weighted alternatives and their trade-offs
Have you ever thought about diversification in terms of risks rather than companies?
#SP500 #Diversification #RiskManagement #IndexInvesting #ETFInvesting #PortfolioManagement #Investing #FinancialEducation #dotcombubble #AIBubble

1 month ago | [YT] | 3

Michael Frömmel - Finance Explained

🎉 Huge congratulations to Dr. Tian Lan on successfully defending her PhD thesis yesterday: "Cryptocurrencies, Sentiment and Credit Cycles"—marking the 17th doctoral candidate I've had the privilege of supervising to completion!

As the jury highlighted, her research offers a timely reminder that digital assets aren't just about technology: investor behavior, sentiment, and credit creation are critical for understanding modern financial stability.

Well deserved, Tian! 🎓

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1 month ago | [YT] | 2

Michael Frömmel - Finance Explained

Are you investing like a dinosaur? Or like a mammal?
And which is the meteor that could hit your portfolio? Will it survive?

2 months ago | [YT] | 2

Michael Frömmel - Finance Explained

Which path do you believ we will take?

3 months ago | [YT] | 4

Michael Frömmel - Finance Explained

Which central bank communication approach is the better one?

4 months ago | [YT] | 4