The Finance Professionals' Post

James Bullard Discusses the Future of the Fed on Squawk Box

St. Louis Fed President James Bullard apppeared on CNBC's Squawk Box, speaking from the Kansas City Economic Symposium in Jackson Hole, Wyoming. He discussed the outlook for the US economy and potential Fed strategies.

Bullard will speak live at NYSSA on November 8, 2010, for the High Profile Speaker Series: Monetary Policy and Inflation Outcomes in the United States.

Mongolia: BRIC-ing Up is Hard to Do

Mention Mongolia, and most people will conjure images of horse-mounted hordes rushing across the Asian steppes, building the largest land empire the world has ever seen. While Mongolians are understandably proud of their heritage, which has included ruling three present-day BRICs (China, India, Russia), much of the Middle East and parts of Eastern Europe, the Mongolia of today is a much smaller affair, consisting of just over three million people—approximately the population of Jamaica—scattered across an area roughly the size of Iran.

Interview with Mike Bellafiore, Author of "One Good Trade"

Michael Martin had the opportunity to speak with Mike Bellafiore about his new book, One Good Trade: Inside the Highly Competitive World of Proprietary Trading. Bellafiore and Steve Spencer are the founders of SMB Trading. Moreover, Bellafiore and Spencer are prop traders and have one of the best training programs in the country. To hear a clip from the interview, click the button below. 

 

To listen to the interview in it's entirety, visit Michael Martin's blog, MartinKronicle.

Construction Materials Outlook: Some Hope on the Far Horizon

The Finance Professionals' Post spoke with Jack Kasprzak, managing director of Equity Research at BB&T Capital, for his outlook on the three principal sectors of the construction materials sector—public works, housing, and commercial building—in the run-up to NYSSA’s Fifth Annual Construction & Materials Conference, to be held on September 29.

Book Review: High Financier

Niall Ferguson's biography of Siegmund Warburg, High Financier, combines the life of this successful banker with the history of the capital markets of his era. The Warburg family was based in Hamburg as one of Germany's major banking firms. As a refugee from Nazi Germany, Siegmund Warburg came to London as an outsider, started over again, and became an important factor in the London banking world. He changed merchant banking there with the first hostile takeover in England—of British Aluminum. And, in a move that was unusual for that time, Warburg brought modern management into banking. An even greater impact came from his role in creating the Eurodollar and Eurobond markets. At that time in postwar England, London's survival as a major financial center was far from assured.

CFA Considered the Gold Standard, According to the Financial Times

According to a recent article in the Financial Times, the CFA designation is now considered the gold standard among financial professionals worldwide. When established 50 years ago, the CFA was envisioned as a means of transforming equity analysis into “a more ethical, respectful craft, akin to law or medicine,” according to the article’s authors, Rachel Sanderson and Gillian Tett. In the past decade the CFA has undergone exponential growth; it has almost 100,000 members worldwide, and this year twice that number registered to take the exam. Sanderson and Tett report that much of the growth has been fueled by increased interest among finance professionals in the Asia Pacific and the relative cost of earning a CFA to an MBA—approximately $3,600 versus $15,000.

Click here to read the full article.

NYSSA Announces December 2010 CFA Scholarship Winners

NYSSA is pleased to announce the winners of the December 2010 CFA Exam Scholarship Program. Recipients were selected based on experience and/or interest in the investment profession, ethical standards, and commitment to NYSSA and CFA Institute. All scholarship winners receive a free weekly review course from NYSSA and a credit allowance for additional learning materials from Schweser. In addition, CFA Institute will refund the CFA examination and registration fees (less a $225 exam registration administrative fee). NYSSA offers up to five scholarships in both the fall and spring to New York area CFA candidates of all levels. 

Five Things NOT to do if You Want to Pass the CFA Exam

Suffice to say, considering the relatively low pass rate, getting through the rigors of all three exams to become a CFA charterholder is not an easy task. But there are many ways you can shoot yourself in the foot.

Click here to read the full article.

Book Review: Fool's Gold

In 1994 a group of young, bright JPMorgan bankers from the swaps department met in Boca Raton, Florida, for an alcohol-fueled weekend of frat-house pranks and intense financial discussions. At these meetings they generated an idea that would change modern finance: how to use derivatives to manage credit risk attached to the loan book of banks.

Tracing the history of the derivatives team from the Boca Raton meeting to the beginning of 2009, Gillian Tett describes in Fool's Gold the genesis and fall from grace of the booming credit derivatives market, and how the use and abuse of once-obscure products such as CDSs (credit default swaps) and CDOs (collateralized debt obligations) brought the world to the edge of a depression.

Cartoon: Credit Crisis Lineup

Illustration by Karl Wimer.

As an impartial, nonprofit forum for the finance and banking industries NYSSA encourages discussion and debate among its member and other professionals. Commentaries, however, should be taken as the sole opinion of the author(s) and not of NYSSA. If you would like to submit a commentary to the Finance Professional's Post, send your article to the editor.

In Defense of a Quant (Part I)

The public likes simple explanations, especially if they are argued with bombast. For instance, the financial crisis happened because “the young boys with PhDs in physics were conceiving a financial hydrogen bomb” (attributed to F. G. Rohatyn of Lazard Fréres). To me, it sounds like “the laws of fluid mechanics sunk the Titanic.” This is literally true, of course, but the substantive reason was much more mundane (and universal): hubris and the human propensity to throw all caution to the wind—literally and idiomatically—when big money is involved.

CFA Prep Podcast: Passing is a Matter of Perspective

In this clip from the CFA Level I Orientation, instructor Andrew Spieler explains that the key to earning certification is taking a holistic view of the CFA program rather than focusing on each individual exam. He also warns students that passing requires not only knowledge of the material but also the exam structure itself.

Andrew Spieler, PhD, CFA, FRM, teaches CFA prep at NYSSA. He will be teaching a Free Level I Sample Class on August 31, 2010. His Level I Weekly Review Sessions for the December 2010 exam start on September 14, 2010.

Poll: The Bush Tax Cuts

With the Bush tax cuts set to expire at the end of the year a debate rages over whether they should be extended, modified, or simply allowed to expire. Some favor extending the cuts universally, while others—including President Obama—favor extending the cuts for the middle class and poor while letting them expire for those earning more than $250,000 a year. A recent national poll on the issue reveals a nation divided on the issue, what do you think?

 

 

Book Review: Pioneering Portfolio Management

To be sure, Yale CIO David Swensen believes most institutions and the vast majority of individuals lack the abilities and resources to pursue active portfolio management strategies. That caveat aside, however, his updated edition of Pioneering Portfolio Management provides a comprehensive view of Yale’s highly successful endowment fund, and is an essential tool for those seeking returns and diversification beyond traditional asset classes.

Commentary: From Risk to Uncertainty

Stress-test complacency will be a cause of the next financial meltdown.

Economic commentators have been increasingly using the word “uncertainty” as of late. The context has included the business climate, the stimulate vs. austerity debate, and forecasting the investment outlook across capital markets. 

Committee Spotlight: Career Development Committee

The Career Development Committee (CDC) has been one of NYSSA’s most active committees over the last several years. The CDC focuses on helping NYSSA members actively manage their careers and achieve professional growth. The committee's programs are targeted toward helping members: (i) develop themselves professionally, (ii) understand and explore career opportunities in the evolving financial services industry, and (iii) advance their careers by marketing themselves more effectively to current and prospective employers.

CFA Prep Podcast: Top 10 Tips for the CFA Exam

In this clip from the CFA Level I Orientation, William A. Trent, director of the exam development division at the CFA Institute, offers 10 essential strategies that every student should follow when preparing for CFA exams. Though Trent warns students that earning a CFA can be a difficult process–with the global pass rate averaging only 40% for the June 2010 exam–he noted that "more and more CFA designation is held in high regard by employers." 

If you want to watch the webcast of this entire event or any other NYSSA program, visit NYSSA's On-Demand website.

Interview with Christine Richard, Author of "Confidence Game"

In Confidence Game: How a Hedge Fund Manager Called Wall Street's Bluff, Christine Richard unravels the story of Bill Ackman's six-year battle in warning the public of a catastrophic $2.5 trillion bond insurance business waiting to happen. As the hedge fund manager of the MBIA (Municipal Bond Insurance Association), Ackman placed a bet against the MBIA and brought in more than $1 billion for his investors from the collapse of the credit markets.  Despite his winnings, Ackman was called a fraud in the press and investigated by Eliot Spitzer and the Security and Equities Commission. A Bloomberg News reporter, Richard weaves a compelling narrative around Ackman, while revealing the financial fallacies on Wall Street. Bill Hayes, contributor to the Financial Professionals' Post, had the opportunity to speak with Richard about her book. (Richard will speak at NYSSA on Friday, September 24, 2010. Register now to reserve a spot.)

Recent Research: Highlights from August 2010

“Celebrating 10 Years of ETFs in Europe.” The Journal of Index Investing (Summer 2010). Deborah Fuhr, Shane Kelly.

This article is a comprehensive report on the history and outlook for the exchange-traded fund industry in Europe. It covers both ETFs and exchange-traded products (ETPs). ETFs are open-end index funds that provide daily portfolio transparency, are listed and traded on exchanges like stocks on a secondary basis, and utilize a unique creation and redemption process for primary transactions. ETPs are products that have similarities to ETFs in the way they trade and settle, but they do not use a mutual fund structure. The use by ETPs of other structures, including grantor trusts, partnerships, notes, and commodity pools, can create different tax and regulatory implications for investors when compared to ETFs.

Clawbacks in Play with SEC, Dodd-Frank

Act 4, Scene 1—that’s where we are in the drama over corporate clawbacks. Put on stage by SOX (Sarbanes-Oxley), the clawback drama took its latest turn with the passage of the recent financial reform legislation, which goes farther than either SOX or the SEC have moved to date.