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Showing posts from February, 2012

Apple for You?

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Apple is set to eclipse Microsoft and Cisco after hitting a market capitalization of over 500 billion yesterday. While Microsoft reached this number back in 1999, they have been unable to sustain it and now trades at a market cap of 266 billion. At its current market valuation, Apple is now worth more than the country of Poland or, Microsoft and Google combined! Not surprisingly, the market is going crazy for Apple and stock prices are rising.
Unlike Microsoft, I believe Apple will be able to sustain its valuation to reach even greater heights. The electronic juggernaut still has much room for growth through its core businesses - Macs, iPhone and the iPad. Their product lines have been doing extremely well even in the face of aggressive competition, and has been gaining market share rapidly. Not to forget, Apple is intending to launching Apple TV late this year and with it comes even more opportunities. Steve Jobs may no longer be at the helm but the demand for Apple products still re…

EVENT RECAP: Goldman Sachs - Market Risk Management; Cover Letter & Resume Workshop

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This week the Finance Society put on two events.
Last Tuesday, we welcomed professionals from the Market Risk Division in Goldman Sachs for an evening event. It was great to hear more about the elusive terms Value-At-Risk and how the new Basel Regulations impacts the various financial institutions on the street. Questions flew fast and furious about the industry and a career in risk management. We were especially honored by the presence of Wu Siwen, our former president who recently graduated in 2011.
On Thursday afternoon, members gathered for a resume workshop run by the board members. Meha and Susan went through the fundamentals of both resume and cover letter writing, stating things to look out for. After which, the E-Board gathered and helped the underclassmen with their resumes, giving specific pointers on how to improve them.

The Next "Warren"?

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The shareholders of Berkshire Hathaway Inc. might want to reevaluate the stocks in their hand after last Saturday's annual letter. The 81-year-old CEO announced not only his achievements and mistakes during last fiscal year, but also that an unnamed successor of the company has been selected. Although he promised his health condition, people still kept raising question about the identity of the successor and if the company would prosper on the next generation as amazingly as it did in Mr. Buffett's hand. Belief used to be that Warren Buffett's son, Howard, is going to take his position yet the new declaration made this issue more mysterious.
From personal perspective, I am curious about the future life of Berkshire Hathaway as well. As all known, Warren Buffett is always a firm champion of value investment theory created by his professor, Benjamin Graham. He chose companies with potentially large profit margin and undervalued prices to invest such as Washington Post and Coc…

How to Stabilize High Frequency Trading?

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Traders are already feeling the heat from the possible repercussions of the Volckers Rule. While the Volcker Rule struggles to stay alive amidst wave after wave of assaults from bank lobbyists, there is a new threat on the horizon for traders. SEC Chairman Mary Schapiro is moving to impose fees on every single cancellation executed on a buy or sell order. High-frequency trading has been under fire for quite some time and the May 6, 2010 “flash crash” did nothing to assuage the criticisms. On May 6, 2010 the Dow Jones fell almost 600 points in 5 minutes (almost nine percent) only to recover minutes later. This brief crash prompted the SEC to implement circuit breakers and ban stub quotes. For Schapiro, however, that is not enough, she wants to attack high-frequency trading at its core.
By levying fees on cancellation orders—which make up approximately 95- 98% of all trade orders—Schapiro hopes to induce trade that does depends on “the fundamentals of the company that’s being traded” rather …

Gilded Silver

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This past Saturday, I had the pleasure of watching my beloved Liverpool F.C take home the Carling Cup, their first trophy in seven years.Yet the manner in which they won, relying on a missed penalty kick by the opposing second-league team Cardiff seemed too close for comfort. It was the first trophy won by the team following its sale to John Henry and his Fenway Sports Group. And with this new owner, came a new policy of spending, akin to the “sabermetrics” strategy outlined in Moneyball. In the past two transfer seasons, Liverpool has spent over £150 million on new players. Yet they currently place seventh in the Premier League, and barely won the Carling Cup. This is the inherent flaw in association football. As a public, we criticize our respective governments for deficit spending and rising national debts; yet the moment our teams begin cutting costs to even out the balance sheet, we riot. Even for the likes of Manchester United, who have seen tremendous success for the past two d…

FS UPCOMING EVENT

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Inner Circle: Sports Investment Banking
Date: Thursday, March 1st, 2012
Time: 12:30 pm - 1:45 pm
Location: Tisch 200
Are you interested in sports, entertainment, and finance? Come listen to David Becker, Associate at Inner Circle Sports, a leading global investment and advisory merchant bank focused on the sports, media and entertainment industries. David Becker is responsible for sourcing and executing M&A advisory, capital raising, valuation, consulting, restructuring and investing transactions in the global professional sports industry. Co-sponsored with STEBA.

LTRO Part Deux

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On February 29th the European Central Bank will release the results of its second Long Term Refinancing Operation (LTRO) which provides low-interest loans to Europeans banks. Since the announcement of the first LTRO in early December, the S&P 500 has rallied over 8%. Analysts estimate that $668 billion will be dished out, higher than the previous round. The impact on the market likely will be negligible as this announcement has been planned while the first announcement was a pleasant surprise. The ECB has indicated that this likely will be the final round of easing to avoid making regional banks dependent on cheap capital. If this is the case, then the market might be headed for a drop from their current highs as another catalyst will be needed to push markets higher. After previous central bank interventions between QE I and QE II and between the end of QE II and the start of first LTRO, the S&P has lost about 20% which is a trend that does not bode well for the market. ~ Rav…

Do They Appreciate What You Do?

This is my 125th blog entry in the last 25 months. When I started this site, I promised myself that I’d try to do at least 15 entries. My guess is that I would have quit long ago were it not for the many kind emails that I have received. Thanks – I love hearing from people who tell me about their own love of teaching and the challenges they face each day.

Today’s entry is broken into several individual parts.

PART ONE – I travel around the country 3-5 times per year to give teaching programs and presentations. Invariably, at each stop, some teacher will ask in complete exasperation “why should I even try to do better? The students do not appreciate what I do. They certainly don’t appreciate when I try to make them work and think.”

It is very tough to spend the time necessary to move toward excellence if you believe that no one appreciates you. It is hard to put out so much energy if no one cares. I often think deans and department chairs ought to be required to pat as man…

Too Much Lending Eh?

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Crunch Time for Greece

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Greece, which is scheduled to pay about 14.5 billion euros, could potentially default on its bonds as early as March 20th if its neighboring European nations and the Central Bank do not act quickly. The Hellenic Republic, if an agreement is reached, would most likely write down the value of private sector bonds up to seventy percent. Although the Greek government passed more pay cuts and reduced pensions, it will not make up for the hundreds of billions in debt due to years of over-consumption. Ultimately, the nation cannot sustain itself solely on bailout funds and bonds; it needs to cut more funds regardless of public outcry to balance out years of spending beyond their means. While the European Central Bank, which owns about thirty to forty-five billion euros worth of Greek debt, will most likely pass the next bailout fund, austerity will be the deciding factor of its fate.
-Jesse Chai

FS UPCOMING EVENTS

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Goldman Sachs Market Risk Management:
Regulatory Capital and Value-at-Risk

Date: Tuesday, February 21st, 2012
Time: 6:40 pm - 7:45 pm
Location: KMEC 5-80