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Semester Wrap Up: Financial Jeopardy Date: Thursday, May 3rd, 2012 Time: 12:30 pm - 1:45 pm Location: Tisch 200 Join the Finance Society as we wrap up another great semester with a friendly (but competitive) game of Financial Jeopardy. Bring some friends and form a team to compete with the E-board’s winning team from last year. Winners get a prize!

Oh Starbucks. There's always those people who make fun of Starbucks lovers saying, "I'd never pay 5 bucks for a cup of coffee!" and, "What does a 'tall' even mean?" But despite these critics of one of the largest coffee brand in the world, there exists millions of people willing to dish out those 5 dollars because it is the little things in life that one truly appreciates. Starbucks has created its culture to do just that and please tired customers in the morning with sweet and energetic drinks. Furthermore, many of the large corporations we hear about all the time, Apple and Starbucks being two of them, have begun realizing potential in Chinese markets. With recent expansion into China, Starbucks has been able to tap into a new market of millions of people. It plans on opening 400 new stores in the China/Asia Pacific region, which doesn't include what is already existing there. Even if, for example, 10% of China is willing to pay for a Starbucks...

Spain’s unemployment rate has reached an 18-year high of 24.4% as announced this Friday. This is up from the 22.9% reported last quarter and close to the highest level on record. The distribution of this rate is even more appalling, as more than half of those under 25 years old are unemployed. As a reflection of these dim economic times across the pond, Spain’s credit rating was downgraded to BBB+ on Thursday. What is ludicrous about this, however, is the fact that Spain’s debt is still considered investment grade despite all the structural issues it faces and an unemployment rate higher than the US unemployment rate going into the Great Depression, which maxed out at 21-22%. This brings into question, once again, the accuracy and credibility of ratings agencies. In 2009 Moody’s issued a report stating that “Investor fears over Greek government liquidity was misplaced” six months before the country started seeking a bailout. Even more absurd were the ratings agencies AAA ratings of the...

            Goldman Sachs chairman and chief executive, Lloyd Blankfein has insisted that he has no plans to relinquish any of his current positions.  Appearing for the first time on a television interview in two years, he denied any speculation on abdication. Goldman has faced many recent charges for fraud, insider trading, and other scandals in the aftermath of the financial crisis. On February 24, Goldman Sachs was notified that the charges could include its involvement in the disclosures made as an underwriter of about $1.3 billion of sup-prime mortgages.              This would be the second time that the investment bank faces the SEC for fraud charges.  Previously in 2010, the Securities and Exchange Commission filed a lawsuit against Goldman for securities fraud during the financial crisis.  The firm was accused of hiring John Paulson, a former executive member and hedge ...

So we all know about the Big Mac Index, which is based on the theory of purchasing-power parity and states that exchange rates should adjust until equilibrium—the market exchange rates that would equalize the price of an American Big Mac with an English Big Mac and a Chinese Big Mac. Recently, another bright economist has come up with an intelligent way of comparing real wages across the world using McDonald’s Big Mac as well.  Orley C. Ashenfelter of Princeton University calculates real wages as how much of a Big Mac could an hour of work can buy.  He then flips the ratio over and compares the number of minutes a McDonald’s employee must work in order to earn enough to buy a Big Mac across countries.  In his paper published by the National Bureau of Economic Research, Ashenfelter concludes that after his own preliminary analysis of the decade long project, “Wage rates of workers using the same skills and doing the same jobs differ by as much as 10 to 1, and that these g...

How correlated are humor and success? It’s hard to imagine that anyone believes that exhibiting humorous and genial qualities act disadvantageously. In fact, in the business field, being humorous works to one’s advantage. It’s more enjoyable to talk to someone who can slip in a few jokes and be funny than someone who is always uptight and formal. Being respectful and serious can be important too, but it can sometimes come off as boring. Where conversing and networking is important, being funny can make the conversation lighter and more enjoyable, thus opening opportunities that may have never been created otherwise. Formal studies show that being funny can make others perceive you as more enjoyable and thus approachable. Michelle Gielan, expert in positive psychology and cofounder of the Institute for Applied Positive Research, explains that more dopamine is released when something makes us smile to reinforce creativity, productivity, and engagement. In an analysis of 225 a...

Earlier today, Google launched the long anticipated cloud storage platform that awards its users 5 gigabytes of free online data storage. Users can upload files in any format whenever, wherever they want. The unique thing about GDrive as an online storage service is that it’s part of the Google App Suite. The network effect of all Google users will essentially give GDrive leverage in not only getting the loyal Google users but also new users who might just want to try out this new service for its being part of Google. The way GDrive works is that it will operate as if it was a local file system. When users click the “save file” dialog box on Chrome OS, the system automatically leads the file to Google Drive. This feature is quite similar to the already existing Google Doc function (as a matter of fact it looks the same), but in switching to a new storage service, Google is aiming to better provide the transfer of files between all sorts of online applications. --Rong...

                As NYU students, we all know how painful our tuition is. Some of us have parents who have sold their first born (if not, an arm and a leg) for our education.  Others will simply have tens of thousands of dollars of student loans post-graduation. What’s worse is that our situation is not improving, as the US government plans on DOUBLING student loan interest rates from 3.4% to 6.8% on July 1 st , 2012. Statistics show that student loans are the second largest source of consumer debt, more than credit card debt and only behind home mortgages. The average student debt is over $25,000 and some even have over $100,000. The picture seems bleak, to say the least. But fear not, Sternies, because we are fortunate to have a president that is extremely pro-education, as he reminded us with his 2011 State of the Union address. He is trying to convince congress to grant him a one-year reprieve, most likely to discuss the matter furthe...

There are many times in teaching that a teacher needs to explain things to students. In many college classes, they are young people with limited experience. Occasionally, they simply don’t understand, especially when things are not as they have experienced them in the past. Part of my job as a teacher is to explain things beyond my subject matter. There are stories that can sometimes help them come to a better understanding. I often have students come to my office after I return a test. They are upset that they didn’t make the grade they had wanted or expected. It is common for me to hear something like “I cannot tell you how hard I studied. In fact, I studied with Mr. A and Ms. B and I knew just as much as they did. We worked every question from class 8 times apiece. Yet, they made a 95 and I made an 83. What am I supposed to do?” I guess this is on my mind because one of my students told me this afternoon that the 83 he got on a recent test was the first grade he had received in coll...

Last Thursday, we invited Jon Teo from General Catalyst Partners to provide a general overview of the Venture Capital industry, speak about his past investments and experiences, and provide insight about how to enter to the industry. The event was a pure Q&A sessions, and Jon fielded all questions extremely well. One of the more interesting points of discussion was the ideal skillset for entering the VC industry and whether our traditional business school education places us at a substantial disadvantage. There are many who claim that engineers (such as Jon) are much better suited to work in Venture Capital due to the fact the industry gravitates toward companies who innovate primarily on a technological level; therefore , individuals with in depth knowledge of programming and web-based products are better suited to pass judgement on such firms. In addition, valuation and corporate finance skills found in banking, P/E, and the hedge fund industries isn't to core competency of a...

The French Presidential Election will proceed to a second round after both Francois Hollande and Nicolas Sarkozy failed to win 50 percent of the vote on Sunday. Hollande took 28.6 percent of the vote, while Sarkozy achieved 27.1 percent. However the day belonged to anti-immigrant, anti-euro advocate Marine Le Pen of the National Front party, who achieved a strong 18.1 percent of the vote. Le Pen’s performance highlights the French people’s frustration with the political elite and economic problems in the world’s fifth largest economy and Eurozone’s second largest economy. The unemployment rate, at nearly 10 percent, is a 12-year high and the country lost its AAA credit rating for the first time in January. After the vote the euro declined to $1.32 against the dollar while 10-year bond yields rose 5 basis points over fears that France could undergo further radicalization. Sarkozy, the first incumbent not to win in the first round since 1958 must gain the support of the m...

Professor Series: Ed Melnick - Statistics in Finance Date: Thursday, April 26th, 2012 Time: 12:30 pm - 1:45 pm Location: Tisch 200 Come and check out Finance Society's last Professor Series event of the Year as Professor Ed Melnick discusses the growing role of Statistics in Finance. Melnick is a Professor of Statistics and the former Chair of the Department of Statistics at Stern. He will be discussing the vital role probability plays within the world of Finance and some of his research. Professor Melnick is a great lecturer and this is definitely an event you don't want to miss! Wall Street Tour Date: Friday, April 27th, 2012 Time: 1:30 pm Location: Meet at Stern Take a tour of the Wall Street area with Finance Society on Friday, April 27th. We'll be visiting spots such as Trinity Church, the grave of Alexander Hamilton, the NYSE, the Wall Street Bull, the Federal Reserve and various other financial centers of downtown NY. Limited spots are available for ...

Rich Ross, the Chairman of the film unit at Wald Disney Co. resigned after the company’s devastating $200 million loss on John Carter , a figure rumored to be the biggest ever for a single movie. And because of Ross’s resignation, Disney CEO Robert Iger’s franchise-focused film release strategy is placed in even further doubt. This year, Disney has cut its number of film releases in half to only 12 because of this strategy of releasing fewer, larger-budget, and what they speculate to be extremely popular, films that have the potential to become long-lived, consumer franchises. Essentially, Disney is betting big on every single movie they come up with. The strategy seemed promising at first, as most of these big-budget movies are built around marketable characters from Pixar and Marvel, except that it failed spectacularly with John Carter, which led to a quarterly operating loss of $120 million for the studio, the first since Ross succeeded Dick Cook as Chairman back in October 2...

An intelligent internet fraud was uncovered by SEC on Friday. A pair of British brothers marketed Marl, a fictitious “stock-picking robot,” and earned $1.2 million from 75,000 investors buying newsletters and home “robot software” used to access Marl’s stock picks. Since “Marl” did not really perform analyses, the Hunters were earning at least $1.87 million from stock promoters. What makes this incident more interesting is that the brothers are now 21 years old only, and they started the alleged scheme in 2007, which means they were just 16 years old. The brothers made creative claims on their websites. According to the complaints received by SEC, the website pronounced that Marl could pick out distinct trading patters “in split second timing” and could process 1,986,832 mathematical calculations per second. Therefore, trading according Marl’s picks could earn investors 34% a week. In fact, Marl’s picks did skyrocket in price once the newsletters were out. Since Marl pi...

General Catalyst: Introduction to Venture Capital Date: Thursday, April 19th, 2012 Time: 12:30 pm - 1:45 pm Location: Tisch 200 Join the Finance Society this week as we welcome Managing Director Jonathan Teo from General Catalyst Partners. General Catalyst is a private equity/venture capital firm based in Cambridge, MA. They specialize in venture capital and growth equity investments in Clean Energy, Consumer & New Media/Internet, and Software/System Services. Jonathan Teo, head of their New York office, will come in to introduce what venture capital is, speak about the work he does, and discuss some of General Catalyst's investment strategies. Read more about the firm at www.generalcatalyst.com , and be sure to join us for this exciting event! Bloomberg Assessment Test Date: Friday, April 20th, 2012 Time: 12:00 pm - 3:00 pm Location: Tisch 200 Join Finance Society and Bloomberg Institute this Friday and take the Bloomberg Assessment Test (BAT). The BAT is a st...

Four days ago, the New Orleans Hornets were bought by Tom Benson, the owner of the NFL New Orleans Saints, for a deal valued at a reported $338 million. The troubled basketball team has been in administration by the NBA for over a year now due to an unsustainable business model, and so this new deal seems to be bringing some new life back into a team that saw its star player, Chris Paul, leave for the L.A Clippers earlier this season. The problem now becomes what Benson can due as owner to leverage his team back into playoff contention like last year, when the Hornets almost bested the Lakers. The financials do not bode well for Benson. Benson paid a 19% premium for a team that has run three years of consecutive losses. In addition, his current fortune, estimated at about $1.1 billion according to USA Today puts his investment into the Hornets at about 25% of net worth; even if he was able to finance a large portion of the deal with debt, a question remains whether Benson can shore u...

This past Thursday we invited Steven Jon Kaplan, author of the newsletter truecontrarian.com, a popular investment strategy newsletter with over 600 subscribers (some of them actually came to the event!). Mr. Kaplan focused his discussion on the history and progression of technical analysis, and why he believes technical analysis is obsolete in todays financial markets. After his presentation, Finance Society members had the opportunity to engage in discussion with not just Mr. Kaplan but his subscribers as well. We heard some great discussion about investment strategies, Apple and Facebook, and the recent economic crises. Thanks to all those who attended the event and we hope to see you at our event with General Catalyst Partners this Thursday.

This blog went over 50,000 views a few days ago. Obviously, no one would have ever heard of this blog over the past 27 months if it weren’t for people like you who have spread the word. First, I want to thank you from the bottom of my heart. I cannot tell you how very much I appreciate your helping out by telling other people about my writings. Second, I’d like to ask you for a very personal favor. The second edition of my Financial Accounting textbook that I wrote with C. J. Skender (of UNC) came out today. (Today!!!!) I feel like I just experienced the birth of another child. I thought the first edition was good but I honestly think the second edition is great. It approaches the introduction of financial accounting differently because it is written in a Socratic Method style. It is the book that I have always wanted to write and I am thrilled with it. It covers what I think college students should learn in an introductory course. And, although I am obviously bia...

Last Wednesday, we were fortunate enough to welcome JC Chandor, the writer and director of the Academy Award nominated film "Margin Call" for a Q&A session about his creative process, inspirations, and unique perspective on the financial services industry. Mr Chandor provided a personal background, but focused the majority of the discussion on his perceived transformation of the industry away from client-firm relationships towards short-term profits. Other topics include parallels of film details to real world events and people, growing up in New York, and his next film starring Robert Redford. Overall, it was a great event and a interesting alternative view on the industry.

Last week, a fellow E-Committee member, Mehyar Afkari, wrote a poignant piece on the over $2 billion dollar deal by Guggenheim Baseball Management to purchase the L.A Dodgers. The main question Mehyar brought up was just how this mammoth deal that makes the Dodgers the most valuable franchise in the world would be financed? Earlier in the semester, Finance Society had the pleasure of bringing in David Becker of Inner Circle Sports to discuss this world of sports investing. Becker used the Dodgers as his primary example in explaining how teams are purchased or sold. Now I do not pretend to have a technical knowledge of investment banking, however, one concept seemed simple: when a person or entity purchases a new sports team, they pile on the maximum debt a team's balance sheet can handle and then pay the difference amongst a group of investors. So with a $2 billion purchase price that analysts believe is $800 million too much, the amount of debt taken on must be staggering. So wh...

By Matthew Giacobbe While the buzz coming out of the social media sector this week is Facebook’s acquisition of Instagram, investors should keep an eye on the recent news out of Travelzoo (TZOO). Travelzoo, which is the so-called Groupon (GRPN) of travel, has announced that it is putting itself up for sale this week. Travelzoo offers its users exclusive deals to destinations around the world. However, Travelzoo is more sophisticated than Groupon’s daily burger deals; it offers deals to stay at destinations like the world-renowned Ritz-Carlton hotels. What has sparked a flurry of interest around this company is that Amazon (AMZN) and Google (GOOG) have been rumored to be actively pursuing acquisitions to strengthen their own daily deal businesses. Travelzoo is especially appealing to Google, which recently acquired the restaurant review company, Zagat. Combining Zagat’s ability to recommend high-quality restaurants and Travelzoo’s ability to provide luxury deals related ...

Takeda Pharmaceutical announced its decision to purchase the Philadelphia-based URL Pharma Inc. for $800 million this past Wednesday. This is a deal that follows Asahi Kasei Corp's $2.2 billion acquisition of the Massachusetts-based Zoll Medical Corp that took place last month. Japan is seeing a trend in expanding the horizons of its health care sector. The high price of yen, low cost of drugs, and losses of patents in the United States are driving the country to look overseas, the Wall Street Journal says. It's interesting to see that Japan, a country known for its global detachment that stems from a historical background of geographic seclusion, (most Japanese can speak only Japanese, refrain from studying overseas, and are highly traditional in their beliefs) is making an attempt to extend its presence overseas. The recent deals raise attention to future acquisitions and large-scale involvement of Japanese companies. It will be intriguing to follow Japan, already one of the ...