The Markets Lab

The idea

A share represents ownership; a bond is a claim on future payments; commodities are physical inputs or stores of value. Crypto assets differ widely in rights and use. Start with what is owned or owed.

Identify the claim

Start by writing what the holder actually owns or is owed. Separate direct ownership from a fund, derivative or exchange balance. Then list how value could reach the holder and the conditions under which that claim might fail.

Go deeper

Begin with the claim, not the chart. Identify what is owned or owed, who must perform for value to be realised, and what could interrupt that route. Similar price exposure can hide different legal rights.

Worked example

Owning an oil-company share is different from exposure to oil: the company also has costs, debt and management decisions.

A second look

An oil producer’s share depends on management, financing and operating costs as well as oil prices. A barrel of oil has a different delivery and storage chain.

The idea

A price reflects the next willing buyer and seller, shaped by expectations. Good news may not lift a price if it was already anticipated. Separate the event from what the market expected beforehand.

Separate news from surprise

Before reading the price reaction, record the event, the prior expectation and the new information. Consider at least two plausible interpretations. Revisit the market response after the fact without rewriting your original expectation.

Go deeper

A market move is a response to new information relative to prior expectations. Write the expected outcome before seeing the reaction; then separate the event from later stories explaining the price.

Worked example

An announced supply cut can support oil, but price may barely move if traders had already expected it.

A second look

An oil supply cut that everyone anticipated may barely move prices. A smaller surprise reduction can move them more.

The idea

Economic growth, interest rates and inflation affect costs, demand and the value investors place on future cash flows. The same change can help one asset and hurt another.

Trace the economic channel

Choose one change in growth, inflation or rates and draw the route to cash flows, financing costs, demand or discount rates. Compare two assets with different sensitivities. Add a counterforce that could offset the first effect.

Go deeper

Trace a macro change through a mechanism. Name the first actor affected, then cash flow or financing effects, then the asset. Add a counterforce and a timeframe before making a conclusion.

Worked example

Higher borrowing costs can strain a highly indebted company while supporting income from some newly issued bonds.

A second look

Higher rates may raise a company’s refinancing cost over several years, while stronger demand could support its near-term sales.

The idea

A share price is not the same as business quality. Look at revenue, cash generation, debt, margins and what the price already assumes. Compare claims with filings rather than promotional summaries.

Read primary company evidence

Use the company’s own filing to compare revenue, operating cash flow, debt and margins over time. Note the reporting period and any one-off items. Contrast management’s explanation with the statements before forming a view.

Go deeper

Read primary financial statements before commentary. Compare revenue with cash flow and debt across comparable periods. Note accounting changes, one-offs and what remains unknown.

Worked example

Revenue can rise while cash flow weakens if collecting payments becomes harder.

A second look

Revenue growth with falling operating cash flow may signal slower collections or higher working capital needs; it is a question to investigate, not an automatic verdict.

The idea

Crypto assets may involve network rules, token supply, custody and exchange risk. Ownership, legal rights and recovery options vary. Separate the technology story from the market price.

Map crypto access and risk

Record the network’s stated purpose, token supply rules, custody method and venue risk. Identify who can reverse a transaction, if anyone, and what recovery would look like after losing access. Separate protocol claims from investment claims.

Go deeper

Separate a protocol from the businesses around it. Record token rights, custody, exchange access, liquidity and recovery routes. A sound network can coexist with a weak investment case.

Worked example

A token may gain attention while its holders still face custody or liquidity risk.

A second look

A holder may lose access through a compromised wallet even if the market price never falls. That is operational loss, not volatility.

The idea

Gold, industrial metals and oil have different demand and supply drivers. Oil responds to production, inventories and consumption; industrial metals to industrial activity and supply; gold also reflects investor demand.

Compare physical markets

For oil, follow production, inventories, transport and consumption. For metals, distinguish industrial demand from investment demand and supply constraints. Use dated primary data where possible and record the measurement unit.

Go deeper

Commodity narratives need quantities and units. For oil, compare production, inventories and demand; for metals, separate industrial and investment demand. Date each number and check its source.

Worked example

A mine closure can affect metal supply, but demand weakness may offset the price effect.

A second look

A mine closure may tighten copper supply while weak construction lowers demand. Both can be true, so a single headline is insufficient.

The idea

A 50% fall needs a 100% gain from the lower level to recover. Leverage makes small moves more consequential. Decide how much loss is tolerable before considering any position.

Calculate loss before upside

For a hypothetical position, define the maximum amount at risk, the move that would cause it and whether leverage or fees change the result. Calculate recovery from the reduced balance. Use the exercise to understand exposure, not to size a real trade.

Go deeper

Calculate a hypothetical loss in money before discussing upside. State position value, leverage, fees and the move that causes the loss. Recalculate the gain needed to recover from the smaller balance.

Worked example

£100 falling to £50 needs another £50 to recover, which is 100% of the remaining £50.

A second look

If £100 falls 20% to £80, it needs £20 to recover, which is 25% of £80. A larger percentage loss requires a disproportionately larger recovery.

The idea

Write a thesis, contrary case, evidence, uncertainty and date before learning the outcome. Review what you missed. A journal rewards clear thinking rather than selective memory.

Keep a falsifiable journal

Write the thesis, contrary case, data sources, review date and evidence that would change your mind before observing the result. At review, compare prediction with outcome and name what you missed. Preserve the original entry.

Go deeper

Make the research thesis falsifiable. Write what would make it wrong, which data will be checked and when. Preserve the original entry and append the review separately.

Worked example

An oil thesis should say what supply change matters, what demand data could disprove it and when to review.

A second look

If the thesis depends on improving margins, specify which filing and metric would disprove it. Do not edit the old entry after the next earnings report.

The brief

Write a one-page research memo on one asset without recommending a trade. Define the asset, explain two drivers, state a rise and fall scenario, calculate a hypothetical loss, cite your evidence and list what would change your view. Track the idea for four weeks without trading it.

Deliver in four stages

1. Research question — One asset and its underlying claim
2. Evidence — Dated primary sources and two causal drivers
3. Risk — Contrary case and hypothetical loss calculation
4. Review — Four weekly observations and a final evidence check

Use this review rubric

• Claim: explain what the chosen asset represents and where value may come from.
• Evidence: cite dated primary sources and separate observations from interpretation.
• Risk: include a contrary case, a hypothetical loss calculation and non-price risks.
• Review: keep four dated observations and state what would change the original view.

Before you finish

Read your work once against the course outcome. Mark one strength, one uncertainty and one change you would make next. Completing the course means producing and reviewing the work, not merely reading the lessons.

Download the project workbook (.txt) ↓