Sunday, September 27, 2009

09/27/09 a detached sleepily indifferent smile, a wanderer's smile...

As we recover from bonfires and spreadsheets, slowly peeking to observe the shape of the next two weeks, you may hear a collective gasp. It seems the intrawebs have noticed as well:

Such moments lead to, well, we surely can't call it quiet reflection, but lets take some links to sooth the incessant mutterings of doubt:

The rising cost of MBAs: Overpriced or priceless? Economist. Opps. Maybe the wrong article for this week.

Top 100 MBA employers. CNN Money. There you go. Keep your eyes on the prize.

Top 100 Global Venture Capitalists. Red Herring.

Time to end our deluded obsession with club managers. FT. Another salvo in the longstanding debate as to what matters: institutional structure or individual leadership. See also, Do CEOs Matter? We should also note that Billy Bean is falling on hard times. Of course, Warren Buffet lost money last year as well.

The Urban Diet. Felix "I can't believe my last name is Salmon" Salmon. I could argue that the calories lost due to my increased walking and more careful eating is mitigated by the whiskey which helps keep the fog at bay.

Most of today's links are stolen from The BizDeansTalk Blog. It was the PR guru Mitchell Friedman who directed me to the site.

Back to the books.

Friday, September 25, 2009

What peaches and what penumbras!

File under: living the dream via creative accounting. 37SIGNALS VALUATION TOPS $100 BILLION AFTER BOLD VC INVESTMENT. (37signals) Hat tip ccq

Datablog. I expect y'all to have this put in two way tables by wednesday.

Do financial advisors improve portfolio performance? VoxEu. Given my previous job, this is of particular interest to me. In the middle of the financial crisis, we had to balance the clients desire to move to cash versus the difficulty of timing the markets. Considering the risk, and ease, of moving accounts, the collective will of clients won. So, an advisor may not fully mitigate the irrationality of the retail investor (and let us not discuss the irrationality of advisors, for we are human, mostly).

Alternative Investments, Illiquidity, and Endowment Management. Liquidity was, especially in our office, the main concern of clients. Of course, estimating proper levels of liquidity is one of those "rational actors determining self interest" things that behavioural economics likes to point out that we're really bad at.

Vanity Fair posts another few thousand words on TARP. The belief that no good financial journalism exists in the world is pretty dumb.

File under: Posts I'm linking to because I have the humor of a 7th grader. Meat Trends. Of course, the point of the excerpt is brilliant. Maybe Malthus can still be right.

Over half a million strategic defaulters in 2008. Felix. Financially savvy people most likely to default strategically. In other news, clouds are fluffy, water wet.

There Are No Villains in Financial Crises. Megan.

Further debates on Securitization: Felix picks on Zubin. Zubin responds

okay, time for me to get back to spreadsheets and other

Wednesday, September 23, 2009

09/23/09 as this flea's death took life from thee.

As the bifrucated semester continues, we become more and more occupied with presentations, papers, and other matters of import.

Why Goldman Always Wins. Megan McArdle talks about what Investment Bankers and Don LaFontaine have in common. The decision making process for one time transactions, or transactions upon which a lot relies upon, are the same: "When you have only one chance to get it right, you tend to open up your wallet and pray." I would put this into the strange market of CEO selection and payment as well. Insofar as if your selection turns out poorly, well, you know, you as a board member followed all the small signals you could to TRY to get the best candidate.

Finally, Some Real Action on Student Loans. James Surowiecki. Of interest to all business school students, I am sure.

How to reduce the mountain of debt. Felix. Felix does a pretty good job of deconstructing a Nassim Taleb meme of reducing the amount of debt in the world. I suppose we still run into the same problem: long term liabilities of pensions and companies demand high quality, long dated debt.

Wednesday, September 9, 2009

09/09/09 within his eye false teardrops gather

Bonds and Brands: Foundations of Sovereign Debt Markets, 1820–1830. one for a quiet Sunday afternoon. What do you usually do?

Misdiagnosing the crisis: The real problem was not real, it was nominal (VoxEu. Scott Sumner, of the money illusion, makes his case. Dear God I hope this all makes more sense after Macro.

Overdraft Hell Revisited (Mother Jones). Overdraft Fees Revisited (Felix). Responding to this article in the NYTimes. Kevin Drum dares someone to defend them, and since my previous job was to be Professional Trash Talker, here we go:

Yves touches on it here at the bottom, but, yes, "transparancy" in terms of bank fees that Kevin Drum talks about would mean that, if certain numbers of the formerly unbanked are not subsidized by somebody, that they would return to being unbanked. Retail banks throughout the 00's rushed into "banking the unbanked" not because they were altruistic, but because they needed deposits to fund a lending boom and, yes, the unbanked are a good source of fees. A lot of ink was then spilled on the value of doing so, but lets not put carts before horses. WAMU and zero fee banking pushed fees from the visible into the invisible, and, from personal experience, that the unbanked are very cost conscious (and the plural of anecdote is data. But a transition from pricing the services that low deposit customers utilize directly rather than indirectly would reduce the number of these low deposit customers. Bank margins have, not to my knowledge, been increasing over the past, so there is no reason to think that a reduction in fee income would not result in increase fees across the board. Kevin Drum may talk about transparency, and for people who have more than $1000 in their bank account, this may be a good thing, but it is disengenuous to pretend that increasing up front fees on the low end would not reduce those being banked on the low end, with whatever attendant social costs that entails.

The externiality of the unbanked will be paid by someone, the question is just who. We can argue about the fairness of foisting that upon one small subset of people, but that doesn't mean that that is any better or worse than foisting it on a smaller scale on a larger number of people.

(update 9/23/09: Chase and Bank of America to Revise Fee Policies. (NYT). It should be said that the above argument may be seen as an intellectual argument. I don't advocate that the bank's fee policies were reasonable, but rather that to say that there may be more moving parts than the gifted and articulate Mr. Drum may have acknowledged.

Friday, September 4, 2009

Turning and turning in the widening gyre

How Did Economists Get It So Wrong? by a Mr. Paul Krugman in a paper you may have heard of called the New York Times. I'm not going to pretend that I know better than Mr. Krugman, but methinks that those people actually involved with the allocation of capital understand that the market is filled with inefficiencies. Though I think he hits on it when he mentions research that implies that people willing to exploit said inefficiencies must have adequate capital to do so. Though I suppose this is a question for a valuations class.

Football, Statistics, and Agency Problems. From the Baseline Scenario. I believe there was some sort of draft today. Another data point in the "when taking the correct path is offset by the forces of convention and reputation".

A Post Finance Job Market. Ezra Klien. I suppose few people, apart from myself, dream in excel spreadsheets. But it does lead to an interesting question: will the lower salaries for Wall St, coupled with the reduction in status, cause a Renaissance in law schools, med schools, and the like?


Vanity Fair profiles Henry Paulson. Vanity Fair, from my perspective, has had some of the most compelling reporting over the past year. I will agree with Mr. Purdum that we get much more expressive photographs our of Mr. Paulson, especially compared to Mr. Geithner, who looks like a Keebler Elf.

I suspect I have some Accounting Homework to do.