Wednesday, April 19, 2017

Hey, stock analyst: Your bias is showing - MarketWatch



Hey, stock analyst: Your bias is showing - MarketWatch:



"...earnings surprises of firms headed by female, foreign or Democratic CEOs are systematically upward biased, the researchers write in their paper. In other words, because analysts have underestimated the CEOs who don’t belong to their in-group, those CEOs’ companies more often surprise the market when earnings are reported, boosting share prices. “These results are also reflected in analysts’ buy and sell recommendations, with systematically more buy than sell recommendations for stocks of firms headed by CEOs belonging to their in-group,” says the paper, by Sima Jannati and Alok Kumar at the University of Miami School of Business Administration, Alexandra Niessen-Ruenzi at the University of Mannheim in Germany, and Justin Wolfers at the University of Michigan’s Gerald R. Ford School of Public Policy."


'via Blog this'

Tuesday, March 07, 2017

Excessive executive pay for plain dumb luck: Barry Ritholtz - Moneyweb

great for class discussion from Barry Ritholtz:



Excessive executive pay for plain dumb luck: Barry Ritholtz - Moneyweb: "You can place much of the blame on compensation consultants and the corporate boards that hire them. Boards are supposed to act on behalf of shareholders when they are considering the pay packages created by the former. But the relationships are riddled with conflicts that produced the charade we have today.  That we are discussing packages and not mere salaries should give you the first inkling of how far around the bend the issue of compensating corporate executives has gone"



'via Blog this'

Monday, February 13, 2017

Endowment Sweepstakes: How Tiny Houghton College Beat Harvard - The New York Times

Endowment Sweepstakes: How Tiny Houghton College Beat Harvard - The New York Times:



"Compare the results with those of Houghton College, a liberal arts institution affiliated with the Wesleyan Church in the Genesee Valley in western New York. Houghton has just over a thousand students and an endowment of $46.4 million. Houghton emerged in the top quartile of all endowments, according to Nacubo, with a return of 11.85 percent for the year ended Sept. 30. (Houghton uses a different fiscal year.) For the calendar year, the results were also impressive, at 7.54 percent. Houghton has been able to lower its spending rate — the amount it withdraws each year to fund operations — to an enviable 4.5 percent, and may be able to lower it further, to 4 percent. How did tiny Houghton do it? The answer is pretty simple: Houghton got out of hedge funds and all alternative investments a year and a half ago, and moved the entire portfolio to a mix of low-cost index funds and mutual funds at the fund giant Vanguard."


'via Blog this'

An Ivy League professor who spent 4 months working in a South Bronx check-cashing store says we're getting it all wrong

An Ivy League professor who spent 4 months working in a South Bronx check-cashing store says we're getting it all wrong:



"The three common reasons customers cited for using a check casher over a bank: cost, transparency, and service.  Lisa Servon couldn't kick the nagging feeling that the financial elite had it all wrong. The prevailing wisdom from bankers and policy makers went like this: People who used alternative financial services — like check cashers and payday lenders — were making expensive and unwise decisions. If we could just educate the "unbanked" and "underbanked" and usher them into the modern financial system with a bank account, their fortunes would surely improve. But Servon, a professor of city and regional planning at the University of Pennsylvania and former dean at the New School, had spent 20 years studying low-income communities, and that picture didn't add up. Most of the unbanked, the roughly 7% of US households without checking or savings accounts, and the underbanked, the nearly 20% that had such accounts but still used alternative financial services, that she encountered were neither naive nor irresponsible about money. "


'via Blog this'

Friday, February 03, 2017

ASU Professor Debunks Stock-Market Myth | KJZZ

ASU Professor Debunks Stock-Market Myth | KJZZ: "The so-called “Weekend Effect” refers to the tendency of stock returns to be significantly lower on Mondays than the preceding Fridays. Some theories point to companies releasing bad news after the markets close on Fridays, leading to lower prices on Monday, but new research reveals the “Weekend Effect” hasn’t existed for years.

"


'via Blog this'

Wednesday, December 07, 2016

Boeing Sweats Under Trump Spotlight as SoftBank Feels Warmth - Bloomberg Politics

Boeing Sweats Under Trump Spotlight as SoftBank Feels Warmth - Bloomberg Politics: "This is extraordinary,” said Mohan Tatikonda, a professor at Indiana University’s Kelley School of Business. “For a president to get involved at the level of spot locations, spot companies, spot plants, is I think unprecedented.”
Stock Moves
The president-elect’s moves had consequences for the market, with Boeing falling as much as 1.5 percent before regular trading Tuesday. The shares were little changed Wednesday in New York. SoftBank climbed 6.2 percent in Tokyo."

'via Blog this'

Insider-Trading Prosecutions Backed by U.S. Supreme Court - Bloomberg Politics

Insider-Trading Prosecutions Backed by U.S. Supreme Court - Bloomberg Politics: "Ruling in its first insider-trading case in two decades, the justices unanimously said that people can be sent to prison for making trades even when the insider who provided the tip wasn’t trying to make money. The court said it’s enough if the insider gave the information as a gift to someone likely to trade on it."



'via Blog this'

Tuesday, November 22, 2016

Podcast Episodes for Finance Classes


Podcast episodes for Finance classes.  Primarily for my own classes, but useful in any finance class.

For economics classes, here is a list I made as well.


FOR A CORPORATE FINANCE class

A mule trader (finance is not new):
http://www.bloomberg.com/news/audio/2015-12-14/episode-6-meet-the-man-who-made-millions-trading-mules

How finance has grown:
http://www.bloomberg.com/news/audio/2016-05-27/30-how-finance-took-over-the-world

Finance at the University: http://knowledge.wharton.upenn.edu/article/why-we-cant-afford-to-ignore-higher-educations-financial-problems/

Contracts and CEO pay

  1. http://www.marketplace.org/2016/07/12/economy/let-s-do-numbers-ceos-still-make-way-more-money-you
  2. http://www.npr.org/sections/money/2016/02/05/465747726/-682-when-ceo-pay-exploded
  3. http://www.npr.org/2015/01/01/374332473/why-cutting-a-ceo-s-pay-can-be-very-difficult
  4. http://insight.kellogg.northwestern.edu/new/podcast-popup/total_compensation
  5. Very difficult to measure how much a manager matters http://freakonomics.com/2012/12/27/how-much-does-a-good-boss-really-matter-a-new-marketplace-podcast/

Time value of money (retirement & personal finance)


Retirement planning
http://www.doughroller.net/investing/how-much-should-you-be-saving-for-retirement/
https://moneyfortherestofus.net/mny033-mind-the-gap/  ---start at 10 minutes
http://freakonomics.com/2012/01/17/retirement-kills-a-new-marketplace-podcast/


What rate of return should we assume?
https://moneyfortherestofus.net/mny009-expected-return/



Valuation


Aswath Damodaran is simply the best valuation professor there is.
http://www.bloomberg.com/news/audio/2016-10-28/ritholtz-s-masters-in-business-aswath-damodaran-interview

How to be less terrible at forecasting (Freakonomics):
http://freakonomics.com/podcast/how-to-be-less-terrible-at-predicting-the-future-a-new-freakonomics-radio-podcast/

Difficulty in reading accounting statements: http://knowledge.wharton.upenn.edu/article/possible-defog-americas-corporate-financial-reports/

Allocations: 


http://moneytreepodcast.com/mti019-modern-portfolio-theory-wrong-david-stein/

http://moneytreepodcast.com/mti083-adaptive-asset-allocation-adam-butler/


Small businesses and micro finance--
http://knowledge.wharton.upenn.edu/article/living-2-day-microfinance-breaks-cycle-poverty/

One the importance of small business finance:
http://www.goldmansachs.com/our-thinking/podcasts/episodes/8-26-2015-dina-powell.html


Market efficiency:

The value of information from space:
http://www.bloomberg.com/news/audio/2016-09-16/46-space-robots-are-helping-hedge-funds-invest

From dumpsters: (also can learn about short selling):
http://www.bloomberg.com/news/audio/2016-03-28/21-the-fraught-life-of-a-dumpster-diving-u-s-short-seller


Burton Malkiel
https://www.bloomberg.com/view/articles/2016-05-31/barry-ritholtz-s-masters-in-business-burton-malkiel-interview


John Bogle on Passive vs Active investing:
https://www.bloomberg.com/view/articles/2016-03-15/jack-bogle-s-indexing-revolution


An Insider Trader tells all:
http://www.npr.org/sections/money/2015/12/23/460689797/episode-671-an-insider-trader-tells-all

Ok, so this is not really a podcast, but it's audio and since it is my page, I am including it.  A series of newscasts on insider trading from NPR:
http://www.npr.org/tags/141715105/insider-trading

Behavioral Finance


What is behavioral finance from IBM:
http://www.ibmbigdatahub.com/podcast/finance-focus-what-behavioral-finance

Nobel Prize Winner Daniel Kahneman:
http://www.bloomberg.com/news/audio/2016-08-04/interview-with-daniel-kahneman-masters-in-business-audio

Richard Thaler (he needs no introduction)
http://origin-www.bloombergview.com/articles/2015-06-15/barry-ritholtz-s-masters-in-business-richard-thaler-interview

Does expensive wine taste better?
http://freakonomics.com/podcast/the-days-of-wine-and-mouses-a-new-freakonomics-radio-podcast/

Dr. Daniel Crosby on making good financial decisions (target is advisors)
http://www.xyplanningnetwork.com/ep-46-helping-clients-make-good-decisions-dr-daniel-crosby/

Maybe willpower is not enough:
http://freakonomics.com/podcast/when-willpower-isnt-enough-a-new-freakonomics-radio-podcast/


Scarcity: I think this is most important thing going.  I see it/live it every day.
http://www.lse.ac.uk/newsAndMedia/videoAndAudio/channels/publicLecturesAndEvents/player.aspx?id=3089

Fear of scarcity is a big thing.
http://www.npr.org/sections/money/2011/11/04/142016962/the-friday-podcast-how-fear-turned-a-surplus-into-scarcity


IPOs and Corp Fin
Why firms are waiting longer to go public:
http://www.mckinsey.com/industries/high-tech/our-insights/anatomy-of-a-unicorn-why-tech-start-ups-are-staying-private

Governance:

CEO transitions:
http://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/ceo-transitions-the-science-of-success

ESG from Masters in Business:
http://ritholtz.com/2016/09/books/


ESG investing goes mainstream
from Goldman Sachs:
http://www.goldmansachs.com/our-thinking/podcasts/episodes/04-21-2016-john-goldstein.html
http://www.goldmansachs.com/our-thinking/podcasts/episodes/7-21-2015-hugh-lawson.html

Impact investing:
http://www.goldmansachs.com/our-thinking/podcasts/episodes/4-15-2015.html

Market for Corporate Control:


* Horizontal deals and monopolies
http://www.npr.org/sections/money/2013/02/23/172724026/episode-438-mavericks-monopolies-and-beer

* A look at Tesla and Solar City
http://knowledge.wharton.upenn.edu/article/will-teslas-merger-with-solarcity-shine/


10 years of Mergers and acquisitions (2006-2016)
http://www.strategyand.pwc.com/global/home/what-we-think/multimedia/podcasts/mm-mergercast_display/decade-of-mergers-and-acquisitions

Divestitures and carveouts (not the most exciting, but good content)

  1. http://www.strategyand.pwc.com/global/home/what-we-think/multimedia/podcasts/mm-mergercast_display/hidden-value-nasty-surprises-part-1
  2. http://www.strategyand.pwc.com/global/home/what-we-think/multimedia/podcasts/mm-mergercast_display/hidden-value-nasty-surprises-part-2

IPO and mergers/acquisitions (what it is like as an Investment banker)
http://www.bloomberg.com/news/audio/2016-10-04/interview-with-ventresca-myers-masters-in-business-audio

Debt:

Country level debt:
http://www.npr.org/sections/money/2011/07/20/138518262/the-tuesday-podcast-how-much-debt-is-too-much


Dividends:


https://radicalpersonalfinance.com/financial-independence-via-dividend-investing-interview-with-jason-from-dividend-mantra-rpf0096/

Buybacks
http://www.marketplace.org/2016/06/08/world/profit-buybacks


Derivatives and Hedging:
http://www.npr.org/sections/money/2012/10/17/163038597/ask-a-banker-whats-a-derivative

A look at one options contract (Soybeans) from the CME (my advice, skip the first few minutes):
http://www.cmegroup.com/education/options-insider-a-deep-dive-into-soybean-options.html

ok, so this may not be super exciting, it is good material.
https://capitalistexploits.at/2016/10/hedging-extraordinary-risk/

What is the VIX? https://optionalpha.com/vix-index-22197.html

Your financial fragility matters
https://soundcloud.com/investing/mny055-are-you-financially-fragile-or-antifragile


Low cost investing:

Bill McNabb is CEO of Vanguard.  Both of these are great (about a year apart) from Masters in Business
:
* http://www.bloomberg.com/news/audio/2016-10-21/interview-with-william-mcnabb-masters-in-business-audio
http://www.bloomberg.com/news/audio/2015-05-15/vanguard-ceo-bill-mcnabb-masters-in-business-audio-



Trends:

FinTech
http://www.goldmansachs.com/our-thinking/podcasts/episodes/01-20-2016-don-duet.html

BlockChain:
http://derivsource.com/content/blockchain-not-panacea


Friday, November 18, 2016

The rich outlive the poor by up to 9.5 years in the United States, study says | News & Observer

A must read!!



Yes a bit biased, but fascinating and telling.  The researchers rearranged the richest and poorest counties into "states" and then analyzed these new "states".



The rich outlive the poor by up to 9.5 years in the United States, study says | News & Observer:



"The poorest “state” was made up of actual counties from Alabama, Arkansas, Georgia, Illinois, Kentucky, Louisiana, Mississippi, Oklahoma, South Carolina, South Dakota, Tennessee, Texas and West Virginia.



The richest “state” included real counties from Alaska, California, Colorado, Connecticut, Georgia, Illinois, Indiana, Kentucky, Maryland, Massachusetts, Minnesota, Ohio, New Jersey, New Mexico, New York, Pennsylvania, Utah, Tennessee, Texas and Virginia. (It’s worth mentioning that five real states contributed counties to both the poorest and richest “states.” This shows that “some of the challenges associated with poverty in the United States are related to factors associated with unequal distribution of resources within states, as opposed to simple lack of resources,” the researchers wrote.)"



"In other words, they wrote, “the poorest ‘state’ is between 40 and 50 years behind the life expectancy achieved by the wealthiest ‘state.’ ”The study authors also compared the richest and poorest “states” to 222 actual countries with reliable data on life expectancy. They found that if the richest “state” were an independent country, it would rank eighth in the world in life expectancy for men and 25th for women. The poorest “state,” on the other hand, would rank 123rd for men and 116th for women."

Read more here: http://www.newsobserver.com/latest-news/article115507143.html#storylink=cpy"


'via Blog this'

Tuesday, November 15, 2016

Podcast episodes for economics classes

Here are some great podcast episodes for economic classes.  I use them (either reference them or make them available to my students).

 Remember, my linking to them is not an endorsement of everything they say, but rather a way of getting us all to think about things a little differently)



Economic Podcast Episodes


* Why economics and politics don't mix:

*  Introducing GDP: http://www.npr.org/sections/money/2014/02/28/283477546/the-invention-of-the-economy

* Globalization: http://www.npr.org/sections/money/2016/09/23/495226796/episode-725-trade-show

* Textbook prices: http://www.npr.org/sections/money/2014/10/03/353300404/episode-573-why-textbook-prices-keep-climbing

*   Externalities: http://www.npr.org/2015/07/17/421490567/how-did-a-medical-miracle-turn-into-a-global-threat

* A carbon tax (short): http://www.npr.org/sections/money/2013/06/28/196355493/economists-have-a-one-page-solution-to-climate-change

* Sustainability and Economics: http://www.npr.org/2015/07/17/421474018/what-can-a-small-town-in-england-teach-us-about-resilience

* The afterlife of a t-shirt:  http://www.npr.org/sections/money/2015/08/26/434988401/episode-502-the-afterlife-of-a-t-shirt

* The interconnectivity of Globalization: http://podacademy.org/podcasts/the-butterfly-defect-how-globalization-creates-systemic-risks-and-what-to-do-about-it/

* Protectionist policy and Canadian milk prices  FT.com http://podcast.ft.com/?p=3771

* A look at an early strike (I do not think it was the FIRST strike :) )
: http://www.npr.org/sections/money/2015/10/16/449264812/episode-658-strike-one

* Forecasting is hard.  http://freakonomics.com/podcast/how-to-be-less-terrible-at-predicting-the-future-a-new-freakonomics-radio-podcast/

* What is inside TPP?  http://www.npr.org/sections/money/2015/11/06/455055023/episode-662-omg-tpp

* The economics of education: http://www.highlanderinstitute.org/podcast/episode-025-russ-roberts-on-the-economics-of-education/

* Adam's Smith's Invisible Hand (gets two!)
  1. Pro:  https://www.stlouisfed.org/education/economic-lowdown-podcast-series/episode-3-the-role-of-self-interest-and-competition-in-a-market-economy
 2. Con:    https://www.theguardian.com/commentisfree/audio/2011/oct/06/big-ideas-podcast-adam-smith-audio


*  A look at price inelasticities: Why are weddings so expensive.  http://www.bloomberg.com/news/audio/2016-08-31/53-why-are-weddings-so-expensive-blame-econ-101










Thursday, October 27, 2016

Black Monday Revisited: Lessons From 29 Years of Market History | PIMCO Blog

Just a great article from PIMCO:



Black Monday Revisited: Lessons From 29 Years of Market History | PIMCO Blog: "It was 29 years ago this month that world equity markets experienced a meltdown that became known as Black Monday (or Black Tuesday in Asian time zones). On 19 October, the Dow Jones Industrial Average plunged 23%, its largest-ever one-day percentage decline.

As equity and bond markets fell, an anonymous bond trader sensed an opportunity. He sold a U.S. long bond (a 30-year Treasury bond yielding 8.875% and maturing in 2017) at a price of 86. Just two months earlier, the bond had been issued at par. The trader was hoping to buy it back a quarter of a point lower.

Yet a minute later the bond market reversed direction and has not looked back since.

"


'via Blog this'

Tuesday, October 25, 2016

Research: Index Funds Are Fueling Out-of-Whack CEO Pay Packages

Research: Index Funds Are Fueling Out-of-Whack CEO Pay Packages:



 "We found that when firms in an industry are more commonly owned, top managers receive pay packages that are much less performance-sensitive. In other words, these managers are rewarded less for outperforming their competitors. This difference in compensation has a sizeable effect. In industries with little common ownership, executive pay is about 50% more responsive to changes in their own firm’s shareholder wealth than in industries with high common ownership.

What’s more, in industries with high common ownership, top managers receive almost twice as much pay for the good performance of their competitors as managers do in industries with low common ownership. This effect is even more pronounced for CEOs alone. Essentially, CEOs are rewarded more for the good performance of their competitors than they are for the performance of the company they run.

"


'via Blog this'

Monday, October 24, 2016

Shaking Up Boards Would Help Keep Corporations Honest - Hartford Courant

Shaking Up Boards Would Help Keep Corporations Honest - Hartford Courant:



While a somewhat extreme view, there is much truth in this.  Read the whole article not just this reading-bite:



 "Where do such directors come from? In U.S. companies they are typically chosen by shareholders, but in a system so rigged that it may be the closest Western analog to a Soviet election. The incumbent directors nominate all the candidates (usually themselves), severely limiting the voters' freedom of choice. Withholding votes in protest is both useless and dangerous, because it has no effect on the outcome and — if practiced by big investment firms — can even elicit retaliation from management (which has the power, for example, to decide who invests the company's pension money). Directors know that the quickest way to lose their well-paid positions is to criticize the CEO."

99% of actively managed US equity funds underperform

99% of actively managed US equity funds underperform:



Surprised only by the 99%, I expected closer to 95-97%....wow...



"Amin Rajan, chief executive of Create Research, the consultancy, said: “These numbers are scary. Active managers need a root and branch look at their investment processes to retain their relevance in today’s surreal investment landscape.” According to the analysis, 99 per cent of actively managed US equity funds sold in Europe have failed to beat the S&P 500 over the past 10 years, while only two in every 100 global equity funds have outperformed the S&P Global 1200 since 2006. Almost 97 per cent of emerging market funds have underperformed."


'via Blog this'