How prices form, how trades settle, and what a squeeze, a corner or a bubble looks like from inside.
Check all three legs, marketability, cheap money and a population buying for resale, before calling something a bubble.
Answering whether a current market is a bubble, or explaining why some overvalued assets never become one.
From Boom and Bust · William Quinn and John D. Turner
Returns on a rolled futures position include the roll, so the shape of the curve matters as much as where spot goes.
Any question on commodity exposure, futures-based products or the difference between spot and investable returns.
From The Little Book of Commodity Investing · John Stephenson
A short position is a promise to deliver; whoever controls what must be delivered controls the price.
Questions on futures, short squeezes, margin or physical delivery in a markets interview.
From Trading Places · 1983
A limit is an escalation rule: it decides when a problem must move up the firm, not just how big it may be.
Markets and risk interviews, especially the question of what a risk function actually does.
From Margin Call · 2011
When the filings are what is in doubt, the evidence has to come from outside them.
Building a short thesis, or any diligence where the reported numbers seem too good for the business described.
From The China Hustle · 2017
Settlement takes days, and the collateral call arrives before the trade clears. That gap is where a squeeze does its damage.
Any long/short, prime brokerage or market structure conversation that touches GameStop.
From Eat the Rich: The GameStop Saga · 2022
Expect an edge to be small, to fade, and to cost more to find than to run; a large, durable, obvious one is probably not an edge.
Quant interviews, and any conversation about whether a published strategy can still work.
From The Man Who Solved the Market · Gregory Zuckerman
Separate what you can do from the structure that makes it valuable, and watch the structure.
Choosing a seat, judging the effect of automation on a role, or answering what AI changes about an analyst job.
From Floored · 2009
Term premium is an estimate from a model; say which model, and treat the level as less certain than the direction.
Any rates conversation that invokes the term premium, and any question about why long yields moved while policy did not.
From Treasury Term Premia: 1961-Present · Tobias Adrian, Richard K. Crump, Benjamin Mills and Emanuel Moench, Federal Reserve Bank of New York (Liberty Street Economics)
Ask where a market is in the sequence rather than whether it is a bubble; the stages are more recognisable than the verdict.
Any market history question, any debate about whether a current theme is overdone, and macro interviews.
From Manias, Panics, and Crashes · Charles P. Kindleberger
A prepayable bond gets shorter when rates fall and longer when they rise; the spread you are paid is for that asymmetry.
Fixed income, securitised products and mortgage finance interviews, and any question about why mortgage rates move with MBS rather than the policy rate.
From Mortgage-Backed Securities · Andreas Fuster, David O. Lucca and James Vickery, Federal Reserve Bank of New York (Staff Reports)
Whoever can take a position must not be the person who confirms it. Separate the hands, and the rest of the controls become possible.
Risk, operations and compliance questions, and any time a process lets one person both act and verify.
From Rogue Trader · 1999
In physical commodities the money is in moving, financing and accessing the cargo; the price direction is usually hedged.
Trading house and commodities interviews, and any analysis of a business that moves physical goods.
From The World for Sale · Javier Blas and Jack Farchy
A steepening is mostly term premium; a move in the two-year is half expectations, half premium. Use the rule, then say which model you trust.
A markets interview asks why long yields moved, or a desk needs a quick decomposition before the models update.
From The Treasury Tantrum of 2023 · Anthony M. Diercks and Dev Asnani, Board of Governors of the Federal Reserve System (FEDS Notes)
A short thesis is a public claim set against a fact the company does not control, with the arithmetic that joins them shown.
Short pitches, forensic work, and any thesis that depends on reported figures being false.
From Muddy Waters' initiating report on Sino-Forest · Muddy Waters Research
An inverted curve is the market expecting cuts; read the near-term forward spread, because the long spread is diluted by the term premium.
Rates, macro and sales and trading interviews, and any time a headline says the curve has inverted.
From (Don't Fear) The Yield Curve · Eric Engstrom and Steve Sharpe, Board of Governors of the Federal Reserve System (FEDS Notes)
The common factor among people who last is not how they pick trades but how they limit what a wrong one costs.
Sales and trading, hedge fund and any markets interview that asks how you would manage a position.
From Market Wizards · Jack D. Schwager