When I was thinking of things to write about, I remembered the episode of The Office where Michael is invited to Ryan's business school class for the day. While Michael is in the classroom, one of the other business students asks him how far his Herfindahl index has dropped as a result of a recent merger. (Over the course of this explainer, it will become apparent that that student was incorrect-- mergers will increase this index, not decrease it.) This is completely real, and it's actually something that can significantly impact which stocks are available on the market and how much those stocks are worth. One of the ways that businesses grow, and therefore the value of their stocks go up over time, is by buying other companies. In general, there are two directions in which it makes sense to buy a company. If you buy a company vertically relative to yours, then the company you bought is somewhere else on the same supply chain that your company is on. Either you bought t...
Personal finance concepts explained by a college student (in computer science) in an approachable way to any audience