Welcome to the Blogosphere

A warm welcome to the Blogosphere to The Finance Blog. It is a new blog by a Peter Went a FinanceProfessor from Bucknell. I look forward to reading! In fact I just added it to my GoogleReader!

CBOE to trade stocks

Big news out of Chicago today:From the Street.com:"The Chicago Board Options Exchange, the nation's largest options exchange, says it intends to get into the business of trading stocks and will launch a new exchange in early 2007. The CBOE on Thursday says it has also begun converting itself into a holding company, a process that could lead to an eventual IPO...."From the CBOE's press release:"

Microfinance: lesson and video

A former student who was always interested in micro finance forwarded me the following video.A brief "lesson" on Microfinance will serve as a means of introducing this video.What is microfinance? It is banking on a very small scale where small (often short-term) loans are made to individuals who would generally not be able to get loans from traditional financial institutions. Adding to the

A look around at the news

In the spirit of the old newsletter, this will have several short stories all together (out of town family (from Texas) is in town today visiting and I am not supposed to be working ;) so this is my compromise.)This would defintely be fodder for my Money and Banking classes if I were teaching that this semester!From the BBC:"Monopoly money will be phased out in a new version of the game in a

Deja vu all over again?

Sometimes the more things change, the more they stay the same. NY Times Deal Book has a really interesting article on the similarities between the takeover market now and in 1988.A quick look-in and then the link to the actual DealBook article."HCA’s $33 billion buyout announcement on Monday is turning up all kinds of references to the late 1980’s, which was the last time Wall Street saw a

More political connections = higher returns

I imagine this one will be making the rounds in the popular press relatively quickly. It is by Goldman, Rocholl, and So.The super short version of their paper is that having a board member with ties to the political party in office is good for shareholders (which probably is more disappointing than shocking).A slightly longer version:The authors begin by stating that "in countries with a well

More entrenchment = more employee pay

Start off with the assumption that holding employee pay down is hard work (if nothing else, you are frequently criticized). This simple assumption leads to the conclusion that ceteris paribus (holding other things constant), managers would prefer to not have to do this and would pay their employees more than is optimal.However, as residual claimants, shareholders disagree. They do not want to

What I learned watching the Tour

Wow, what a Tour! As anyone who wants to know, knows, Floyd Landis won!!While not wanting to take the fun away from the event (I simply love the Tour and think the three weeks of the event is my favorite time of year), nor to read too much into it, there are some lessons (both financial as well as non financial that we can learn from his performance.1. Have a long term plan. Floyd understood

Socionomics and the Enron Scandal

Right after my posting of the 1952 cartoon, B. C. emailed me the following video that is a documentary on Socionomics and even has Finance Professor John Nofsinger in it speaking about Enron and other scandals!What is socionomics?From Socionomics.org:"Socionomics is a new theory of social causality that offers fresh insights into collective human behavior. Over twenty years of empirical research

Gates to give more to Africa

Yeah, maybe I am still being biased by my reading of Jeff Sach's Ending Poverty. Or maybe it was the stories my brother (the real doctor) brought back from his service trip to Ghana. Ormy Mom's campaogn to collect and send t-shirts and money to an orphanage in Ghana. Or maybe it just seems right, but whatever the reason I agree with the Cameron Cameron Duodu of the New African (although this

a few really interesting posts from Financial Rounds

The Unknown Professor over at Financial Rounds just keeps writing some really interesting posts! So on a day that I devoted to the "Tour" (I don't want to give results away, but WOW!!!! What a day!!!),here are a few recent highlights:Can you make money betting against Jim Cramer? Uh, it looks like it! At least in the past).The backdating of option grants seems much more common than originally

1952 cartoon on Stock Market

Yeah I know I have not been posting much of late. A combination of research, summer, trips, and the tour. But this will make up for it. LOL! Pretty funny.And I apologize about all gender stereotypes in advance!!! Remember, it was made in 1952."Cartoon promoting the stock market as the engine of America's prosperity." Animation in public domain and available at Archive.org. 1952.

Want to have some fun?

Ok, so this is not the usual post. It is a summer Friday afternoon, so why not. It is from Blogthings. Take a quick quiz to see if you are likely to become a "multimillionaire". Interestingly, it is totally based on actions and how you think about things (and not type of job, amount of money you are starting with, etc.) It takes about 1 minute.I think it is overly optimistic (which based on

FinancialRounds:What does a professor do all day

If you are a college professor, you have been asked "what do you do all day" or told "it must be nice only having to teach X courses per semester". Similarly, if you are a student, you no doubt have thought "What an idiot! All he does is teach X courses, why can't he get grades back faster?"Over at Financial Rounds, the Unknown Professor addresses these questions with two answers. In his

Warren Buffett interviews

At least for today (thanks to HP) the first two of the three Warren Buffett interviews that were on Charlie Rose are free at Video.google.com Video one, two(the third show is not yet available)

Dow and SP 500 Differences

Most introductory finance classes cover the makeup of different indicies. For instance the Dow Jones Industrial Average is price weighted and composed of 30 "blue chip" stocks whereas the S&P 500 is weighted based on market capitalization and includes 500 stocks.The Street.com looks at some of the implications of this difference:"What is the impact of the different weighting schemes?....if one

Jeremy Siegel on Indexing

More reasons to index from Jeremy Siegel writing for Finance.yahoo.com:"data...indicates that the vast number of these managers can't beat the market after fees are subtracted from their portfolio returns. Over the 35-year period from 1971 to 2004, the average annual return on all actively managed equity mutual funds trailed the S&P 500 Index by 87 basis points a year, and the broader-based

Looking around, catching up

The more tired I am, the harder I find it to concetrate, so there will be no academic journal articles today. Hopefully tomorrow. But in the mean time, we can catch up on several "news" items that have crossed my monitor today:*I hated to hear last week that Ken Lay died. I was disappointed. Not (as I heard a person on the radio say) because he did not get to serve time or even be sentenced,

Back from Mississippi and Louisiana again

Some of you wondered why I have been quiet for a while, well I was in Biloxi helping out. It was my fourth time to the Gulf and I really can not stress the fact that there is still much much much work to be done down in the region. I would urge you all to try to get down there, if only for a few days. You will not only do much good work helping others in ways you never dreamt of, but also will

Overconfident CEOs lead to more debt

I am traveling again (back to Mississippi) but read the following article today (it is a tad dated in blog time, but definitely still relevant for class!Malmendier, Tate, Yan are at it again! After showing how overconfidence of CEO's impacted investment, they now (updated April 8, 2006) show that CEO overconfidence also impacts capital structure.From their abstract:"Overconfident managers believe

Money can not buy you happiness

Contrary to popular opinion, money can not buy you happiness---Yeah I know I am a FinanceProfessor, but I would rather you be happy than rich, so I think this is something that we should all remember!From Yahoo :"Measuring the quality of people's daily lives via surveys, the results of astudy published in the June 30 issue of journal Science reveals that incomeplays a rather insignificant role in