It is instructive to observe the reaction to the Piketty phenomenon — a 700-page treatise on political economy that became an overnight Amazon bestseller deserving, according to Larry Summers, of a Nobel Prize. It is similarly instructive to note the spectacle of the viral Russell Brand interview with the BBC’s Jeremy Paxman in which Brand pretty much shreds Paxman and calls for revolution. I can’t claim to have actually read Piketty’s tome, but I’ve read a lot of the reviews, and I have watched the Russell Brand video. Regardless of where you come down on their arguments, the response to Piketty’s book and the wide appeal of Brand’s rant taken together tell us that trouble is brewing.
Continue reading "The Central Contradiction of Capitalism that Piketty Overlooked" »
Most financial firms in the present day would need an overhaul of their current collateral management practices. This comes in the midst of the burden being experienced by an already intensely regulated financial industry and the new measures of regulation on OTC derivatives in the post financial crisis world. The costs of regulation are near-crippling to some firms. Big dealers are planning to exit or divest certain lines of business that will face huge operational costs as a result of regulation, and are no longer deemed profitable.
Continue reading "Forward Thinking on Collateral Management" »
While most financial services professionals must now surely be savvy enough to avoid generic CV clichés like “entrepreneurial”, “innovative team-player,” or “dynamic problem-solver”, there’s a chance you could be inadvertently including hackneyed phrases when attempting to demonstrate your prowess for your particular business area.
The key, say exasperated recruiters, is to be as specific as possible. If it’s not tangible, or something that can demonstrate your real achievements, it’s probably bunkum.
Continue reading "Banking CV Clichés You Must Definitely Avoid, by Job Function" »
"Go Big or Go Home: The Case for an Evolution in Risk Taking"
The Journal of Investing (Summer 2014)
This article argues that alternative investments—private equity, real estate, and hedge funds—have natural advantages in risk and return over traditional stock and bond investments. A large allocation to alternatives relative to current institutional practice is needed for a material contribution to an institutional investor’s bottom line. Investors should consider whether moving toward an “efficiency” portfolio with an emphasis on low-cost passive management or an “opportunity” portfolio with heavy reliance on value added through active management—especially alternative investments—is most appropriate for them. Investors who can tolerate the cost, complexity, and illiquidity should consider opportunity-type allocations of 40% of their return-seeking assets to private equity, non-core real estate, and hedge funds. Over time, institutional investors will likely choose alternative investments and indexing as their primary investment options, and traditional active management will likely transform to take on qualities currently associated with alternative investments.
Continue reading "Recent Research: Highlights from June 2014" »
I got lost. A poorly marked hiking trail sent my husband and me in one wrong direction and then another before we found our way. This reminded me of how writing that lacks trail markers sends readers astray.
The best trail markers for your writing are topic sentences. A strong topic sentence—the first sentence of any paragraph—summarizes the information covered by the rest of the paragraph.
Continue reading "Guide Your Readers Better than This Trail Guided Me" »
You’re applying for jobs in finance. You’re relying on recruiters to act as intermediaries and to represent you to potential employers. In most cases, recruiters are honest upstanding individuals. But even honest, upstanding individuals can be a little economical with the truth sometimes.
Want to know whether a hiring agent is being duplicitous? According to recruiters, speaking candidly and anonymously, these are the signs.
Continue reading "Signs That Recruiters Are Not Being Truthful with You" »
Young Money: Inside the Hidden World of Wall Street's Post-Crash Recruits tells the stories of eight young Wall Streeters who were hired after the Crash. Author Kevin Roose, New York magazine business writer, shadowed each subject for more than three years. They started their jobs in 2009- 2010, and most, but not all, are from elite ivy universities. Their identities are not revealed, and understandably so, since they could be fired for unauthorized media contacts. While Roose says some of the personal details and events have been changed; the stories are true, and read as candid and revealing.
Continue reading "Book Review: Young Money" »
There are five main reasons for market dysfunction:
- Transaction costs and market frictions;
- Information asymmetry and adverse selection;
- Market externalities;
- Existence of public goods (bads), nonexclusivity of consumption, and Pigovian markets (activities that reduce society’s welfare, or marketing bads); and
- Problems of collective action (e.g., arms races).
In Part I of this article, I discussed the first two reasons. Below I cover the remaining three.
Continue reading "When Markets Fail: Part Two" »