Armstrong, ‘Celebrity’ Directors Targeted in SEC Rule (Update1) - Bloomberg.com

Will talk about this after the workout, but since it has both Lance (Asrmstrong) and David (Becher) in it, it has to be a good article! Armstrong, ‘Celebrity’ Directors Targeted in SEC Rule (Update1) - Bloomberg.com: "Recruiting celebrity directors can bring benefits, such as helping a company burnish its image or pursue new business opportunities, said David Becher, an associate finance

Tweets of the Week (June 22-29

BTW I will fix the links and make it look better later....getting something online better than zero...Tweets of the Week!Lots of good ones this week. Take a look at some. Not in any real order. researchpuzzler RT @BrightScope: Steven Covey would be proud: The 7 habits of highly suspicious hedge funds. http://bit.ly/Txqf7researchpuzzler investment news on twitter and compliance issues for

No Such Thing as a Free Lunch, Revisited - Economix Blog - NYTimes.com

Whether you believe markets are efficient or not, this one has something for you. It will be a definte "MUST read" for my students this coming semester. It is by Ed Glassnor of Harvard. No Such Thing as a Free Lunch, Revisited - Economix Blog - NYTimes.com: "The absence of arbitrage possibilities does not imply that market prices always and everywhere reflect some sort of fundamental values.

Using Psychology To Save You From Yourself : NPR

Seems like everywhere we look we see another Behavioral Finance Story. This story (also in audio format) is from NPR:Using Psychology To Save You From Yourself : NPR:"...devotees of behavioral economics — a school of economic thought greatly influenced by psychological research — which argues that the human animal is hard-wired to make errors when it comes to decision-making, and therefore

Here's How The Community Reinvestment Act Led To The Housing Bubble's Lax Lending

The following is John Carney's explanation of how he now believes the Community Reivestment Act of 1977 helped lead to the housing bubble.Here's How The Community Reinvestment Act Led To The Housing Bubble's Lax Lending: "Contrary to my initial conclusion, the evidence is overwhelming that the CRA played a significant role in creating lax lending standards that fueled the housing bubble."It is

Time out for a laugh.

LOW FINANCE CONTENT...but if you are a professor who does research in any field, I am sure you will find this funny.Someone left this site as a comment on an old post. The cartoons are really funny. Go ahead click on it!High & Low Impact Factors- "Life in Research" Cartoon | VADLO Biology Databases Search Engine

Holders of Season Tickets Are Having Second Thoughts - NYTimes.com

Is it the economy or the product? Either way the teams (and likely MLB in general) have some work to do!Teaching point: all too often students ask why should the company care if the stock price in teh secondary market goes up or down. The standard answer includes a mention of what happens when they want to sell more shares in a SEO. This is quite similar. Here the article focuses on the

News from 1930

Fascinating! A blog that is redoing the news from 1930. Eerily similar in some ways. News from 1930: "In hindsight it's easy to see the optimism then was mistaken and the downturn was worse than expected, but this was impossible to predict at the time. Also, the conferences did some good - they reduced the panic and pessimism of the time, and helped keep employment and wages from plunging as

CBC podcast on Behavioral Finance

Why good people make bad money decisions.Interesting podcast on Behavioral Finance from the CBC. Definitely want to listen to this one!CBC Radio | Quirks & Quarks | June 20, 2009: "Dr. Richard Thaler, Professor of Economics and Behavioural Science at the Booth School of Business in Chicago is one of the leading researchers in the relatively new field of behavioural economics. This is the field

Today's Crystal Ball Award

First let me make the typical excuses: "There is so much information out there, sometimes something slips through the cracks and is missed; I was busy; I was out of town then; I was going to but....."Having provided those excuses, let me add that there really is no excuse for my missing Ed Kane's piece for so long. Thankfully, the NY Times had my back and drew it to our attention. Fair Game -

A Butterfly Spreads Its Wings on Wall Street - Barrons.com

A keeper for showing Butterflies in class! My number one piece of advice on ANY derivatives trade? Draw the payoff and profit diagrams.A Butterfly Spreads Its Wings on Wall Street - Barrons.com: "Here's how a typical butterfly or fly trade works.Palsson told clients to consider buying an August 90 put and an August 70 put on the Standard & Poor's Depositary Receipts (SPY), an exchange-traded

Economic View - It May Be Time for the Fed to Go Negative - News Analysis - NYTimes.com

Now here is a creative solution!Economic View - It May Be Time for the Fed to Go Negative - News Analysis - NYTimes.com: "Imagine that the Fed were to announce that, a year from today, it would pick a digit from zero to 9 out of a hat. All currency with a serial number ending in that digit would no longer be legal tender. Suddenly, the expected return to holding currency would become negative 10

Failed Banks List: 2009 - Financials * US * News * Story - CNBC.com

Failed Banks List: 2009 - Financials * US * News * Story - CNBC.com: "Below is a list of all the US banks that have closed this year, with the most recent ones first.A total of 40 banks have failed so far in 2009, versus 25 for all of 2008. For more on failed banks, check out our slideshows of the ten largest bank failures this year and the two dozen of 2008."

Tweets of the week

Tweets of the week (June 22, 2009)Been on the road some with limited internet access, so this will be a bit unorganized and shorter...PlanetMoneyBest NYT business article today in sports section: Golfers hurt themselves by playing it safe /lc http://snurl.com/k8azvLooks like deflation might not be so scary a threat after all, at least according to the Fed /mk http://bit.ly/1ahpzZBrand new podcast

‘Impossible to Understand’ Swap Burns 290-Person Italian Hamlet - Bloomberg.com

"If your friends jumped off a cliff, would you?"‘Impossible to Understand’ Swap Burns 290-Person Italian Hamlet - Bloomberg.com: "Ortenzio Matteucci points to towns down the wooded Nerina valley in Italy’s Umbria region and blames peer pressure for his decision to let Polino, population 290, buy a U.S.-inspired financial swap he didn’t understand.A retired steelworker with wavy gray hair, Polino’

Turning Nonprofits into For-Profits - BusinessWeek

Time to rewrite my notes again to incorporate these new organizational forms.Turning Nonprofits into For-Profits - BusinessWeek: "Social enterprises...often don't fit neatly into existing ownership structures. Those that register as nonprofits have trouble tapping private capital to expand, while for-profit companies risk compromising their missions because they must put shareholders' returns

For Colleges, Small Cutbacks Are Adding Up to Big Savings - NYTimes.com

Wow, things are getting tough. For Colleges, Small Cutbacks Are Adding Up to Big Savings - NYTimes.com:The article lists many cuts that are happening around the country, but my favorite (actually least favorite) is this:"At Dickinson College in Carlisle, Pa., the women’s swim team held a “virtual swim meet” with Bryn Mawr College, in Pennsylvania, about 112 miles away. Each team swam in its home

SSRN-Corporate Governance Systems and Firm Value: Empirical Evidence for the Value of Committee Systems with Outside Directors by Robert Eberhart

This fits theory so well it is exciting!SSRN-Corporate Governance Systems and Firm Value: Empirical Evidence for the Value of Committee Systems with Outside Directors by Robert Eberhart: "The paper presents evidence that the adoption by Japanese firms of a shareholder-centric, more transparent, system of corporate governance creates greater corporate value in comparison to the traditional system.

Secretary Tim Geithner Discusses the 'Healthy, but Slow' Economic Recovery - ABC News

Well he is saying the right stuff...will it play out like this?Secretary Tim Geithner Discusses the 'Healthy, but Slow' Economic Recovery - ABC News:MORAN: Why? What in this package today would have prevented what happened last fall?GEITHNER: ... maybe three key things. The first is we need to give consumers better protections against the risk they get taken advantage of....The second is to make

From FT.com: Crisis of faith for high priests of rational markets

Not sure if survey data really is the way to get at it, but the article is worth reading and does convey the way much of the field seems to be going.FT.com / MARKETS / Equities - Crisis of faith for high priests of rational markets: "The British CFA recently asked its members for the first time if they trusted in “market efficiency” – and discovered that more than two-thirds of respondents no

Business.view: Coffee and pastries but no debate | The Economist

Interesting look at shareholder meetings from The Economist.Business.view: Coffee and pastries but no debate | The Economist: "Exxon Mobil is not alone in giving the appearance of regarding the annual meeting as a pointless legal obligation, a sort of tax on the time of the executives and board which must be endured with the least possible effort. Indeed, there is no reason to think that Exxon

Lack of Regulation Didn't Cause the Crisis and More Rules Won't Prevent the Next One: Tech Ticker, Yahoo! Finance

Definitely not the best video ever (Ex. SOX was not designed to prevent these type of problems), but it does get the point across that regulation for regulation sake is not a good idea, that people will find ways around regulations, and that hedge funds did not cause the problems, banks (which were already heavily regulated) caused the problems. (Watch the video). Lack of Regulation Didn't Cause

SSRN-Hedging Real-Estate Risk by Frank Fabozzi, Robert Shiller, Radu Tunaru

SSRN-Hedging Real-Estate Risk by Frank Fabozzi, Robert Shiller, Radu Tunaru: "Real-estate assets represent more than one-third of the value of all the underlying physical capital in the United States and the world. The relationship between the level of interest rates and housing prices does not always follow one direction and a shock event in one market may trigger deep repercussions in the other

Tweets of the week

Best Tweets of the week Some of my favorite tweets from the past week in no particular order: Planetmoney This administration forecast for solar surprised me -- you can barely find it on the chart /lc http://snurl.com/jp2fsThe solution to the financial crisis? We have to be more boring: http://bit.ly/IR7SUTo continue your Chart-y Friday, a chart of economic growth across income distribution.

Market Mine: The rapidly changing (reducing) role of the traditional sell-side analyst

Not surprising, given low commissions, less and less research coming from the sell-side.From Penny Herscher: : The rapidly changing (reducing) role of the traditional sell-side analyst: "....from Rick Hanley's chart here -- the price of a trade has dropped continuously. Trading volume and investment banking were the two sources of funding for sell-side research -- for the first the price per

PREPPING FOR THE WORSE - New York Post

Well this is cheery:PREPPING FOR THE WORSE - New York Post: "'The real problem is that long-term unemployment is going up dramatically,' said Franklin Allen, finance professor at the Wharton School. 'Unfortunately, many people ...may never get jobs again,' he wrote in a paper published this week.Allen, alluding to federal statistics that show 27 percent of the 12.5 million unemployed workers in

MLB: Wins and Payroll, a fast fast fast midseason look

Ok, so this is a really bad study (It took all of three minutes to do), but I found it interesting. Data was sketchy at best and definitley would not hold up even in class let alone a paper, but like I said it took three minutes.Y is number of wins right as of 1Am eastern today (June 15) (and yes I know some teams have played more games), X1 is payroll as reported by USA Today, X2 is number of

Geithner and Summers writing in the Washington Post

Obama to propose regulation overhaul Wednesday - Jun. 15, 2009: "In a commentary published in Monday's Washington Post, Treasury Secretary Timothy Geithner and the Director of the National Economic Council, Lawrence Summers, defended the need for an tighter regulatory control.'The financial system failed to perform its function as a reducer and distributor of risk,' Geithner and Summers wrote. '

Study hints that alpha may be finite (at least in the short term)

Fascinating look (albeit not over a seriously long time frame) from AllAboutAlpha that is consistent with the long held economic view that if there are positive abnormal returns to be had (in financial or product markets), newcomers to market will drive down the returns (hence importance of barriers to entry etc).AllAboutAlpha.com» Today's Post » Study hints that alpha may be finite (at least in

How Safeway Is Cutting Health-Care Costs - WSJ.com

Ok, so it is a grocery store chain, that is only a part of the reason I have it included. Fascinating. Using statistical analysis, Safeway has focused on what drives cost and forced those who want to be insured to internalize the costs. Talk about a nudge. Great. Finally!How Safeway Is Cutting Health-Care Costs - WSJ.com: ".... The key to achieving these savings is health-care plans that

New Book: The Myth of the Rational Market

The Myth of the Rational Market: A history of Risk, Reward, and Delusion on Wall Street by Justin Fox (he of the recent Time Magazine piece on Stocks and bonds. .The following excerpts are from TheBigMoney.Spinning Math Into Gold: How academic debate transformed into Wall Street wealth. | The Big Money: ""In the 1970s, the war between random walkers—theorists who believed that stock prices

Six Flags Seeks Bankruptcy to Cut Debt $1.8 Billion (Update1) - Bloomberg.com

Six Flags Seeks Bankruptcy to Cut Debt $1.8 Billion (Update1) - Bloomberg.com: "Six Flags Inc., the owner of 20 theme parks, sought bankruptcy protection 3 1/2 years after Washington Redskins owner Daniel Snyder become chairman and hired new managers in an attempt to return it to profitability.The Chapter 11 petition filed in U.S. Bankruptcy Court in Wilmington, Delaware, listed assets of $3

So This Is What Politicized Lending Looks Like

Lending becomes increasingly political. This is not good.Fom BusinessInsider at Clusterstock.comSo This Is What Politicized Lending Looks Like: "It was inevitable that the increasing role of the Fed in our economy would draw it deeper into the morass of politics.Now the New York Times describes the efforts of various companies--from rental car giants like Hertz to manufacturers of speedboats,

Can We Please Stop Saying the Market is Efficient? - Freek Vermeulen - HarvardBusiness.org

NOTE this is not talking per se about informational efficiency in the sense of responding to how markets react information, but rather how through economic Darwinsim only the strong are seen to "survive" and thrive. This is saying that this is not always the case. Can We Please Stop Saying the Market is Efficient? - Freek Vermeulen - HarvardBusiness.org: "Research - by professors Benner from

Kiva - About Microfinance

Kiva is now making loans in the US as well. Interesting. I realize the literature is very mixed on microfinance, but it has been my experience that many of these borrowers have no other access to capital. Plus with with high repayment rates, I think it is definitely worth a try. Better than charity and moreKiva - About Microfinance:This page contains information we have gathered from coleagues,

A look at inflation from the 1930s

Inflation can save us? Uh, for real? Clusterstock's BusinessInsider found this "classic". It is a 1930s era video.

What is a hedge fund and how is it different from a mutual fund?

Had a student ask this question this semester so I am sure he was not the only person who does not know:From Examiner.com What is a hedge fund and how is it different from a mutual fund?:"Hedgefunds, unlike mutual funds, employ a wider array of ivesting techniques, which are considered more aggressive. For example, hedge funds often use leverage to amplify their returns (or losses if things go

Are Stocks Still Good for the Long Run? - TIME

Wow. The other day I reTweeted a tweet from Zvi Bodie. I did not have time to blog it then, but saved it. And just finished reading it and two follow-ups to it all I can say it that they are definite must reads! (and will be so for all of my fall classes!)Are Stocks Still Good for the Long Run? - TIME by Justin Fox:While now it is commony held that stocks have a higher expected return than

Yes, Your Favorite Hedge Fund Manager Is Probably Just Lucky

ClusterStocks' Henry Blodget pointed this out yesterday: The actual link is from Ken French, so you know it is good!Yes, Your Favorite Hedge Fund Manager Is Probably Just Lucky: "Your favorite hedge fund manager has walloped the market by 5% per year for the past 10 years, so he's obviously a genius, right?Actually, no. He had a one-in-five chance of doing that just by throwing darts."From the

Fama/French Forum

Fama/French Forum: Search Results: "Observations, opinion, research and links from financial economistsEugene Fama and Kenneth French."How had I never seen this? For real? Amazingly good. Maybe even better than that! LOL...

Two Very Sad Posts from the UnknownProfessor (Financial Rounds)

The academic finance blog community is pretty small and the blogger/professor I have followed longer than any other is the UnknownProfessor and his FinancialRounds. (The unknownprofessor and I have much in common. Not only both financeprofessors, but also both like cycle and oversee student invested portfolios.)So it is with great sadness I share his post from today and one from Friday.

Maybe the talk of run away inflation is just that, talk.

Martin Wolf responds to the fears that we are doomed by future inflation due to the large government expenditures and deficits.His arguments are essentially that bond price drops are a reduction of the fear of DEFLATION and not necessarily a signal of high inflation. Additionally, to the degree that we see we are seeing is risk aversion levels drop (which is a another good thing!) and the safety

Peter Bernstein, Consultant, ‘Capital Ideas’ Author, Dies at 90 - Bloomberg.com

We have lost a great great mind in finance. :( If you have not read his books, I highly suggest you do! Great writer. Peter Bernstein, Consultant, ‘Capital Ideas’ Author, Dies at 90 - Bloomberg.com: "June 8 (Bloomberg) -- Peter L. Bernstein, an economic consultant and historian whose prolific writing built a bridge between academic theory and practice in the financial world, has died. He was 90

The Still Over-Leveraged Consumer | The Big Picture

The Still Over-Leveraged Consumer | The Big Picture: "Despite spending less time at the mall, throttling back consumption, and increasing their savings rate, the US consumer still finds themselves with too much debt and too little savings. Even worse (at least for the economy), they lack the income or the equity to fund their previous lifestyles."A couple of things deserve mention:The graphs are

The Best Online Tools for Personal Finance - WSJ.com

The Best Online Tools for Personal Finance - WSJ.com: "There are a host of Web sites that help you lay out a budget and track your spending and investments. Some let you set up a plan for a long-term goal, like college or retirement, and others offer advice about where to put your money. And many of these services are free of charge.To help you wade through all the choices, we scoured the Web to

NY Times on Market Efficiency

Nice recap of current standing on EMH (Efficient Market Hypothesis) from the NY Times"[It] grew out of the University of Chicago’s finance department, and long held sway in academic circles, that the stock market can’t be beaten on any consistent basis because all available information is already built into stock prices. The stock market, in other words, is rational.In the last decade, the

A possible upside of a monopoly: increased innovation

Probably more of an economics article, but we deal with anti-trust issues in finance classes all the time too and it is such a good thought-provoking article I will include it:Columbia Ideas At Work : Feature : The+Price+of+Competition: "Antitrust laws aim to protect consumers and spur innovation by fostering competition, but in some industries ingenuity thrives under monopolists....."Working

US to Propose Wider Oversight of Pay

An update on last week's WSJ piece:US to Propose Wider Oversight of Compensation the from the NY Times:" The Obama administration plans to require banks and corporations that have received two rounds of federal bailouts to submit any major executive pay changes for approval by a new federal official who will monitor compensation, according to two government officials.Some of the rules... apply

ForumSPB.com - St. Petersburg International Economic Forum :: Search

ForumSPB.com - St. Petersburg International Economic Forum: "Plenary SessionPost-crisis financial acrchitecture Global imbalances and the reform of financial regulation. Reforming international financial instruments (FSB establishment, IMF reform) and building new relations between ministries of finance and regulators worldwide to mitigate global systemic risks (coordination, supervisory boards).

The Jim Rogers video that everyone seems to be talking about

Have had a couple of people ask me about the video and more directly the US Dollar and potential inflation.

Here is the Jim Roger's interview

How Ben Bernanke Saved Us From a Second Great Depression -- New York Magazine

How Ben Bernanke Saved Us From a Second Great Depression -- New York Magazine: "I’ll just come right out and say it: Ben Bernanke will go down as the greatest Federal Reserve chairman in history. The soft-spoken academic who has toiled in the shadows of his legendarily self-promoting predecessor, Alan Greenspan, will be known as the man who averted the Great Depression Two, a sequel that could

Yale's Levin on the Age of Diminishing Endowments - WSJ.com

Yale's Levin on the Age of Diminishing Endowments - WSJ.com: "University endowments once invested primarily in stocks and bonds. Yale's longtime chief investment officer, David Swensen, pioneered a new strategy that found better returns in less traditional vehicles like hedge funds, private equity partnerships and real estate. The Swensen approach produced a 16% average annual return the past

Best tweets of past week

Some of the best tweets (or at least my favorites) I have seen this week (not all are finance related)Wayne Marr is simply amazing. Has so many interesting tweets he may personally be the cause of my total lack of productivity some days. But in a good way :) A few of his tweets: Was there Really a #Hawthorne Effect at the Hawthorne #Plant? An Analysis of the Original Experiments http://

Reasons to be scared

Just a short post giving two very scary articles. Both suggest much more government intervention into the business world, which is the exact slippery slope we have been talking (and fearing).From Clusterstock and the WSJ: Barney Frank Intervenes To Keep Open Massachussets GM Facility: "The WSJ provides a good example of the kind of shenanigans we should expect under a government-run car

Quote of the day

"If a man's poor and not a bad fellow, he's considered worthless; if he is rich and a very bad fellow, he's considered a good client."While this very well may be the mantra inside many brokerages, it was actually written by Titus Maccius Plautus who lived from about 255 BC to 185 BC.

Medical Bills Driving Most Middle-Class Bankruptcies - Forbes.com

I often fear we (college finance professors) don't do enough to prepare students for personal finance issues. For instance, we speak much about risk management at both corporate and a porfolio levels (really we do, contrary to what it may seem if we use the banking industry problems as our only evidence), but very little on a personal level (For instance we spent 1/2 of one class this semester.)

Are Finance Professionals overpaid?

NPR's Planet Money talks to Ariell Resheff about Resheff and Philippon's paper that looks at whether barriers to entry and a lack of transparency lead to "excessive" pay (i.e. positive rents) in the financial field. The authors suggest that deregulation played a large role in this since often neither the firm nor the so-called investors knew what they were dealing and a messed up incentive

Julian Robertson Bets the Farm on Inflation -- Seeking Alpha

Julian Robertson Bets the Farm on Inflation -- Seeking Alpha: "Today, we are going to highlight Julian Robertson's steepener swap play. In layman's terms, he is betting on inflation. Taken from eFinancialNews, 'Steepeners are a type of interest rate swap, where one party agrees to pay the other a fixed rate in exchange for a floating rate, which is derived from the difference between long and

Fund trading costs higher than many items - studies | Funds | News | Reuters

Fund trading costs higher than many items - studies | Funds | News | Reuters:"University of California Professor Roger Edelen and two co-authors found that trading costs are comparable to funds' expense ratios and often exceed them. "We think our study really nails down that these costs do matter more than expense ratios," Edelen said."and later..."Among 1,758 US equity funds, the study found a

VIDEO: Erik Lie Research Suggests Bankruptcy Won't Help GM Much

A press release from the University of Iowa that merits attention:VIDEO: Erik Lie Research Suggests Bankruptcy Won't Help GM Much: "June 1, 2009VIDEO: Erik Lie Research Suggests Bankruptcy Won't Help GM MuchNew research by Erik Lie, a finance professor in the Tippie College of Business, suggests today's bankruptcy filing by General Motors will be of little help to the company's long-term

G.M.’s Big Bankruptcy, by the Numbers - DealBook Blog - NYTimes.com

More on the story that everyone seems to be talking about.G.M.’s Big Bankruptcy, by the Numbers - DealBook Blog - NYTimes.com: "...excluding financial companies — which generally have bigger balance sheets than industrial companies — G.M. isn’t the reigning Chapter 11 heavyweight. The largest nonfinancial bankruptcy in United States history is that of WorldCom: when it filed in 2002, it reported

Answers to Some Questions About G.M.’s Case - NYTimes.com

Answers to Some Questions About G.M.’s Case - NYTimes.com: "General Motors followed Chrysler into bankruptcy on Monday in a case that will be one of the largest and most complex in history. It hopes to follow the same path Chrysler has taken through court, but there will be some differences between the two cases. Here is a quick look at some basics of the G.M. bankruptcy."

Chart showing difference in economic classes and speed of adoption

Two charts that tell interesting stories.The first is a fascinating look at how money is spent by different wealth classes. For instance, the lowest 20% spends about a third of the top 20% on food, but about a fifth on entertainment etc.The second chart is shows how much faster new technologies have been adopted recently. (look for steeper lines).Thanks to SimoleonSense for pointing this out (

Fed independence

Central Bank independence is important for the long term health of any economy. That has been fairly well established. Indeed, in the early 1990s Laurance Summers (and others) argued the importance of Fed independence for keeping inflation in check.Why? Governments (read politicians) have an incentive to grow the money supply very quickly for short term gains at the expense of longer term