Hurricane Brings Miss. Real Estate Frenzy - Yahoo! News

This is one of those things I realize from an intellectual point of view I should be happy about, but that said, it still saddens me.

From Yahoo News (the AP)
"The Mississippi coast, wracked by Hurricane Katrina, is caught up in a real estate rush, as speculators and those looking to replace their own wrecked homes pinpoint broken and battered waterfront neighborhoods. In the weeks since the

Don't Let Your Portfolio Get Caught Speeding [Fool.com: Commentary] September 28, 2005

What great timing! We just covered bonds this week in class. So if you are in my class, you better read this one. It reviews the types of bonds and what bonds add to your portfolio.Don't Let Your Portfolio Get Caught Speeding [Fool.com: Commentary] September 28, 2005: "we tend to focus most of our time and energy on stocks, believing that equities are the best way to stay ahead of the erosive

Executive Stock Options and Earnings Management - A Theoretical and Empirical Analysis by Ohad Kadan, Jun Yang

Executive compensation has changed in the aftermath of the corporate governance "crisis" (where we saw Enron, Tyco, Adelphia, WorldCom and others fall precitously due to accounting scandals). One such change is a shift away from stock options. Microsoft is the classic example but many other firms have also scaled back option progams for restricted shares (share that can not be sold for some

FPA Journal - Post-Modern Portfolio Theory

What is risk? It pains me greatly that we do not have a better measure of it. I remember when I took my first finance class and was told that risk was measured by standard deviation and was immeditely put off. Why? Because how many people are worried about making too much money?Ask a person on the street (Main Street or Wall Street) and they will tell you a closer description of risk than the

Valuation from 2003 FMA Conference

I realize this is not cutting edge (2 years old) and that I have mentioned the presentations before, but with the transient nature of a blog's readership, it is worth mentioning again! And besides, I want my class to watch at least one of them! All are from the FMA 2003 conference and are available at FMA Online.

Aswath Damodaran and Tim Opler on valuation. They are excellent!

I guess I like

Corporate Investment and Asset Price Dynamics: Implications for SEO Event Studies and Long-Run Performance by Murray Carlson, Adlai Fisher, Ronal

Using option theory to understand and explain firm and investor behavior often yields important insight. This is no exception. Carlson, Fisher, and Giammarino (CFG) use real option analysis (real options are essentially the application of option theory to “real” assets) to investigate the stock behavior around seasoned equity offers (SEO). Many researchers (probably most notably Ritter

How Informative are Analyst Recommendations and Insider Trades? by Jim Hsieh, Lilian Ng, Qinghai Wang

Mixed signals. They happen all the time in and out of finance. Take for instance the starting pitcher saying he can go another inning while wearily dragging himself onto the field, or the spouse who is crying while saying things are fine, or the CEO selling shares while stock analysts write ringing endorsements.While Hsieh, NG, and Wang may not be able to help you interpret the mixed signals on

Financial Advice-KISS

I was asked recently by FreeMoneyFinance for a brief piece on the best financial advice possible. Unfortuntately I was too busy at the time to do it, but FMF was nice enough to run it anyways. The following is what I wrote. KISS-Keep It Simple Stupid. Oftentimes financeprofessors tend to make things too complicated. Such is the often the case when it comes to investing. Sure, we might be

-Political Connections and Corporate Bailouts by Mara Faccio, Ronald Masulis, John McConnell

SSRN-Political Connections and Corporate Bailouts by Mara Faccio, Ronald Masulis, John McConnell:Faccio, Masulis, and McConnell report that politically connected firms are more apt to receive government bailouts. This fits with prior evidence that leverage ratios at politically connected firms are higher. Thus, it may be inferred that lenders are more apt to make loans if they feel that the

Financial Fruition: Crappy TV -- Jim Cramer's Mad Money -- Let's Turn It OFF!

Financial Fruition has a pretty interesting article on Jim Cramer of CNBC. Cramer probably will not be sending FF a Chirstmas card anytime soon:


Some highlights:

** "Jim Cramer and the ill effects of active trading and preaching to to a world-wide audience. "

** "Yes, Cramer says he is just giving advice to those that have side money and want to dabble in the market, but does he know if that

Is It Better to Buy or Rent? - New York Times

Is It Better to Buy or Rent? - New York Times: "But renting might deserve another look right now. After five years in which rents have barely budged while house prices in New York, Washington, Los Angeles and elsewhere have doubled, renting has become a surprisingly smart option for many people who never would have considered it before"Something I have been saying for quite a while. Renting is

HoustonChronicle.com - Cash in demand, but supply short

HoustonChronicle.com - Cash in demand, but supply short"Cash-hungry residents who had to deal with Hurricane Rita also drained automatic teller machines throughout the city.Machines at some of Chase's 37 Houston branches, which were open for part of Thursday, ran out of cash, spokesman Greg Hassell said. He wasn't sure how many.'We weren't able to get cash in because of the roadways, and there

SSRN-Effects and Unintended Consequences of the Sarbanes-Oxley Act on Corporate Boards by James Linck, Jeffry Netter, Tina Yang

SSRN-Effects and Unintended Consequences of the Sarbanes-Oxley Act on Corporate Boards by James Linck, Jeffry Netter, Tina Yang: "Effects and Unintended Consequences of the Sarbanes-Oxley Act on Corporate Boards"Using firms in the Disclosure database, Linck, Netter, and Yang report that the Sarbanes-Oxley Act has increased the size of boards and has created more committees within boards. They

SSRN-Brand New Deal: The Google IPO and the Branding Effect of Corporate Deal Structures by Victor Fleischer

Brand New Deal: The Google IPO and the Branding Effect of Corporate Deal Structures Fleischer provides us with a series of case studies that shows that firms use contract design to signal various traits about the firm to stakeholders. In the author's own words:"This Article claims that the legal infrastructure of deals sometimes has a branding effect - that is, an effect on the brand image of the

How the BBC, Fortune and the New York Times went overboard claiming that the prediction markets had foreseen the name of the new pope!

This deserves another look. Hopefully this afternoon. But for now I at least wanted to point the article out to you.Super Short version: The bettering markets (decision markets) may not have done as well in predicting the pope as the NY Times and others suggested.From ChrisMasse.com"The questions I pose today to Enterprise Commanders are these: * How did the prediction markets at TradeSports/

India's MBA Gold Rush

India's MBA Gold Rush: "To get an edge in the country's exploding economy, more Indian students are seeking business degrees -- both abroad and at home "Given that one of my classes has an extra credit assignment of reading "The World is Flat" I really could not skip this one! Remember, there is a great deal of competition from all corners of the earth! Study hard!

Emotionless Trading

Sorry, I liked the title Emotionless Trading better than Yahoo's version:
"Psychopaths could be best financial traders?"


Not sure what to say about this one. Just that it goes to show emotions should not play a roll in investment decisions.


In a study of investors' behavior 41 people with normal IQs were asked to play a simple investment game. Fifteen of the group had suffered lesions

Kimmunications: Investment Return Doesn't Mean Diddly

Even when the stock market goes up, investors may lose out if they try to time the market. The extent to which market timing occurs is debateable but no doubt substantial. That is the gist of a recent blog entry over at Kimmunications. Kimmunications cites a Dalbar study that finds individual investors lose a great deal as a result of this attempt to time the market. "over the 19 year period

Modern Finance vs. Behavioural Finance: An Overview of Key Concepts and Major Arguments by Panagiotis Andrikopoulos

It is about the time of the semester when many finance classes turn their attention to market efficiency. Thus, it is perfect timing for Andrikopoulous' refresher comparing and contrasting Modern Fiance and Behavioural Finance.SSRN-Modern Finance vs. Behavioural Finance: An Overview of Key Concepts and Major Arguments by Panagiotis Andrikopoulos: A quick look in: "Modern Finance has dominated

IESE Insight - Finance

Jeff B. just sent me an email about this site. It had somehow slipped under my radar. Man do I feel stupid. It is really, really good! Recap of what the people at IESE are doing.
IESE Insight - Finance

Articles include fascinating looks at the "bubble", M&A in Europe, and the Euro.

I definitely bookmarked this one and will add it to my FinanceProfessor Links as well.

(PS Thanks Jeff!)

Look at Me Now: The Role of Cross-Listing in Attracting U.S. Investors by John Ammer, Sara Holland, David Smith, Francis Warnock

SSRN-Look at Me Now: The Role of Cross-Listing in Attracting U.S. Investors by John Ammer, Sara Holland, David Smith, Francis Warnock:Ammer, Holland, Smith, and Warnock provide an interesting look at what leads non-US firms to cross-list (sell their securuties on US markets).Several key points:* relatively few foreign firms do cross list. * cross listed firms are owned by US investors at a

Apology

Hi everyone...I just wanted to let you know that contrary to popular opinion I have not gone anywhere, just a tad busy. I got a bit too involved in a few different relief "missions" (not sure if that is the right word or not) for the Katrina Victims.One for the animal victims (we are collecting and shipping down pet supplies, medicines, towels, etc) and then organizing a trip down for the finance

Are casinos really important for national security?

Don't do it France! I hope they come to their senses. This would entrench management even more.


Sectors on the list, already confirmed by the Finance Ministry, include several over which most states retain tight control, such as arms manufacturing and encryption.

But the decree also covers companies with activities in biotechnology, data security, casinos and antidote production -- fueling

Who Loses from Trade? Evidence from Taiwan by Brad Barber, Yi-Tsung Lee, Yu-Jane Liu, Terrance Odean

Who Loses from Trade? Evidence from Taiwan by Brad Barber, Yi-Tsung Lee, Yu-Jane Liu, Terrance Odean:In a paper that finds the exact opposite of San 2005, Barber, Lee, Liu, and Odean report individual investors lose when trading with individuals. This finding, which fits with previous work much more than San's surprise finding, is based on stock trades in Taiwan from 1995 to 1999.From the paper:"

The Firing of a manager

One of the coolest things about finance, and in particular about teaching finance, is that almost any news item can be used to demonstrate various finance lessons. Indeed, just today Kimmunications gives us financial lessons we can take from the Hurricane Katrina disaster. The story I wanted to point out however has received very little national coverage. Indeed, it really is not that

Brain Regions Blamed for Bad Investment Ideas

How cool is this? Behavioral finance meets neural science.Brain Regions Blamed for Bad Investment Ideas:"Researchers say two different brain regions may be involved in making risky vs. conservative investment mistakes, a finding that may eventually help economists build better models of people's investment behavior.'Overall, these findings suggest that risk-seeking choices (such as gambling at a

Why we should not cap gas prices

I found this when I was researching gas prices for a friend who is convinced that prices should be capped. I disagree! Let markets work.The FinancialRounds does a good job of explaining why capping is not a solution:"we have to have some mechanism to allocate the available gas among the peoplewho want it. You can do it by lottery, by government fiat (i.e. you get a"ration card"), by random chance

Assorted Topics

Trying to catch up some: FreeMoneyFinance is doing an amazing thing. Matching donations upto $5000 for aid to Hurricane victims! GO and give now! I hate to make cyclists pay extra, but in this case, I want him to pay the full amount ;) Speaking of the Hurricane, a few more financial points to note. The IRS has relaxed some rules and deadlines for those affected and even has advice for those

Explanation for lack of posts

Just wanted to apologize for paucity of posts in recent days. The combination of watching too much Katrina news, classes starting, and network problems have combined to eat up any posting time. I think the computer problems are past so hopefully I will be back posting either tonight or tomorrow. BTW if you have not done so, please donate to the charity of your choice for the hurricane victims.

Is the sky falling?

I had an email this week from a former student. I answered him today. The answer was very long but I do think it may interest some of you. I guess it should be labeled as an editorial, so it is an editorial. A quick look:"As for your questions on the gloom and doom that you feel pervade the world. Please do not take this personally, but totally disagree. In fact that is why I waited a while

Dr. James Lorie

I missed this totally. The finance profession definitely owes the late Dr. Lorie a great deal. He is one of the people behind CRSP.Victor Niederhoffer and Laurel Kenner: Daily Speculations:" Much of the mystery shrouding the stock market dissolved when James H. Lorie began documenting the historic rise and fall of stock prices.The idea was simple but laborious: chart stock prices from 1926

SBU's response to Hurricane Katrina

Do me a favor, pass this one on. I played a small part in the idea so I really want it to work. St. Bonaventure is offering free room and board and one-half tuition scholarships to students from higher education institutions in areas affected by the hurricane so those students can continue their studies here at St. Bonaventure on a temporary basis. “Our doors — and our hearts —

Seasonal, Size and Value Anomalies by Ben Jacobsen, Abdullah Mamun, Nuttawat Visaltanachoti

SSRN-Seasonal, Size and Value Anomalies by Ben Jacobsen, Abdullah Mamun, Nuttawat Visaltanachoti: "Uh, oh. Here is one that will cause my notes to be redone!Jacobsen, Mamum, and Visaltanchoti use the Fama-French data library to look at three types of anomalies. Their findings may surprise you!The anomalies are broken down into three categories: Seasonal--the Halloween Effect (that is that