arbitragr

More to fall. Not done yet. I wouldn't buy with leverage.

Shareholders have a right to vote at board level, especially with respect to the directors that sit on the boards. The directors in turn make decisions that determine the company's future. Executive director-Managers sit with boards to make operational decisions. This particularly applies to debt. Think about a mortgage on home .... When companies take on debt, they permit a charge to be granted and registered over the company's assets. If it is a 'charge' on property then it is called a mortgage. When a company goes into default or breaches covenants set by the mortgagor or lender, then these charges activate and crystallize. Therein the lender's rights take precedence over common shareholders. The same sorts of principles apply to preferreds. Doesn't take a PhD to explain all this. Nor does it take 9 pages in a journal by an academic either. I wouldn't waste too much time on it. Superficially speaking, looks like a silly research paper if you ask me that just takes a little common sense to figure out. If shareholders don't want to be subordinated then they shouldn't permit management to take on debt. And if they don't like the managers in place then they should vote at annual meetings to determine who sits on the board. Shareholders are legal owners of a business, however you are powerless if you're a minority shareholder and the majority shareholders decide against you. Just don't vote in directors and in turn managers who have opposing views to you if you feel that your rights are being subordinate. You think Buffett doesn't have any control over Berkshire? Or Mark Zuckerberg doesn't have any control at Facebook? Or Rupert Murdoch at News Corp?

I wonder if this scandal is a 'Black Swan' event. :D

Didn't WEB say something along the lines of his home was his 3rd best investment ever?

Yeah but OPEC thinks the price should be $100+.

Graham's ghost has come back to haunt us on the principles of capital allocation ...

They haven't actually won the deal yet. There's no feeding unless there's a catch.

Well the article forgot to mention brokerage costs or mgmt fee costs for stocks over the long term: so 4.5% should be about 3.5% to 4% for stocks and that means the long run return to stocks is about 2.5% or so. The key difference is leverage I guess. The bank isn't going to lend you 300K for stocks. But on property, yes they will. Therefore the quantum of returns from real estate is larger than that of stocks if you're good enough to at least get 0-5%. e.g. 5% return in stocks over 30 years on 100K = 332K vs. 5% return on property over 30 years at 100K + leverage of 200K = 997K Also, different govts. have different types of govt. incentives. e.g. some govts reduce property taxes altogether, whilst others give you co-contribution towards your first home e.g. the govt. will give you 10-20K for first home owners. etc etc Mobility is good or bad depending on who you are. If you're a govt. that is trying to promote skilled immigration, then getting skilled immigrants to buy a house is beneficial for the economy b/c it establishes 'roots'. Ask the Singporean govt. whether or not home ownership is a social objective or not. And they will probably reply with yes. Note; note how the article says; In the end, what makes money is human ingenuity -- building new things and creating value. Things like rocks, or a constructed house that's wasting away every year in need of repairs is not where the money is. You could also say that about the investment management industry ... things like trading and buying/selling pieces of paper, is not where the money is.

Can use binomial. Just be conservative with vol ... if there's more than what you projected then that's all upside.

Sounds maybe a bit too theoretical but should try Hull's option & derivatives book. Also Taleb's books, since he was an options trader. ;)

I passed level 1 a couple of years ago. Since then I haven't really progressed much, and haven't felt the need to do the whole thing. in the meantime, my pay has gone up. ;D Some jobs require you to get the CFA as a requirement. Mine didn't. I've got a finance background anyways, so haven't felt the need to get it as a way to enter the industry. I feel as though it doesn't really help you make money, but it might help you in improving your CV. As I've progressed further and further in my career, I realize how ineffectual (or some might harshly label it 'useless') a CFA is. I've hardly used any of the theory in the CFA Level 1 curriculum. Even ethics, which they are serious about, it's not black or white in the real world and there are so many cultural factors when dealing with people that you couldn't possibly apply the CFA standards to the real world. Much the same applies to the finance theory as well. A big reason why I'm against doing the whole program if it takes too much time is the CFA doesn't really teach you about 'making money' or 'being a capitalist' or managing RISK. It doesn't contribute to that 'sixth sense' about how to allocate, protect and grow capital. There are countless MBAs and CFAs who loss big money during the GFC. And might I add that a lot of MBA programs and the CFA curriculum will go over theories and subjects that aren't really helpful to financial success in the real world. For example, in say statistics with normal distribution curves, when in fact it's the outliers that really define an investment career (e.g. 9/11 or buying during the GFC). I can only say that it may help you in keeping updated with the industry as you're a member. However, if you're a busy professional like myself, who is working at least 9-10 hours a day or more, where do you have time to get involved with all the CFA events??? Also, I think a CFA is more suited to a 'sales' type of role more, b/c you can sell your credentials to clients, this means if you're working on the sell side of the industry, or your a big mutual fund who is selling hard to clients via marketing. But in terms of a private hedge fund or something akin to a Paulson fund or a Buffett 1950s style fund, then it's really meaningless not unless it can help you grow capital. In these situations more important will be your personal relationships and networks. The majority of people in sales types of roles are usually the ones in the industry who can't make money so they're sitting behind a brand or credentials to gather assets. Anyways I passed level 1 by just doing the sample exams/tests. Hope that helps. Didn't really read the textbooks (I don't have time!!).

Thankyou.

Hi all, I'm looking for a good Snowball (Alice Schroeder) summary. Something along the lines of how we have summaries from the annual meetings. My computer crashed and I lost my old notes. Anyone with anything or any links to summaries/notes, with any help it would be greatly appreciated. Thanks. Happy Easter. :)

WFC just dropped 4.3% today when everything else is up 1-3% ... no cash for me. ;D

Was wondering, in light of the upcoming annual meeting, what people who are in the know, know about Omaha and its culture in general. I've only been to the annual meeting once, but was talking to a business associate the other day about the annual meeting and what Omaha is like. He's a local or knows the area well, and said that there are serious crime and violence problems in Omaha once in while. check out this wild goose chase by the Omaha Police on a guy with a shot gun in an SUV. at 3:42 they go past the the Qwest Center and through to Carter Lake. Couldn't believe my eyes ... and was thinking ... man that's where I went past a couple of years ago getting to my hotel on the way to the Qwest. just an amusing thought. :)

I think he still holds a grudge from things of the past. i.e. Salomon Brothers. He's got friends or was involved in some way or another with the fallout of that event. Probably has an axe to grind and it's all coming out now, and he wants it to be heard.

People were saying the same things about MySpace a couple of years ago. Last time I looked Rupert was trying to sell it.

Never used Facebook before. Don't understand why people would. Wait for it to go public, and short. Fad for young people, who don't realize their privacy is being compromised.

What security and what rates? Which sector in Europe? What type of distress? Secured level? mezz? or exotic stuff like cmbs

John Hull

There's no bubble in Australia. Use the word "Bubble" with caution.

Like a shark, I smell blood. :)

I take it you don't mind the Fed's QE2 program then? Given population is gonna solve all our problems. Nevertheless, you don't see any westerners in Japan, despite the fact that they are one of the leading economies of the world. US isn't closed off a society as Japan is, and immigration makes a difference definitely. e.g Singapore

Ah yes, there is hope for you. Get your MBA or do something in business/finance and do well. Then try and land a job as a renewable energy or ESG analyst. That's probably your best bet. Otherwise, it's hard to see the connection, and people would question your motivation levels if after you've done an undergrad in environmental science, you went and did a masters in the same field. Usually people do masters levels to either further extend their competence in an existing passion, or are looking for a career change. Maybe drop out of the masters in environment and just do business school or the like ASAP. Note however, that given the current climate, investment and financial careers are sort of looked down upon, because people see it as a waste of space in the economy as financial people are just moving money around and creating risk/volatility. Society is questioning the value of Wall St careers and is wary of the fact that bright people like yourself, who would otherwise go onto more productive endeavors in the fields of engineering and science, are being persuaded to enter the financial services arena and be of less value to society. Read this recent article titled "What Good is Wall St" in the New Yorker: http://www.newyorker.com/reporting/2010/11/29/101129fa_fact_cassidy Food for thought. Hope this helps.

Interesting WSJ article about the high levels of correlation in the market place these days due to a larger number of participants taking on macro strategies and HFT. Have always suspected this was the case i.e. "worry top down, invest bottom up", but couldn't put words to it, or couldn't find the time to do the research. http://finance.yahoo.com/banking-budgeting/article/110827/macro-forces-in-market-confound-stock-pickers;_ylt=As5jlqKoH2WTPJBs.dMfRsC7YWsA;_ylu=X3oDMTE1Y3JmcTc5BHBvcwMyBHNlYwN0b3BTdG9yaWVzBHNsawN3aHltYWNyb2ZvcmM-?sec=topStories&pos=main&asset=&ccode= If you're an orthodox Buffett/Graham then you may be agnostic to this, however I have certainly noticed that the market place doesn't provide as much deviation for smaller stocks these days, or stocks that may seem 'out of sample'. Interesting Einhorn quote: "For years I had believed that I didn't need to take a view on the market or the economy because I considered myself a 'bottom-up investor,'" said hedge-fund manager David Einhorn of Greenlight Capital last year. "The lesson that I have learned is that it isn't reasonable to be agnostic about the big picture." I gather that this is a function of the composition of participants in the market place: Hedge funds are moving in the same direction. Last year, 184 new macro hedge funds were launched, compared with 203 funds started by traditional stock investors. By contrast, in 2005 there were 894 new stock funds and 244 new macro funds. HFT Funds are also larger participants in the market place. http://online.wsj.com/article/SB10001424052748703793804575511990102886132.html I don't ignore the macro these days, but I don't make predictions based on them either. Just be aware how the markets change through the years when you're investing, that's all.