There were two pieces of interest in the New York Times: The first describes how the more attractive compensation arrangements offered by Private Equity firms is allowing them to attract very good CEO-level candidates, and the second highlights the growing prominence of activist investors.I'd post more, but I'm trying to get stuff done before the semester starts.
Here's another neat use of prediction markets -- Intrade (the non-sports betting spinoff of TradeSports) now has a recession contract. It pays off if there's a U.S. recession in 2007, and is currently predicting a 30-35% probability of it happening.
This week's Carnival of the Capitalists is up at the Peersight blog. My pick of the week:Investing While Incompetent - And Blissfully Unaware
Finally, Steven Levitt (and others) explore what factors predict Ph.D. completion and long-term success in the field of economics.
Tuesday Link Dump
Here are a handful of links for your reading pleasure:
Sad News For Poor Grad Students The World Over
Momofuku Ando (the inventor of Ramen noodles) died yesterday of a heart attack.
TGIF Link Dump
It's the between-semester break, so Friday isn't such a big deal (unlike when I'm teaching). However, it does signal the end of the school week. So tomorrow is family day.
Lately I've been going to the YMCA to swim and bike before breakfast (it's either that or look for a sponsor to pay for advertising space on my increasingly oversized backside). We have a family membership (it's only $16 more a month than an individual membership) and it's a mere two miles from the Unknown House. So tomorrow, we'll take Unknown Son and Unknown Daughter to go swimming at family swim time.
But before I get back to work, here are some links to keep y'all busy:
Lately I've been going to the YMCA to swim and bike before breakfast (it's either that or look for a sponsor to pay for advertising space on my increasingly oversized backside). We have a family membership (it's only $16 more a month than an individual membership) and it's a mere two miles from the Unknown House. So tomorrow, we'll take Unknown Son and Unknown Daughter to go swimming at family swim time.
But before I get back to work, here are some links to keep y'all busy:
MarketWatch.com has some good tips to help you avoid mortgage fraud.Enough bloggery - back to work.
Craig Newmark links to a site that gives Meanings and Origins of Phrases, Sayings and Idioms. Since I'm a self-confessed "word nerd" and fan of slang, I wasted about a half hour on it today already.
As usual, there are a number of good stories in the Wall Street Journal. In the first (from a couple of days back) we find that The SEC is trying to show that the benefits of their proposed rule requiring 75% independence for the directors of a mutual exceeds its costs. They can't seem to, and they're arguing that it's a limitation of the methodology. Here's a thought - maybe it's because the benefits don't exceed the costs (nope, nah, can't be).
In another WSJ story, Serena Ng reports how there are more and more companies issuing "junk" rated bonds. She argues that it's because of both the increases in LBOs and increases in investors' (like hedge funds) appetites for high-yield debt.
In the third and final WSJ piece, Shefali Anand is examining whether the increasingly large role played by hedge funds is causing distortions in the market for small-cap stocks.
Thursday Link Dump
Lots to do today, so without further ado, here are today's links:
Marketwatch interviews money manager Ted Aronson about his personal portfolio. He's got an expanded version of the "three fund portfolio" I've mentioned earlier, but it's still all index funds.Enjoy.
Value Blog Review lists some useful blogs for new investors and/or traders.
Michael Covel (Author of Trend Following) has a link to a free PDF of Jesse Livermore's bio Reminiscences of a Stock Operator. It's a great (albeit long) read.
Joe Carter (at Evangelical Outpost) has posted the latest edition of his Yak Saving Razor series of helpful hints and, software, and tools.
Richard Shaw provides some statistics on correlations between asset classes, sectors, and country indexes. Some of the graphs he shhows will make it to next semester's investments class.
Wednesday Link Dump - The Wall Street Journal Edition
One of the things I like about the winter semester break is that I have a little more time to keep up on what's happening in the "outside" world.
I'm still trying to get used to the smaller size of the Wall Street Journal, but at least the quality of the stories in it haven't changed. In fact, since I've got a little more time to read it, I've found a lot more good stories in the last few days than usual. So, just call this the "Wall Street Journal" edition of the Link Dump. Note: you need a subscription to read these online, but if you don't have one, you can still buy the paper:
I'm still trying to get used to the smaller size of the Wall Street Journal, but at least the quality of the stories in it haven't changed. In fact, since I've got a little more time to read it, I've found a lot more good stories in the last few days than usual. So, just call this the "Wall Street Journal" edition of the Link Dump. Note: you need a subscription to read these online, but if you don't have one, you can still buy the paper:
First off, there were a number of good articles on the Private Equity world. In today's paper, the article Inside the minds of Kravis & Roberts is worth reading if for no other reason than because Kravis and Roberts were two of the three principals of KKR, which started the whole PE thing off, and still has the record for the largest PE deal ever.That's enough for now - time to do some research.
A related piece (Caveat Investor: IPOs Of Hedge, Equity Funds) discusses how PE & hedge funds firms are starting to issue stock to gain access to "permanent capital".
Finally, in the third piece (from yesterday's Journal), Conglomerate Comparisons compares and contrasts today's PE firms to the conglomerates of the 1960's (like ITT)
A New Way To Rate Stock Tips reports on the increasing popularity of web sites that let investors share ideas online. The latest twist is that some of these sites rate the quality of participants contributions.
In yesterday's Journal, the article titled Investors Riding the Cash Rapids talks about some of the effects that increases in global liquidity is having on stock and bond markets.
And finally, Jonathan Clemens (in his Getting Started column) peels back the curtain on the tricks advisors (both the legitimate and shady) use to get you to sign on the dotted line in Don't Get Hit by the Pitch: How Advisers Manipulate You. A few years back, I read a great book titled The Big Con: The Story of The Confidence Man. It was written by a professor of linguistics that got inside the world of con men in the 1920's and 30's, and it does a fantastic job of detailing the strategies con men use. The same tricks are used today, just with different products and with different delivery methods, like the Internet. So buy it and read it - it's worth the price.
Tuesday Link Dump
It's the first "working" day of the New Year, so a Happy New Year to all my readers. Whether you come here regularly or just happened by, I'm glad you're here.
As for the Unknown Household, we pretty much hung around the house for the New Year - we did a lot of family visiting for Christmas, so we decided to stay local for this one. On New Year's day, we got up late and lazed around most of the day - the kids played with Christmas toys, the Unknown Wife read books, and I spent several hours watching the Ultimate Fighting Marathon on Spike TV. Unknown wife can't stand it, but I took taekwondo in high school, played Judo for a couple of years in college, and grew up watching boxing on the Wide World of Sports.
But now, it's back to work. The first order of the day is to clean out all the junk that's been building up in my feed reader. So, here's the first Link Dump of the New Year:
As for the Unknown Household, we pretty much hung around the house for the New Year - we did a lot of family visiting for Christmas, so we decided to stay local for this one. On New Year's day, we got up late and lazed around most of the day - the kids played with Christmas toys, the Unknown Wife read books, and I spent several hours watching the Ultimate Fighting Marathon on Spike TV. Unknown wife can't stand it, but I took taekwondo in high school, played Judo for a couple of years in college, and grew up watching boxing on the Wide World of Sports.
But now, it's back to work. The first order of the day is to clean out all the junk that's been building up in my feed reader. So, here's the first Link Dump of the New Year:
Mark Hulbert of the NY Times highlights an approach to valuing IPOs developed by Andrew Metrick, an extremely smart finance professor at Wharton.And that's all for now folks. Time for some research.
Adam Warner of the Daily Options Report finishes up his series on "option greeks" with a primer on "theta"
Barry Ritholtz at The Big Picture interprets recent data on insider selling.
Now THIS appeals to my inner geek: Avis is provide an option for renters of their cars to make them a mobile Wi-Fi hotspot for $10.95 per day.
And last but not least, this week's Carnival of The Capitalists is up and running at Free Money Finance.
Using Game Theory On Your Kids
At bedtime, the Unknown Kids get a story read to them and it seems like they always want different stories - and I'm only going to read one. We've tried a number of methods for choosing which story to read. Invariably, one child ends up happy and the other doesn't.
So this time, I thought I'd try a little game theory (hey, I studied a lot of this stuff in grad school, and since I'm an empiricist, I don't use it often. And I should get some use out of it). So, here's what we did tonight:
Here's how it played out: In round one, Unknown Daughter choose an American Girl book that Unknown Son had no interest in. Then, for his turn he choose a Sponge Bob book that she had no interest in (big surprise there, so far).
At this point, she said "that's no fair - all you're going to do is choose Sponge Bob books, and I don't like them." Then I took her aside and told her that she could reject his choice if she didn't want it (that's exactly what she did).
At this point, I explained once again that if they both kept saying no, after three rounds, there would be NO story. So, if they used their turns to only chose stories that THEY wanted and that their sibling didn't, their sibling could easily decide that NO story was just as good as a story that they didn't like, and they could end up with NO story at all.
At this point, Unknown Daughter took Unknown Son out into the hallway, and some frantic whispering ensued. About 20 seconds later, they told me that they'd chosen a Disney Story book.
So this episode could show that there's actual benefit to advanced training in Finance and economics.
Or, it could just illustrate why children of academics turn out so different from their peers.
Note: I just noticed a fair bit of traffic coming from a couple of sites that just linked to this post. If you've just wnadered in, welcome. Feel free to stay and look around a bit. If you want to go to the main page, click on the "Financial Rounds" title up at the top. If you want to find out more about the blog, check out the Frequently Asked Questions (FAQ) page. And if your want to subscribe to our RSS feed, there are links on the sidebar.
So this time, I thought I'd try a little game theory (hey, I studied a lot of this stuff in grad school, and since I'm an empiricist, I don't use it often. And I should get some use out of it). So, here's what we did tonight:
- I explained to the kids that that we'd go three "rounds", and if they couldn't agree on a book, by that time. no one would get a story.
- First, we flipped a coin to determine who'd go first. Unknown Daughter (age 6) won.
- For the first round, Unknown Daughter chose a book. Then Unknown Son (age 8) got to either accept the book or reject it. If he rejected it (and he did), he then got to choose one of his own. At this point, Unknown Daughter would get to accept or reject his choice. If she rejected, round one would be over.
- At this point, the choice went back to Unknown Daughter for round two, and she got to choose. And then Unknown Son, and so on.
- The key is that if three rounds went by and a book hadn't been agreed upon, no one got a story.
Here's how it played out: In round one, Unknown Daughter choose an American Girl book that Unknown Son had no interest in. Then, for his turn he choose a Sponge Bob book that she had no interest in (big surprise there, so far).
At this point, she said "that's no fair - all you're going to do is choose Sponge Bob books, and I don't like them." Then I took her aside and told her that she could reject his choice if she didn't want it (that's exactly what she did).
At this point, I explained once again that if they both kept saying no, after three rounds, there would be NO story. So, if they used their turns to only chose stories that THEY wanted and that their sibling didn't, their sibling could easily decide that NO story was just as good as a story that they didn't like, and they could end up with NO story at all.
At this point, Unknown Daughter took Unknown Son out into the hallway, and some frantic whispering ensued. About 20 seconds later, they told me that they'd chosen a Disney Story book.
So this episode could show that there's actual benefit to advanced training in Finance and economics.
Or, it could just illustrate why children of academics turn out so different from their peers.
Note: I just noticed a fair bit of traffic coming from a couple of sites that just linked to this post. If you've just wnadered in, welcome. Feel free to stay and look around a bit. If you want to go to the main page, click on the "Financial Rounds" title up at the top. If you want to find out more about the blog, check out the Frequently Asked Questions (FAQ) page. And if your want to subscribe to our RSS feed, there are links on the sidebar.
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