Mutual
Fund Scandal, Fama Interview, Free Trade or Trade Barriers?, and Much more!
FinanceProfessor
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Top Stories
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1.
Mutual Fund Scandal
2.
An Interview with Eugene Fama
3.
Bank America acquires Fleet
4.
NYSE reforms
5.
Do Boards matter? A look at recent academic studies on Boards of
Directors
6.
High cash firms: Good or bad?
7.
US reprimanded for steel tariffs
8.
Free trade or not? Political
expediency or a thought-out plan?
9.
Playing cards with Nick Leeson
10.
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Hi
everyone!
It seems
like forever since the last newsletter. First
quite a bit of travel, then my tenure portfolio had to go in, and then trying to
catch up on about a million fronts. But
finally it is ready. I have to say,
it is very good! There are just so
many interesting articles to choose from!
The FMA
conference was great! The newsletter
profiles some of my favorites papers from there.
I am always amazed at how many new ideas I get out of the conference.
(You really should try to make next year’s meetings in
IndexFunds.com
has a very cool interview with Eugene Fama!
It is definitely worth checking out!
One final
thing, please be sure to check out http://www.FinanceProfessor.com.
I am making an effort to keep it more up-to date with news items
appearing there prior to the newsletter. No
guarantees on frequency of updates, but day, but generally something is added
every day or so. There are even some
pictures (kitties, race pictures, and biking pictures, so enjoy).
jim
JimMahar@FinanceProfessor.com
and now
the news:
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Mutual
funds sure made a mess. By allowing
wealthy investors (in some instances fund insiders) to trade shares with stale
prices (and in some cases trade stocks prior to the fund purchases), the mutual
fund industry has destroyed years of good will with investors.
The best
descriptions of what happened may be from John Shinal of the San Francisco
Chronicle: “most of the abuses center on one of two practices: late trading or
market timing. Late-trading abuses
occurred when certain investors were allowed to buy or sell funds after
http://news.bbc.co.uk/1/hi/business/3283127.stm
http://www.washingtonpost.com/wp-dyn/articles/A63561-2003Nov19.html
How did this happen? Many are blaming the SEC for not being more stringent in their regulation. Even former SEC Chairman Arthur Levitt admitted as much when he said that his time was largely spent elsewhere and that he “never saw this coming.”. So now, after the horse has left the barn, the SEC is being forced to play catch-up. To regain investor confidence most experts are looking for the SEC to come down hard on the guilty parties and to step up regulation of the fund industry. (BTW If the SEC does not do so rather quickly, do not be surprised if NY State Attorney General Elliott Spitzer does. Be it for political gain or not, Spitzer is making quite a reputation for himself in prosecuting these funds. And of course Congress will be involved in passing new laws to satisfy voters.
http://www.chron.com/cs/CDA/ssistory.mpl/business/2225870
http://www.chron.com/cs/CDA/ssistory.mpl/business/2233299
To prevent
harsher penalties in the future, some firms are coming forward and making deals
with regulators. For instance,
Morgan Stanley agreed to pay $50 million without admitting wrongdoings.
Other firms have stated that they will take measures to prevent any such
behavior in the future.
http://news.bbc.co.uk/1/hi/business/3278345.stm
http://money.cnn.com/2003/11/19/funds/fundsfire_merrill.reut/
http://www.forbes.com/home_europe/newswire/2003/11/17/rtr1150474.html
Why is so
much being made of this? Approximately
$7 trillion is invested in mutual funds. If
investors lose faith in mutual funds, they may pull their money out, which could
lead to a sell-off in the stock market. While
there does not yet appear to any massive exodus from funds, investors have
reportedly pulled $21B out of Putnam mutual funds (most funds have not yet
reported their cash flows). Part
of this $21 billion was from CALPERS which decided to seer all ties with the
fund.
http://www.foxnews.com/story/0,2933,103301,00.html
http://cbs.marketwatch.com/news/story.asp?guid=%7B4CFEEC53-9EFB-4BDC-9753-76528B0D682D%7D
http://money.cnn.com/2003/11/17/funds/fundsfire_calpers.reut/
Slate
reports while some will take their money out of mutual funds, many more will
not. This is in part because the
money is often invested through retirement accounts.
Additionally, for those invested in non-retirement accounts, selling
would likely result in a capital gains tax.
(FWIW: the article also has some interesting numbers such as the number
of people owning stocks and how this declined since the market peak.)
http://slate.msn.com/id/2090714/
One
consequence of the investigations is that conflicts of interest are being made
known. For instance, directed
brokerage is the practice rewarding brokers with trades in return for the broker
pushing the funds shares. Upon even
casual observation this appears to be a conflict whereby the broker might
recommend a fund that offered a high commission even if the fund were not really
what the customer needs. As a
result, MFS Investment Management (Did you know they are the oldest mutual fund
family?), has decided to end this practice.
Good move!
http://www.nytimes.com/2003/11/18/business/18fund.htm
A winner
in all of this? Exchange Traded
Funds (ETFs) and to a lesser degree all closed- end funds.
Both of these allow trading whenever the market is open.
Additionally, in ETFs the role of mangers is greatly reduced and
subsequently the transactions costs are generally much smaller.
http://www.washingtonpost.com/wp-dyn/articles/A43837-2003Nov15.html
http://www.pasadenastarnews.com/Stories/0,1413,206~11848~1775747,00.html
Back to
basics:
Lost in
the above discussion? The Detroit
Free Press gives a brief overview of what a mutual fund is.
http://www.freep.com/money/business/funds13_20031113.htm
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Interview with Eugene Fama!!!
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As Paul
Harvey would say, after that, let’s wash our minds out with something upbeat.
How about an interview with the world renowned (and my odds on favorite
to win a Nobel Prize within the next 5 years) Eugene Fama!
Ok, so you may have known his major was in Romantic Languages (studied
French in College, now writes with Ken French, coincidence?!?!), but did you
know his first experience with the stock market when he was, and sit down for
this!, a technical analyst! Great
stuff. You’ll want to read this
one!
http://www.indexfunds.com/articles/eugenefama_20031015_interview_with_eugene_fama.htm
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Focus Corporate Boards of Directors
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The board
of directors is the group of people who are elected by shareholders to look out
for shareholders’ interests. How
well they do that is always a matter of debate, but at no time more so than now
coming after the corporate governance crisis where shareholder’s interests
were seemingly forgotten at many firms.
How
closely do the boards actually monitor management?
This has been a difficult question to answer.
Some authors have found there to be little relation between firm
performance and CEO turnover. However,
Goldman, Hazarika, and Shivdasani now give us an explanation to this troubling
finding: the sensitivity is not the
same at all times. In particular the
relationship is significantly stronger in years the stock is down.
Thus, even when the firm lags its peers, if the stock price is up, there
is less risk of a manager being forced out.
Why? One reason that the
authors suggest is that a stock price decline triggers further investigation of
performance, whereas if the stock price is up, the board feels things are OK.
The importance? In the words
of the authors, the results suggest that “even though the overall sensitivity
of turnover to performance may be low in a broad sample of firms, this
sensitivity can be high for firms that don’t meet a performance threshold. In
this regard, the prospect of CEO turnover can be a powerful incentive device for
certain firms.”
http://207.36.165.114/Denver/Papers/CEOturnover.pdf
In an
interesting paper that may surprise some who have grown accustomed to hearing
that Boards of Directors fail to look out for shareholders, Scholten finds that
boards of directors are the main party that forces out CEOs following a poor
acquisition. More importantly,
Scholten reports that Boards do this regardless of whether there is an active
takeover market or not. (This is
important because earlier papers, for example Mikkelson and Partch (1997) and
Hadlock and Lumer (1997), had found that Boards need to be pressured into action
by an active takeover market).
http://207.36.165.114/Denver/Papers/InvestmentDecisionsandManagerialTurnover.pdf
In a
forthcoming Journal of Finance article, Yermack investigates how board members
are compensated for their actions. Specifically
he asks how sensitive their wealth is to changes in firm value (much like the
famous Jensen and Murphy 1990 paper that looked at CEO pay).
He finds that for a change of $1000 in firm value, there is a
corresponding change of 11 cents to board members.
Thus, for a one standard deviation change in firm value, the average
board member would see his/her wealth increase by $285,000.
This is from not only options and stock ownership, but also a greater
likelihood of being selected to serve on other boards.
http://www.afajof.org/Pdf/forthcoming/JF%202343%20Final%20Revision.pdf
Any
bankers on Board? Xie finds that if
you have a banker on your board of directors, CEO pay sensitivity is likely to
be lower. This makes sense if you
consider bankers (who may be looking out for their bank and not just
shareholders of the firm) tend to be more risk averse then diversified
shareholders. Additionally, and not
surprisingly, the banker has a greater impact on smaller boards.
http://207.36.165.114/Denver/Papers/Banker%20Director%20and%20CEO%20Compensation.pdf
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Yet
another paper that finds strong corporate governance is good for shareholder
returns! Cremers and Nair report
that there is synergy between internal and external control mechanisms.
When both forms of monitoring are present, returns are even higher.
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=412140
Motorola
has decided to spin-off its semiconductor business.
A spin-off is when shares in a subsidiary are given to existing
shareholders. As is typical the firm
may first sell up to 20% of the shares in the subsidiary in a public offering.
So long as less than 20% of the firm is thus carved out, the remaining
spin-off is considered tax-free. http://www.miami.com/mld/miamiherald/business/6945178.htm
In a
similar move, GE is planning to spin-off some of its financial divisions.
http://www.nytimes.com/2003/11/19/business/19electric.html
Stand and
Poors was the only one of the large bond rating agencies to downgrade Ford’s
debt to only one level above junk status.
http://www.thecarconnection.com/index.asp?n=156,175&sid=175&article=6610
http://moneycentral.msn.com/inc/news/breakingredir.asp?feed=OBR&Date=20031112&ID=3077259
Biased
forecasting? Coming after the
California Energy Crisis, many utilities decided to build on.
The result? Since 1999 overall
http://www.quicken.com/investments/news_center/story/?story=NewsStory/dowJones/20031110/ON200311102350001639.var&column=P0DFP
After
quite a break following the gigantic internet crescendo, venture capitalists are
again increasing their investments. However,
they all stress that they are being more careful this time around.
http://www.bayarea.com/mld/mercurynews/business/7276039.htm
http://www.bayarea.com/mld/mercurynews/business/7276040.htm
Not
surprisingly the IPO market is also slowly coming back to life.
One deal that many have their eyes on is Google.
It has been rumored to be going public but also that Microsoft may
acquire it. Stay tuned.
http://www.forbes.com/business/newswire/2003/10/26/rtr1123131.html
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Mini-lesson:
A look at High cash firms.
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Is cash
good, bad, or both? The basic
problem with firms with too much cash is that they may waste it (Jensen’s Free
Cash Flow Problem) and the firm does not expose itself to the discipline of the
capital markets. On the other hand,
in a world with transaction costs and other market frictions, it may behoove
firms to hold cash (for either a rainy day or for investment opportunities.)
The next two articles on High Cash firms are fascinating!
In a very
cool article, Almeida, Campello, and Weisbach develop and test a model of cash
sensitivity to cash flow. That is
they test whether firms that are subject to financial constraints hold more cash
when they have positive cash flows than do firms that apparently have lower
constraints on raising new cash. The
results support the theory that market frictions induce firms to hold more cash.
http://www.afajof.org/Pdf/forthcoming/campello.pdf
For
numerous reasons managers have an incentive to hold more cash than is optimal
from a shareholder perspective. These
agency costs problems may be exasperated because cash can provide management
with more flexibility in fighting hostile takeovers (example Harford 1999 and
Pinkowitz 2002). However, as Faleye
points out in an upcoming JF article, takeovers are only one means of
disciplining management and proxy contests rise with cash balances.
Equally important, following the proxy contest cash balances fall
regardless of outcome of proxy battle.
http://www.afajof.org/Pdf/forthcoming/Faleye.pdf
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How long
to keep IPO shares? A paper presented in Denver by Dssold says your optimal
holding period for shares in an IPO is very different for up markets and for
down markets. If the overall market
is dropping, then the optimal holding period is very short, but when the overall
market is up, it pays to hold until prior to the expiration of the lock-up
periods.
http://207.36.165.114/Denver/Papers/Optimal%20IPO%20Holding%20Periods.pdf
One of my
favorite parts of most investment classes is talking about CAPM.
Why? It is such an important
and elegant model, but of course most research ver the last decade suggests it
does not work very well (example Fama And French!).
Now why it does not work is the real fun.
Is it the model? The market?
The researcher? Or some
combination of the above? Research
from Ang and Chen finds that the time period studied matters as well.
For instance, from 1963 on there appears to be a Value anomaly.
However, this disappears when the 1926-2001 period is examined and “the
market factor alone is able to explain the spread of average returns of these
portfolios.” [note the portfolios were created based on book to market
values.] Further they find evidence
of a time-varying beta relationship where value stocks (i.e. high book to market
or equivalently and more commonly in the popular press low market to book
ratios) “were risky in the early part of sample, but not in the latter part.
This could be really big. (If
you are going to the AFA meetings in early January, look for this to be
presented there!)
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=346600
A good
example of insider trading: bond
trader knew the Treasury was about to end the issuance of 30 year bonds.
So what did he do? He placed
a large order just before the news announcement.
UH, bad move.
http://www.iht.com/articles/117504.html
Is your
mutual fund experiencing significant volatility in its cash flows?
If so, your future returns may suffer.
That is the conclusion of Rakowski’s new paper (also presented at the
FMA meetings).
http://207.36.165.114/Denver/Papers/Fund%20Flow%20Volatility%20and%20Performance.pdf
Concerned
about inflation? Apparently some are
as gold is coming back into fashion. Why? In
part because of a falling dollar, and an improving economy.
However, an expansionist monetary policy have some fearing inflation may
be on the horizon. (I am not one of
them!). Additionally gold is really
back in fashion. Really.
Demand for gold jewelry is picking up sharply. http://www.bayarea.com/mld/mercurynews/business/7281989.htm
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Financial
Institutions and Markets
(also Money and Banking)
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NYSE
announced its new governance plan. Chief
among the changes is a smaller and independent board.
While many were originally satisfied with the changes, CALPERS encouraged
the SEC to block the plan on grounds it does not go far enough.
For instance, the dual role of market and regulator will likely continue.
http://www.washingtonpost.com/wp-dyn/articles/A28428-2003Nov11.html
http://www.nytimes.com/2003/11/18/business/18nyse.htm
http://www.washingtonpost.com/wp-dyn/articles/A59334-2003Nov18.html
A GREAT
look at a specialist. Of course a specialist is a person who for instance on the
floor of the NYSE is responsible for the orderly flow of trading.
This story is awesome! Gives
you a look at how the specialist performs his/her duties.
http://seattletimes.nwsource.com/html/businesstechnology/2001792251_dunphy16.html
The CME
(Chicago Mercantile Exchange) has opted to lower its fees for European traders.
This price cut is in response to Eurex’s entrance in to America. Let
the competition begin!
http://biz.yahoo.com/rf/031110/financial_cme_europe_4.html
While an
older story, the big news in the banking world is still the BankAmerica
acquisition of Fleet. The move is
designed to make BankAmerica a truly national bank thereby increasing their
market power and allowing for better utilization of economies of scale.
At least one person knew about this prior to the announcement.
And like above (see investments), he decided to trade on the information.
So he proceeded to buy options.
Well the problem was he bought nearly half of the daily volume (from
various brokers). This triggered an
SEC investigation and well, let’s just say I bet he wishes he had not done it.
He was arrested and charged with insider trading.
http://www.boston.com/business/globe/articles/2003/10/29/insider_trading_by_ex_fleet_official_alleged/
Do you
still need more proof that banks are important for a nation’s economy?
And Japan is not enough? German
banks are now showing a reluctance to lend to smaller firms.
Result? A slower economy.
http://news.bbc.co.uk/1/hi/business/3262831.stm
Euro
forgeries increase.
http://news.bbc.co.uk/1/hi/business/3258035.stm
Are
pensions in trouble or not? The
recent stock market upswing has improved their economic position, but are they
out of the woods? Most probably are,
but there are some who are still underfunded.
http://news.bbc.co.uk/1/hi/business/3276567.stm
http://news.bbc.co.uk/1/hi/business/3133992.stm
A pension
story with a happy ending
http://news.bbc.co.uk/1/hi/business/3258521.stm
Across the
board insurance costs are rising. Not
only medical, but property as well. The
reasons are varied: more expensive medical treatments, terrorism, law suits and
major claims etc, but one thing is certain, many firms are balking at offering
the same insurance contracts as they have in the past.
http://money.cnn.com/2002/11/01/pf/insurance/q_insurecost/
Need more
fraud and corruption? It seems like
many forex brokers were not so concerned about their customers either.
In fact some were trading fictitious securities. The result?
The FBI arrested over 45 people.
http://www.washingtonpost.com/wp-dyn/articles/A63588-2003Nov19.html
http://www.nytimes.com/reuters/business/business-financial-forex-arrests.html
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The World
Trade Organization (WTO) correctly ruled against the US for their ill-conceived
steel tariffs. The ruling now allows
the EU to place punitive tariffs on US products if they so desire.
And of course, as we saw in the last newsletter, the tariffs probably
ended up costing the US jobs anyways. Lesson:
Tariffs are a bad idea!
http://news.bbc.co.uk/1/hi/business/3256197.stm
http://www.bayarea.com/mld/mercurynews/business/7233734.htm
But lest
you think we learned from out mistake, the US is now imposing quotas (limits) on
the amount of textiles allowed in from China.
Consequentially, China has broken off trade talks to increase imports of
US agricultural goods. Stupid,
Stupid, Stupid. (go ahead, ask me
what I really think ;) )
http://money.cnn.com/2003/11/19/news/international/trade_china.reut/
http://www.washingtonpost.com/wp-dyn/articles/A63611-2003Nov19.html
In part as
a result of a fear that the quotas and tariffs may cut international trade and
in part due to a seeming policy of desiring a weaker dollar to help exporters,
the US dollar fell to a record low against the Euro.
http://www.washingtonpost.com/wp-dyn/articles/A64062-2003Nov20.html
Oh and if
that is not enough, we are still publicly pushing for free trade throughout the
Western Hemisphere. This week in
Miami the debate as to whether there will be a free trade zone for the entire
western hemisphere continues. While
officially the US is for it, many, especially in agriculture, are not.
For example, beef and citrus producers are afraid that if the trade zone
is created, they will be unable to compete against Brazilian farmers with out
the tariffs and bans on fresh beef imports that currently exist.
The result? Too soon to tell
but both sides seem unwilling to budge on all things, so likely they will end up
moving towards free trade, but not the entire way.
http://www.chron.com/cs/CDA/ssistory.mpl/business/2223401
http://www.palmbeachpost.com/business/content/auto/epaper/editions/tuesday/business_f39b6afe66ee12c5006f.html
http://news.bbc.co.uk/1/hi/business/3279079.stm
Contradicting
most earlier studies, a new study by the a study from the Carnegie Endowment for
International Peace concludes that the benefits of NAFTA have been overstated.
MMM, interesting. I am not sure
whether I believe it, but definitely interesting. http://www.nytimes.com/2003/11/19/international/americas/19NAFT.html
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WOW!
That is all I can say. GDP
Growth, Productivity, and job growth all came in much better than expected.
In fact the GDP growth in particular was so high that some are even
questioning the measurement of the statistics. While it may not last at such
lofty heights, it was nice to see the economy rebound.
Not surprisingly Bush and others from the administration are taking some
credit for the numbers.
http://www.voanews.com/article.cfm?objectID=5FF501B5-DE5D-4924-B48A14DD1371E4F8
With much
disagreement over the validity of certain economic numbers, Slate suggests a new
measure: the number of new businesses incorporated in Delaware.
Interesting article!
http://slate.msn.com/id/2090984/
The
Japanese economy continues to show at least slight improvement, although the
recent slide in stock market has some worried again. One reason for the slow
progress is that when governments spend money to spur the economy, the spending
is often for wasteful (negative NPV) projects.
http://biz.yahoo.com/ap/031118/as_fin_eco_japan_economy_2.html
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While
credit cards are great, you do have to be aware of credit card fraud.
The BBC gives some pointers.
http://news.bbc.co.uk/1/hi/business/3256031.stm
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From Oil
to energy? A look into the future
maybe? Aberdeen is already preparing
i itself for life after oil.
http://news.bbc.co.uk/1/hi/business/3236703.stm
Oil and
petroleum prices have returned to near their year high.
This is in part due to the falling dollar, but also in part due to
continued set backs in Iraqi oil production.
http://www.msnbc.com/news/995275.asp
The Middle
East Times (Egypt) provides an interesting look at the economy of the region and
the status of oil from Iraq.
http://www.metimes.com/2K3/issue2003-46/methaus.htm
Saudi
Arabia announced further plans to expand its natural gas production.
Moreover the article comments on the impact that continued terror attacks
have had on the Iraqi oil production. In
fact, Iraq remains a net importer of oil.
http://www.metimes.com/2K3/issue2003-46/methaus.htm
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The Wall
Street Journal (Nov. 5) reported that The White House is planning on
reintroducing the tax-exempt “lifetime savings accounts” idea.
As described, the new accounts, which maybe not coincidentally will be an
election year proposal, will allow up to $7500 to be invested and money can
accumulate without taxes. The
investor would be able to withdraw the money for anything they desire and at any
time.
A second
planned White House proposal would be aimed at retirement accounts.
The new plan, would raise the yearly contribution limit to $7,500.
As part of the longer term plans, the current IRA and ROTH IRA would
likely be ended for their higher limited off-spring.
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Financial Service Industry
***********************************************************
The IPO
and merger markets appear to be coming back.
If this pattern continues, and there is some disagreement as to whether
it will, it is great news for investment bankers and investment banker wannabees.
http://slate.msn.com/id/2090588/
An
improving market for IPOs and more mergers have investment bankers hoping that
the worst is behind them. Even
better news? With business
improving, the WSJ reported that the financial job market is showing signs of
life and that year-end bonuses may be up 10 to 20%.
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At long
last Real Estate prices in the UK may be slowing their ascent but this has some
worried that the long run up may be a “bubble” and if it breaks, many
homeowners may end up with negative equity in their properties (that is they owe
more than they are worth).
http://news.bbc.co.uk/1/hi/business/3250991.stm
http://news.bbc.co.uk/1/hi/business/3263877.stm
Housing
starts in the US hit a 17 year high.
http://www.washingtonpost.com/wp-dyn/articles/A63559-2003Nov19.html
An article
in Washington Post by Michelle Singletary claims that home ownership is the key
to reducing wealth inequalities. Which
is a reason for many of the home-ownership plans.
http://www.washingtonpost.com/wp-dyn/articles/A34288-2003Nov12.html
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If
marketing can have 4 Ps, we can have 5Cs! The
Houston Chronicle has an interesting look at the what banks look at when making
loans to small businesses. The 5-Cs?
Character, Cash Flow, Collateral, Capitalization, and Conditions. http://www.chron.com/cs/CDA/ssistory.mpl/business/2224748
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Financial Engineering and Risk Management
***********************************************************
Financial
Engineering News does it again. Another
simply great article. This is an
interview with Aaron Brown. It
touches on too many topics to review, but I strongly urge you to read it, it
will be time very well spent!
http://www.fenews.com/fen35/one_on_one_interview/one_on_one_brown.html
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Stick to
your guns! Pressure (Ok Lobbying)
seems to be lessening the resolve of the FASB and others to require the
expensing of stock options.
http://www.washingtonpost.com/wp-dyn/articles/A33690-2003Nov12.html
KPMG has
been accused of marketing tax saving plan. Why
is this wrong? The law says that if
a plan is sold solely to avoid taxes, then the plan is in violation of the law.
http://www.forbes.com/markets/newswire/2003/11/18/rtr1152572.html
The
investigation of the accounting practices at Freddy Mac continues and now
threatens to draw investment bankers into the fray.
http://biz.yahoo.com/rb/031118/financial_freddie_2.html
Houston
Texans kicker Chris Brown is about to become a CPA.
(Not sure what “about to” means, but that is how Steve Tasker
reported it during the Bills-Texan game.
More next
time on accounting--- this was pretty skimpy this time.
Sorry. If you need more accounting news let me recommend Bob Jensen’s
newsletter and web site.
http://www.trinity.edu/rjensen/
http://www.trinity.edu/rjensen/bookurl.htm
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FinanceProfessor.com Lesson of the week
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With
several stories in recent weeks on Islamic Banking and Finance, I thought it
might be a good time to remind people of the differences between typical Western
Finance and Islamic Finance.
Basic differences? Islamic
finance does not allow for interest and all money must be invested in a socially
responsible manner in accordance with the teachings of the Quaran.
THANKS LUMA!
http://www.financeprofessor.com/islamicfinance/islamic%20finance.htm
Citigroup
announces plans to expand it Islamic Financing operations in Malaysia.
http://biz.thestar.com.my/news/story.asp?file=/2003/11/17/business/6706148&sec=business
In a
related topic, a study of Islamic banks in Malaysia finds that a majority of the
banks customers are not Muslims.
http://www.dailyexpress.com.my/news.cfm?NewsID=22998
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FinanceProfessor.com Site of the Week
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MBA Depot.
It is spectacular if you are getting an MBA or considering, merely great
if not. Has links to many very cool articles from all areas of business.
Well done!
http://www.MBAdepot.com
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Financial Trivia/History/Humor
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Nick
Leeson is back. Well sort of.
Celebpoker.com hired him as a front man.
Of course Leeson is most known for some big bets that went bad and but
Barings bank out of business. However,
it should be noted that his new employer has learned from the Barings debacle:
Leeson has a $500 maximum position limit.
http://news.bbc.co.uk/1/hi/business/3277591.stm
I am sure
you have all gotten the messages from some third world country where the author
of the email wants you to give him/her your bank account number.
Typically they need somewhere to put a giant stash of money.
Well someone took them up on the offer--sort of.
Warning it is long, but hilarious! Read
in order for most effect.
http://www.banterist.com/archivefiles/000024.html
http://www.banterist.com/archivefiles/000028.html
http://www.banterist.com/archivefiles/000037.html
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Of interest to teachers
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Great
opportunity to get free working papers: sign up for AFA’s free journal from
SSRN. All papers will be presented
at the AFA (American Finance Association)’s annual meeting in San Diego.
http://umgt.ssrn.com/subscribe/afa-2004-san-diego.html
Presentations
from this summer’s European FMA meetings are now online as is much more.
Check out the New FMA online journal.
http://www.fma.org/
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ok, I left
this section out last time and never heard the end of it, so.
This is a bit long, but I have been reading (or ristening) quite a bit
lately, so here goes.. (note to new readers: Risten is my word for listening and
read---as in I risten to Books on Tape.
I
absolutely love My Losing Season by Pat Conroy.
Great autobiographical account of novelist Pat Conroy’s 1966-1967
Basketball season as point guard for the Citadel.
One of the best book I have read this year! It boggles my mind that
people (in this case his dad and to lesser degree the coach) can be such
idiots.!
http://www.amazon.com/exec/obidos/ASIN/0684863650/finpapers/104-9378365-5272442
Sea
Biscuit. GREAT.
As with My Losing Season, one of top three books I have read this year.
(along with April 1865). While I am
not a horseracing fan, the story is so good and Sea Biscuit comes alive so much
that several times I have found myself wishing I could meet this long-dead
athlete. Need further proof it is a
good book? I am ristening to this
and I find myself wanting to stay in the car to hear it all.
http://www.amazon.com/exec/obidos/ASIN/0373169906/finpapers/002-5690491-9880850
Why We Run
by Bernd Heinrich. While not as good
as the two above, it too is very good. An
investigation into why we run. It
compares humans to other animals and bugs. While
it does not sound very interesting it is.
http://www.amazon.com/exec/obidos/ASIN/00060958707/finpapers/104-9378365-5272442
The
Millionaire NextDoor. Yes it has
great advice: most millionaires get that way by living below their means and
saving and investing when others are spending.
Yes, I wholeheartedly agree and it makes great advice.
However, as a book, I found it pretty boring.
Mainly common sense.
http://www.amazon.com/exec/obidos/ASIN/0671026682/finpapers/104-9378365-5272442
The
Inefficient Stock Market by Robert Haugen. Very
interesting and thought provoking even if I do not believe all of it.
http://www.amazon.com/exec/obidos/ASIN/0130323667/finpapers/104-9378365-5272442
Selling
the Invisible: a field guide to Modern Marketing by Harry Beckwith.
Picked it up at JFK airport. It
has turned out to be surprisingly good. It
makes several good points about the education system.
For instance, our examples are too product oriented.
While these examples worked when we were predominantly a manufacturing
based economy that is no longer the case.
http://www.amazon.com/exec/obidos/ASIN/0446520942/finpapers/104-9378365-5272442
Hey
Whipple Squeeze This, Luke . Yep
another marketing book. No I am not
making a career change, but when I told a marketing Professor here that I was
reading a marketing book he sid I had to try this one.
He was right, it is very entertaining and I have had to catch myself a
couple of tiems from learning something.
http://www.amazon.com/exec/obidos/ASIN/0471281395/finpapers/002-5690491-9880850
The Man
Who Walked through Time by Colin Fletcher. Makes
me want to go and hike part of the canyon.
http://www.amazon.com/exec/obidos/ASIN/0679723064/finpapers/104-9378365-5272442
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If a man
is 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---Plautus in the year 578.
Whether
you think you can do a thing or think you can't do a thing, you are
right---Henry Ford
Never
apologize for showing feeling. When you do so, you apologize for truth---
Benjamin Disaeli
Happiness
is a state of activity---Aristotle
Empty
pockets never held anyone back. Only empty heads and empty hearts can do
that---Norman Vincent Peale
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St Bonaventure in the news.
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Well we
were in the NY Times and USA Today for recovering from the basketball problems
of last year
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Thanks for
reading! I hope you liked it and
learned something (or even many things) from it!
Also thank
you to all of you who wrote in support of my tenure.
I am not sure when I will hear (before March), but will be sure to let
you know!
BTW today
(November is the great America SmokeOut in the US.
I would encourage all of you to give it a try!
If for no other reason I want you around to read my newsletter :)
http://health.yahoo.com/health/centers/smoke_free/2003.html
If you
have any ideas for the site or the newsletter please let me know.
Jim
Who is
ready to coach the Bills.
Where the
basketball season begins on Friday.
Where it
snowed earlier in the week but has since warmed up and rained.
Who hopes
Joe Paterno gets the team turned around before he leaves.
It would be a shame for him to have to think about a bad year for the
rest of his life.
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Oh and a
final favor…pass this on to someone you think would like it….a fellow
student, a past teacher, your current teacher, your parents, anyone who it might
help. Thanks!
Thanks for
forwarding this so much. That is the
only way I know this newsletter is growing so fast.
:-)
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copyright
2003 FinanceProfessor.com