Commentary

09/02/2015

Living in the Outlier

The past few years can only be described as one of the most unusually serene periods in history for the U.S. equity market. While over time it began to feel normal, we have been living in the outlier. Let’s take a quick trip down memory lane. 

The DiMaggio Streak of Markets

We’ll begin with the historic run from November 2012 through October 2014, what I have called the “DiMaggio streak of markets.” At 475 consecutive trading days above the 200-day moving average, we have never seen such a steady advance and lack of a meaningful pullback in the history of the S&P 500.

Continue reading "Living in the Outlier" »

7 Ways to Manage Writing by Committee

The best way to manage writing by committee? Avoid it. As Ann Handley says in Everybody Writes: Your Go-To Guide to Creating Ridiculously Good Content,

Having a buddy by your side is helpful. Having an entire committee on your back? Not so much. 

However, writing in a regulated industry means that many of you must get your materials reviewed by compliance. Also, if you’re a financial marketer, your subject-matter expert will want to check your work. 

I have some tips, based on my experience as director of investment communications for an asset management firm.

Continue reading "7 Ways to Manage Writing by Committee" »

Avoid Turning your Investment Firm into a Technology Company

Digits
As information technology’s development accelerated, the investment industry took notice and began developing systems that would automate formerly manual tasks. Over time these systems have evolved into something more. While their benefits are continually vaunted by vendors and end users alike, the processes of ensuring that these systems are properly implemented and maintained belong, first and foremost, to the firm.

It is easy to become seduced by the technological attraction
that systems offer but if an investment firm does not clearly
and thoroughly understand the purpose of a system, the
technological dream will quickly turn into a nightmare. In
general, systems are there to facilitate tasks, such as data
management, analysis and reporting. Once that is known, a
system must be properly “placed” within a firm. That is, it is to be maintained by the operations team, supported by IT, managed by specialists (performance, risk, etc.), used as a feedback tool by the front office and fund sponsors, and as a means of communications to the clients.

Continue reading "Avoid Turning your Investment Firm into a Technology Company " »

08/13/2015

How to Select the Optimal Valuation Method to Build Better Price Targets (Part 3 of 3)

Flow chart (as featured image)This 3-part post is all about following best practices for selecting the optimal valuation method…namely the one that’s going to derive a price target more accurate than consensus.

As noted in Part 2 of this 3-part series, there are limitations to every valuation method, but some are better than others. For years I had been looking for an information source that quickly summarized the best method(s) to use under each circumstance, but couldn’t find one. So I created the flow chart below.

The idea is to start at the top of the flow chart and work your way down as far as possible, to get closer to the methods that measure free cash flow. Note the blue shapes are single-period multiples-based methods whereas the tan shape, DCF, is a multi-period cash flow method.

Callout: The further you can go through the flowchart, the closer you are to valuing the company’s free cash flows.

Continue reading "How to Select the Optimal Valuation Method to Build Better Price Targets (Part 3 of 3)" »

Why Fund Sponsors Are Failing

AnswersI was in the process of working on an article
 about why fund sponsors were failing the 
funds and their pension beneficiaries. The
 article was going to focus on the role
 sponsors take in the management of the
 fund, identify their shortcomings and
 propose solutions. Coincidentally, I
 was watching The Daily Show with Jon 
Stewart one night while his guest, Wall Street Journal reporter Ellen Schultz, was promoting her new book. “Retirement Heist” talks about the deliberate mismanagement of pension funds for the benefit of the sponsor and their executives. The next day I stopped by the bookstore and picked up her book. Once I began reading, the focus of my own article shifted from solely looking at the role of fund sponsors in the management of pension funds to also consider the sponsors’ place in society and the long-term consequences of their short-term focus.

Continue reading "Why Fund Sponsors Are Failing" »

08/06/2015

Don’t Overlook Benchmarks

ChartInvestors are presented with a barrage of marketing material from funds and
 managers trying to raise capital, and
 what all these reports have in common is 
that they all focus on performance. That
 is not surprising considering the 
relatively large number of funds available with the few strategies being 
used, managers feel they can only
differentiate themselves through performance. Attend enough sales presentations and you will have heard how “my long-short equity strategy has consistently outperformed the market and that is why you need to invest with us.” By the way, the “Past performance is no indication of future results” is usually said with much less gusto.

This is not to disparage managers and funds alike but rather to help investors identify the good managers whose past performance is more than likely a good indication of their future performance. Although a thorough performance evaluation requires the skill set of a performance specialist, any investor can begin such an evaluation by questioning one simple and important component of the performance marketing material, which is the benchmark.

Continue reading "Don’t Overlook Benchmarks" »

Are financial predictions too risky for investment commentary writers?

CrystalballIs it a bad idea to make predictions in your investment commentary because clients will slam you when you’re wrong? Whenever you make predictions, you run the risk of being wrong. But being wrong isn’t a problem, in my mind, if your prediction reflects good thinking.

Lesson from my winning prediction

Accurate predictions alone don’t make you seem smart. I remember the time I participated in a betting pool with members of an investment policy committee. I had to predict where a certain number—probably the 10-year Treasury rate—would be one quarter later. 

Continue reading "Are financial predictions too risky for investment commentary writers?" »

08/05/2015

How to Select the Optimal Valuation Method to Build Better Price Targets (Part 2 of 3)

Pros & Cons SmallIn my prior post I discussed the importance of identifying the optimal valuation method, which includes researching the valuation method used by most other equity analysts who cover the sector and stock being researched.

In this entry, I delve into the pros and cons of the most popular valuation methods. To ensure I wasn’t missing one of the more popular valuation methods, I researched the topic and came across two studies, one from the U.S. and one from the U.K. Given that buy-side analysts don’t publish their reports, these studies relied entirely on sell-side analysts and therefore they may not be representative of buy-side analyst’s work. The studies were conducted independent of one another and therefore shouldn’t be viewed comparatively. Instead, they provide an idea of the top 5 valuation methods used by equity research analysts in their respective markets. Having been based in London for part of my career, I can verify DCF is more extensively used in Europe than in the U.S.

Continue reading "How to Select the Optimal Valuation Method to Build Better Price Targets (Part 2 of 3)" »

07/21/2015

How to Select the Optimal Valuation Method to Build Better Price Targets (Part 1 of 3)

Buy-and-Sell-300x166In a prior post I noted all stock picking best practices (or “tips”) can be put into one of the four elements of our TIER™ framework (see image below).

If you’re asking “why should I care?”, I’d reply that the best stock pickers have a consistent philosophy and methodology for picking stocks. If you already have one, that’s great, but if you’re looking for one, you might want to start here and make modifications to fit your style or investment philosophy. This 3-part series focuses on the “T” of the TIER™ framework shown below.

Continue reading "How to Select the Optimal Valuation Method to Build Better Price Targets (Part 1 of 3)" »

The Stewardship of Wealth: Successful Private Wealth Management for Investors and Their Advisors

StewardshipofWealthIn his latest book, The Stewardship of Wealth: Successful Private Wealth Management for Investors and Their Advisors, Gregory Curtis goes beyond a traditional study on investment policy, asset selection and monitoring, and risk management of and the fiduciary issues involved in wealth management by thoroughly investigating the aspects of stewardship of the wealth of prosperous families. Curtis is the chairman and founder of Pittsburgh-based Greycourt & Co., a wealth advisory firm that serves high-net-worth families and select endowments on a global basis. This book builds on his Creative Capital: Managing Private Wealth in a Complex World. It provides a moral, ethical, economic, and investment compass for the wealthy.

Continue reading "The Stewardship of Wealth: Successful Private Wealth Management for Investors and Their Advisors" »

When Fear of Bonds Exceeds Fear of Stocks

Worried about your bonds? You’re not alone.

In speaking with our investors in recent weeks, the most universal theme by far was concern over their bond holdings. Historically low interest rates coupled with the prospect of the first Fed rate hike since 2006 (“rising rates”) were causing anxiety. And most importantly, the average bond fund was down in the first half of the year. There’s nothing more fear inducing to investors than short-term losses.

Continue reading "When Fear of Bonds Exceeds Fear of Stocks" »

Going Beyond GIPS

GIPSGlobal Investment Performance 
Standards, better known as GIPS, are a 
voluntary set of standards established to
 create transparency in the calculation and
 presentation of performance. From 
improving the credibility of compliant investment firms to providing clients the ability to fairly evaluate the performance of these firms, GIPS has arguably become the gold standard in investment performance. As client awareness has risen, demand for GIPS is pushing investment firms in becoming compliant in order to maintain their competitiveness. While this is a positive in an industry that sorely needs standards that encourage fairness and credibility, it would be short sighted for firms to stop at GIPS when it comes to their performance. We must remember that performance is not a part of GIPS but rather it is GIPS that is a part of performance. Meaning that, in the ever-growing field of investment performance, stopping at GIPS would rob a firm of maximizing the benefits of performance that go beyond GIPS.

Continue reading "Going Beyond GIPS " »

07/08/2015

Can YOU simplify investment commentary better than this?

I am not perfect. I don’t have all of the answers for how to best simplify the complex sentences that abound in investment commentary and related publications. However, we would all benefit if the smart investment professionals could communicate more clearly and economically.

To spur conversation, I’m posting some before-and-after versions of sentences inspired by what I’ve read in online and printed investment pieces. Most of my tweaks are minor. They don’t dramatically ratchet up the sentences’ effectiveness. However, their simplicity means that they demonstrate techniques that would be easy for anyone to implement.

If you’re trying to improve your writing skills, I hope that you’ll find some inspiration. If you’re a veteran writer or editor, perhaps you can suggest better alternatives.

Continue reading "Can YOU simplify investment commentary better than this?" »

07/07/2015

Growth of Large Companies May Be Driving Wage Inequality

Hmueller

The global trend toward wage inequality may be driven by a rise in the share of people employed by the world’s largest companies, suggest Professor Holger Mueller and his co-authors, Paige P. Ouimet of the University of North Carolina at Chapel Hill’s Kenan-Flagler Business School and Elena Simintzi of the University of British Columbia’s Sauder School of Business, in their new working paper, “Wage Inequality and Firm Growth.”

Using a proprietary data set of employee pay at a broad cross-section of UK firms (both private and public) from 2004 to 2013, the researchers examined how the wage differences between jobs of differing skill levels within a single firm (“within-firm skill premia”) varied between firms and over time. They found that the wage differences between high-skill and low- or mid-skill jobs increased with firm size. As company size grew (measured by either number of employees or sales – both had the same results), the wages paid for high-skill jobs increased significantly, while the wages paid for low- or mid-skill jobs remained the same or decreased slightly. For example, the highest-level job at a company in the 75th percentile of company size carried a wage 280 percent greater than the highest-level job at a company in the 25th percentile. The result of this phenomenon is that as firms grow larger, a divide widens between the high-level and both the mid- and low-level job wages, driving greater wage inequality.

Continue reading "Growth of Large Companies May Be Driving Wage Inequality" »

05/26/2015

11 Things Ultra-Productive People Do Differently

When it comes to productivity, we all face the same challenge—there are only 24 hours in a day. Yet some people seem to have twice the time; they have an uncanny ability to get things done. Even when juggling multiple projects, they reach their goals without fail.

Time is really the only capital that any human being has, and the only thing he can’t afford to lose. —Thomas Edison

It feels incredible when you leave the office after an ultra-productive day. With the right approach, you can make this happen every day. You don’t need to work longer or even do more—you just need to work smarter. Try these 11 productivity hacks that ultra-productive people rely on:

Continue reading "11 Things Ultra-Productive People Do Differently" »

05/06/2015

How 30 Minutes Wasted Could Cost You $5,000

By James Valentine, CFA

Throwing-Away-Time-and-Money-v2.1

We all have the same 24 hours in a day, but I find some analysts use it much more effectively than others. Based on my experience I don’t sense the level of a person’s time management skills has anything to do with their intelligence, professional experience or even their degree of ambition. It comes down to their level of self-discipline for staying focused.

To help get your attention, let me pose the issue this way: If an analyst is being compensated $100,000 per year, and he wastes just 30 minutes of a typical 10-hour day, that amounts to a loss of $5,000 per year. What would you do with an extra $5,000 a year?

To help frame the issue, let’s take a quiz.

Beware! These Toxic Thoughts are Success Killers

No matter who you are or what you do I am willing to bet that if you are having any of these thoughts below, then you are holding yourself back from achieving great success. As an executive coach, I am fortunate to work with and get into the brilliant minds of the brightest and most successful executives on Wall Street and beyond. Like the rest of us, my clients have insecurities that we work on recognizing and banishing from their minds. Here is the list of thoughts that are surprisingly common and are the greatest offenders to our success.

Beware of these toxic thoughts.

Continue reading "Beware! These Toxic Thoughts are Success Killers" »

Are Equities Overvalued?

MspenceBy Michael Spence

Since the global economic crisis, sharp divergences in economic performance have contributed to considerable stock-market volatility. Now, equity prices are reaching relatively high levels by conventional measures – and investors are starting to get nervous.

The question is whether stock valuations are excessive relative to future earnings potential. The answer depends on two key variables: the discount rate and future earnings growth. A lower discount rate and/or a higher rate of expected earnings growth would justify higher equity valuations.

Continue reading "Are Equities Overvalued?"


NYUAd5.7Banner

04/22/2015

The Seven Challenges That Hold Back Great Stock Picking

By James Valentine, CFA

Imagine picking up your car after it’s been supposedly repaired and discovering it’s still not fixed. Then, after a second trip to the shop the problem is still not resolved. What if this issue was an industry-wide phenomena? How would you feel about auto mechanics?

According to the most recent SPIVA report, 60% of large-cap managers and 73% of small-cap managers in the U.S. under-performed their respective benchmarks for the prior 12 months. Furthermore, over 70% of domestic equity managers, across all capitalizations, failed to beat their benchmarks over a five-year period. 

Continue reading "The Seven Challenges That Hold Back Great Stock Picking"»

Should We Outlaw Advertising?

Megan McArdle, a libertarian-oriented commentator on economics, recently recalled her reaction to a proposed class-action suit of the early-2000s dealing with fast-food companies’ impact on public health.[1] McArdle challenged an author involved in the anti-obesity cause to point to any research demonstrating that the restaurant chains’ advertising induced children to increase their consumption of fast food. 

The question confused the author, who simply assumed that corporations would not spend millions of dollars on advertising unless it increased sales.  McDonald’s does not, however, advertise with an eye toward convincing kids to eat more fast food.   The goal is rather to persuade them to eat it at McDonald’s (NYSE: MCD) instead of Burger King or some other chain.  In general, advertising is better at stimulating specific demand (brand selection) as opposed to primary demand (the decision to consume).

This point was emphasized in the mid-20th century by critics of advertising, which at that time was mired in political controversy, much as the financial industry is today.  It became an article of faith among many economists that because advertising did nothing to increase overall consumption, it represented a waste of resources. 

Continue reading "Should We Outlaw Advertising?" »

04/01/2015

How Finance Can Help Save Our Planet

The following post was adapted from a chapter I wrote for John G. Taft’s new book, A Force for Good,  published just this past week by Palgrave Macmillan.  John is the CEO of RBC Wealth Management, and I am proud to be in the illustrious company of individuals like Mary Schapiro, Robert Shiller, Sheila Bair, Roger Martin, and Dominic Barton, who were invited by John to contribute to this book.  I think you will find A Force for Good a fascinating read as it explores, from a variety of experienced perspectives, how the financial industry can marshall, for the long-term public good, the creative energies and brainpower it has deployed in the past to develop derivatives, high-frequency-trading technologies, and other engineering complexities.  

Continue reading "How Finance Can Help Save Our Planet" »

03/25/2015

Insider Trading Law After the Newman Decision: What Does It Mean to Financial Industry Professionals?

In December 2014, the United States Court of Appeals for the Second Circuit issued what has been described as a landmark decision in United States v. Newman.  In its decision, the Court vacated the insider trading convictions and sentences of Anthony Chiasson and Todd Newman, two hedge fund professionals convicted of insider trading after trial in federal court in Manhattan.  The decision has been greeted by the white collar defense bar as an important repudiation of the Government’s heavy handed pursuit of insider trading. 

Continue reading "Insider Trading Law After the Newman Decision: What Does It Mean to Financial Industry Professionals?" »

03/18/2015

Should Your Investment Commentary Be Different?

“Should your investment commentary present a distinctive point of view?” That’s the great question posed by a participant in one of my presentations on “How To Write Investment Commentary People Will Read.”

My answer? It depends.

Continue reading "Should Your Investment Commentary Be Different?" »

03/16/2015

China: Ecological Civilization Rising?

Returning to China for the first time in a quarter century this month was equally awe inspiring and terrifying. The observation deck of the truly gorgeous Shanghai World Financial Center is breathtaking, a fitting testament to China’s rise. But it was the unexpected sense that we might be experiencing history at DeTao Group’s summit in Shanghai, “Future New Economy: Sustainable Model Toward an Ecological Economy,” that left an indelible mark on me.

I had the honor to address the DeTao Group summit on the topic of regenerative investing in natural capital. Inspired by the vision and leadership of DeTao Chairman George Lee, it was an extraordinary experience. The warm hospitality and genuine appreciation and respect extended to all the visiting “experts” was quite exceptional. As George told me, “in Chinese culture, we honor our teachers.”

Continue reading "China: Ecological Civilization Rising?" »

02/23/2015

What Happened to the U.S. Constitution? Effects of Changing Interpretations on International Debt and Banking—Part II

In Part I of my article, I described how the decision of an obscure federal judge promises to transform world debt markets. I planned in Part II to describe the Argentinean debt deal, but in the interim Bloomberg published an article that elucidates this matter in sufficient detail (Levine 2014). Furthermore, the document describing the debt settlement is available online (Securities and Exchange Commission 2005). I cannot claim to have read the entire document—219 pages of prospectus and approximately 150 pages of supplement—but I gleaned enough by browsing. It contains interesting information on how international debt is settled, and if I were to teach international finance, I would make a case study out of it.

Continue reading "What Happened to the U.S. Constitution? Effects of Changing Interpretations on International Debt and Banking—Part II" »

Mongolia Investment Outlook

Mongolia is one of the world's fastest growing economies, with a year-on-year real growth rate of 7% in 2014. Recent growth has been primarily driven by development of new mining projects, growth in the real estate and agriculture sector, and an expansionary fiscal and monetary policy.

Mongolia's economy is highly dependent on trade with China. Economic growth has been negatively affected by a slowdown in the Chinese economy, which accounted for 94.1% of Mongolia's exports in 2013. In addition, Mongolia is dependent on Russia for all of its fuel and some of its energy needs, which makes Mongolia vulnerable to price pressure from Russia.

Continue reading "Mongolia Investment Outlook" »

02/16/2015

Life After the CFA Charter

I still remember the feeling of happiness, relief, and complete sense of accomplishment when I received a congratulatory email from CFA Institute on August 6, 2013 letting me know that I passed the Level III CFA exam.  I officially became a CFA Charterholder in November 2013. The certificate is very big, and I feel proud every time I look at it.  It reminds me that hard work and determination will help me overcome any challenges that I am currently facing, or will face in the future, as they did when I embarked on the CFA journey.

Continue reading "Life After the CFA Charter" »

01/20/2015

It Is Time for a Cyber FDIC

In today’s modern frictionless economy, the principal requisite for growth and order is the free flow of sensitive information, banking transactions, and private data on a global scale.

With this shift brought on by the unrelenting growth of e-commerce and mobile platforms comes the nagging reality that cyber risk is here to stay. It is the sort of drag on the market that needs to be priced into the system rather than treated like something that can be eliminated or perfectly controlled. Market and consumer expectations need to be adjusted accordingly and in the age of hyper transparency, people would be wise to remember that anything can be exposed to sunlight.

Continue reading "It Is Time for a Cyber FDIC" »

01/14/2015

Four Reasons You Should Not Write a White Paper

White papers can be great marketing tools. Done right, they give web surfers reasons to join your email list and persuade them that you understand—and have solutions to—their problems. However, done poorly, white papers waste your time—and your readers’ time. To help you avoid pointlessly sinking your energy into white papers, I’m sharing four reasons you should not write a white paper.

Continue reading "Four Reasons You Should Not Write a White Paper" »

01/05/2015

How About a "Not-So-Fast" Track for the Trans-Pacific Partnership?

The Trans-Pacific Partnership, a potentially historic trade agreement being aggressively pursued by the Obama administration, represents a cornerstone in its strategic pivot to Asia. If ratified by all 12 Pacific Rim countries currently engaged in the negotiations, it would create the largest free-trade zone in the world, accounting for some 40% of global GDP and a third of global trade.

Continue reading "How About a "Not-So-Fast" Track for the Trans-Pacific Partnership?" »

12/22/2014

NYSSA TV™: A Fireside Chat with William Thorndike and William Cohan

Authors William Thorndike and William Cohan share a “Fireside Chat” about the challenge for management to create value in a climate of rising shareholder activism and increased M&A activity.

12/03/2014

MONEYBALL: Reinventing the Game of Capitalism Using a New Scientific Model

There is an epidemic failure within the game to understand what is really going on. And this leads those who run major league teams to misjudge their players and mismanage their teams… Baseball thinking is medieval. They are asking all the wrong questions.

People see this new way of thinking as a threat, and not just to a way of doing business, but, in their minds, it’s a threat to the game itself…

But anybody who is not tearing their team down right now and rebuilding it using your model − they’re dinosaurs.

- Dialog from the movie Moneyball

Continue reading "MONEYBALL: Reinventing the Game of Capitalism Using a New Scientific Model" »

11/24/2014

The Club of Rome’s Next Act

The Club of Rome was founded in 1968 but really came into the public eye with the publication of Limits to Growth in 1972. The controversial book, which sold 12 million copies in 37 languages, first called attention to the systemic limitations of the exponential expansion of the human population and the related material inputs and waste outputs of its economic system on a planet that is fixed in scale.

The concept is not complicated. Sooner or later, the endless expansion of the metabolism of a system within a finite body will cease.

Continue reading "The Club of Rome’s Next Act" »

11/19/2014

Free Help for Wordy Writers!

Wordiness is a curse. Long-winded writing obscures your meaning and scares off readers. However, many writers don’t realize that their writing drags on endlessly.

A free online tool—the Hemingway App—can help you recognize when your sentences are too long. Hemingway will highlight them, and also suggests some ways to improve your writing. You could identify long sentences using your word processing software, but Hemingway is easier to use.

I’ll walk you through an example of how to use Hemingway.

Continue reading "Free Help for Wordy Writers!" »

10/29/2014

How to Manage a Tough Job Environment for Equity Research

The job market for equity research in 2014 is highly competitive. What with across-the-board consolidation, tightening regulation, and a slimmed down banking sector, how can a candidate stand out given the crowded, narrow space?

Increasingly, specialization is sought after. Sector focus—rather than a generalist background—is more favorable, be it in biotechnology, insurance, or any niche.  

Continue reading "How to Manage a Tough Job Environment for Equity Research" »

10/20/2014

What Happened to the U.S. Constitution? Effects of Changing Interpretations on International Debt and Banking—Part I

Contrary to the wishes of originalists, the U.S. Constitution evolves. However, it evolves in strange, almost incomprehensible ways.

For instance, the reach of the First and Second Amendments has increased drastically. The “freedom of speech” clause in the First Amendment, once admitting restrictive Comstock obscenity laws, now has extended to freedom (and anonymity) of money spent by corporations on political advertising, thanks to the Supreme Court’s ruling in Citizens United. The Second Amendment entitles every citizen, age and mental state notwithstanding, to obtain firepower on the scale of a post–Revolutionary War battalion—and much more accurate at that.

Continue reading "What Happened to the U.S. Constitution? Effects of Changing Interpretations on International Debt and Banking—Part I" »

10/15/2014

The Courage to Lead

This post previously ran on the Huffington Post as part of the “Plan B for Business” series to help articulate a Plan B for Business.

Henrik O. Madsen joined Norway’s DNV, the world’s leading ship and offshore classification company, in 1982.  Thirty-two years later, as Group CEO of the recently merged DNV GL, now a Euro 2.5 billion global enterprise, Henrik made a speech few CEOs will ever have the opportunity to attempt.

Continue reading "The Courage to Lead" »

10/07/2014

Plain Language: Let’s Get Parenthetical

Plain language makes your documents more appealing and easier to understand. But circumstances may require you to use jargon. For example, you may be a financial marketer or professional working for bosses or departments that insist on using technical or unfamiliar terms. You can help reader comprehension by explaining the term in the sentence where it first appears. Parenthetical explanations are useful, whether you literally enclose the explanation in parentheses or set it off using some other technique.

Continue reading "Plain Language: Let’s Get Parenthetical" »

10/05/2014

What Type of Financial Advisor Advises You?

For individual investors seeking advice, the world they enter can be a confusing place. I’m thinking here of the different types of financial advisors that offer to help investors deploy their capital.  Non-finance people shouldn’t need to bother themselves with subtle elements of the investing regulatory landscape, but there are some things they’re better off knowing. Financial advisors don’t all operate with the same set of objectives. Some, who work for investment advisory firms and are Registered Investment Advisors (RIAs) are bound by the 1940 Investment Advisors Act to conduct themselves as a fiduciary, meaning they’re legally obliged to put their clients’ interests first. It seems like a sensible standard, but it’s not the only standard. There’s another class of financial advisor who work for broker-dealers rather than investment advisory firms. Their activities are bound by a lower standard of suitability and disclosure.

Continue reading "What Type of Financial Advisor Advises You?" »

08/05/2014

John Lennon Said It Best: “Living is Easy with Eyes Closed"

I was floored by this* Saturday’s New York Times article, “Seeing a Supersize Yacht as a Job Engine, Not a Self-Indulgence.”  I was amazed not only by how the subject of the article, Mr. Jones, rationalized his extraordinary consumption habits, but also by the mere fact that the article was published.

Continue reading "John Lennon Said It Best: “Living is Easy with Eyes Closed"" »

06/25/2014

The Central Contradiction of Capitalism that Piketty Overlooked

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" »

06/23/2014

Forward Thinking on Collateral Management

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" »

06/04/2014

When Markets Fail: Part Two

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" »

05/05/2014

High-Frequency Trading Is a Blight on Markets. Tobin Tax Can Help.

This blog post previously ran in The Guardian's Business section.

The dark side of the world of algorithmic trading in financial markets has twice been in the spotlight this week. First was the release of Michael Lewis' explosive new book, Flash Boys: Cracking the Money Code, which highlights many worrying practices in a sector that accounts for about half of all trades on the New York and London Stock Exchanges. Second was the FBI's announcement on April 2 that it would begin a criminal investigation into wrongdoing in the sector.

Continue reading "High-Frequency Trading Is a Blight on Markets. Tobin Tax Can Help." »

04/10/2014

Five Reasons to Consider Mongolia As Your Top Investment Destination

Mongolia submission

It's the second fastest growing economy in the world: Strong economic growth is expected for the mineral resource–rich Mongolia, with rising mining output from world-class mining projects such as Oyu Tolgoi—a copper and gold mining operation, where Rio-tinto owns 66% and the government owns 33%. This project is expected to contribute 1/3 of Mongolia GDP alone. The Economist Intelligence Unit has projected that Mongolia will be the second-fastest growing economy in the world in 2014 with gross domestic product rising 15.3% thanks to the first full year of operations of Oyu Tolgoi. And, though IMF predicts that growth will slow down to 9.5% (owing to a slow-down in China, the main export destination for Mongolian minerals), the economic growth is high even by regional, let alone international, standards.

Continue reading "Five Reasons to Consider Mongolia As Your Top Investment Destination" »

03/24/2014

Yellen’s 2.25% Target for 2016 May Be a Huge Mistake

Janet Yellen surprised almost everyone on March 19 by speaking off-script and providing forward policy guidance that can undermine the Fed’s credibility, at best, or cause another crisis, at worst. If the economic data comes in weak by the end of tapering and the markets swoon, the Fed will have no choice but to implicitly admit it was wrong and keep interest rates close to zero indefinitely. However, if the Fed continues with its plan to raise rates in the face of a weaker economy and declining market, the actions may cause another violent crash.

Zero short-term rates and the first round of QE were essential to avoid a complete financial meltdown. Subsequent rounds did little for the real economy yet unintentionally produced high leverage and asset bubbles in various places by providing cheap financing for companies, investors, and speculators alike. The policy also resulted in a massive transfer of wealth from labor to asset owners leading to the largest wealth and income inequality in recent history.

Continue reading "Yellen’s 2.25% Target for 2016 May Be a Huge Mistake" »

03/17/2014

Don’t Sabotage Your Website’s News Page

A news page featuring your firm’s mentions in the media can boost your credibility as long as you avoid one financial advisor’s mistake.

“Wow! This advisor hasn’t gotten any press since 2006.” That was my first thought when I looked at this advisor’s news page earlier this year. I immediately thought, “He should delete his news page.”

But then I scanned the rest of the page. I realized that the advisor had listed his media coverage in chronological order. He started in 2006 and continued up to the present day way, way down the page.

Unfortunately, most readers won’t scan the entire page. They’ll stop with the misperception that the advisor is a dud at getting the attention of the press.

The lesson for you? List your news coverage in reverse chronological order, putting the most recent items at the top of your page. For an example, see my “In the News” page.

Using the proper order is a small step with a big impact.

 


Financial-Blogging-book-by-Susan-Weiner

–Susan Weiner, CFA, is the author of Financial Blogging: How to Write Powerful Posts That Attract Clients, which is tailored to financial planners, wealth managers, investment managers, and the marketing and communications staff that supports them. Read her blog or follow her on Twitter, Google+ or the Investment Writing Facebook page.

03/10/2014

Can We Escape Bank Regulation by Lawsuit?

When I worked at JPMorgan in the 80s and 90s, even in the context of deregulation, the concept of “self-regulation” in the financial industry was discussed with a straight face. 

Last week, Better Markets, a sophisticated civil society non-profit organization, run by former Skadden attorney Dennis Kelleher and committed to protecting the public interest in the government’s regulatory response to the financial crisis, filed a lawsuit against the Justice Department and Attorney General Eric Holder.  The suit seeks to block what Better Markets calls an “unlawful” $13 billion settlement with JPMorgan Chase & Co. over bad mortgage loans sold to investors leading up to the crisis.  We now have lawyers suing the United States Attorney General on the public’s behalf for failing to properly prosecute a record $13 billion settlement on the nation’s most powerful and flagrant abuser of the self-regulation ethic.

Continue reading "Can We Escape Bank Regulation by Lawsuit?" »

02/17/2014

Transcending the Tension between Climate Change and Inequality

This year’s gathering of the World Economic Forum at Davos was kicked off with the reading of a letter from Pope Francis, which ends: “I ask you to ensure that humanity is served by wealth and not ruled by it.” One can almost feel the squirming.

I recently participated in a roundtable among leading thinkers, activists, and social entrepreneurs on the need to put "system change" not just problem-solving on the agenda in places like Davos. This discussion is not about capitalism versus socialism. No existing system, not social democracies nor communist states, operate sustainably. As is often the case in these discussions, the inevitable and emotion-packed debate on priorities emerged.

Continue reading "Transcending the Tension between Climate Change and Inequality" »

01/27/2014

How I Passed the CFA Level I Exam with Just 2 Weeks' Studying

My name is Scott, and in the summer of 2011, I passed my CFA Level I with just 2 weeks worth of studying. <

I started two Saturdays away from the actual test having done no more than a cursory glance at my books beforehand. And somehow, incredibly, I managed to pass. Zee wrote to me one day asking if I'd like to share my story with 300 Hours readers, and over the course of the Christmas holidays, I wrote my experience down.

Here is my story.

An Important Success Factor: My Job and Education

I believe a significant factor that allowed me to pull this off was my background, both in work and education

I read Economics at Oxford and did pretty well - that helped me save time in some of the basics of CFA Level I. I was also a management consultant for investment banks and wealth managers. Consultant projects range from several weeks to several months, and having 3 years experience at the time, I had a wide range of knowledge and expertise across several financial sectors.

Without a relevant background in work and education, I don't think this would have been possible for me.

Desperate Times Call for Desperate Measures

I didn't choose to attempt to take CFA Level I with only two weeks' prep - I basically had no other choice.

My biggest mistake was to underestimate how little time and drive I would have for the exams. I always did well in exams in the past and thought that this would be just like the others. Although the exam itself was probably not too different in difficulty, balancing it with work was the problem.

I was rammed with a high-pressure project about 3 months before the exam, working 80-100 hour weeks. This meant that I didn't have any time to do anything else, never mind think about studying for the CFA exams. As the exams approached, I had two choices - either forgo the exam and waste the money I paid for the signup fees and materials, or try and pass with by the skin of my teeth.

Two weeks before E-day, I chose to push for it and see what happens.

My Two Weeks of Studying Hell

I took a full 10 working days off to study for the CFA Level I. That was already a very painful sacrifice, but nothing compared to what I had to endure in the following two weeks.

Through the entire two weeks, I dedicated all of my time to studying. I didn't leave my flat and lived off takeout meals. I had told my friends, girlfriend and parents that I would be incommunicado for two weeks so I didn't speak to any of them either, save for a few online chats here and there. Basically I became a hobo for two weeks in my own home.

And what did I get done? I'd say there were 3 important things that I got right, given my situation.

I started with practice exams, and did as many as I could
Starting with exam papers allowed me to roughly understand what areas I would need more studying in and what areas I could go light on. By the end of the two weeks, I managed about 4 papers under proper exam conditions, and speed-read about 6 more - reading the question and immediately going through the model answers. Practice exams really helped tune my studying - I would recommend it regardless of whether you're time constrained or not.

I outright binned a few topics.
Apart from doing the practice questions in the exams, I skipped these 3 topics:

  • Economics: light weighting in exam, and I could wing it a little based on what I learned in school
  • Corporate Finance: light weighting in exam, and I had a bit of experience from my job that helped me
  • Derivatives: light weighting in exam, and I also found the exam questions very confusing and not worth the time

 

–300 Hours

This exerpt was reposted with permission from 300 Hours, a site dedicated to CFA candidates and charterholders.

Continue reading "How I Passed the CFA Level I Exam with Just 2 Weeks' Studying" »

HELPFUL RESOURCES

Kaplan Schweser

Kaplan Schweser offers resources, discounts, and scholarships to university students and faculty through their University Partnership Program.

› BUSINESS WIRE
› CAPITAL IQ
› CFA INSTITUTE
› ITAU SECURITIES
› KAPLAN
› MORNINGSTAR
› QSG
› STANDARD AND POOR'S
› TORONTO STOCK EXCHANGE

Find NYSSA on Facebook

Follow NYSSAorg on Twitter

Join NYSSA Group

Visit NYSSA on Google Plus



conference rentals


IE
NYU-ad

NYSSA Job Center Search Results

To sign up for the jobs feed, click here.


UPCOMING EVENT
HYB

25th Annual High Yield Bond Conference and Master Class
September 9-10, 2015

Join NYSSA to enjoy free member events and other benefits. You don't need to be a CFA charterholder to join!


CFA® EXAM PREP

CFA® Level I Weekly Review - Session A Thursday
Midtown

Thursday July 23, 2015
Instructor: O. Nathan Ronen, CFA

CFA® Level I Weekly Review - Session B Tuesdays
Midtown

Tuesday July 28, 2015
Instructor: O. Nathan Ronen, CFA

CFA® Level I Weekly Review - Session C Saturday
Midtown

Saturday August 8, 2015
Instructor: O. Nathan Ronen, CFA

FREE CFA® Level II Test Taking Strategy and Sample Class
Midtown

Monday, August 10, 2015
Instructor: O. Nathan Ronen, CFA

FREE CFA® Level III Test Taking Strategy and Sample Class
Midtown

Wednesday, August 12, 2015
Instructor: O. Nathan Ronen, CFA

FREE CFA® Level I Test Taking Strategy and Sample Class
Midtown

Wednesday September 2, 2015
Instructor: O. Nathan Ronen, CFA

CFA® Level I Weekly Review - Session D Wednesdays/Mondays
Midtown

Wednesday September 9, 2015
Instructor: O. Nathan Ronen, CFA

CFA® Level I 6-Week Sunday Condensed Review
Midtown

Sunday September 20, 2015
Instructor: O. Nathan Ronen, CFA

CFA® Level I 4-Day Boot Camp
Midtown

Thursday November 12, 2015
Instructor: O. Nathan Ronen, CFA

CFA® Level II Weekly Review - Session A Monday
Midtown

Monday January 11, 2016
Instructor: O. Nathan Ronen, CFA

CFA® Level III Weekly Review - Session A Wednesday
Midtown

Wednesday January 13, 2016
Instructor: O. Nathan Ronen, CFA

CFA® Level III Weekly Review - Session B Thursday
Thursday January 21, 2016
Instructor: O. Nathan Ronen, CFA

CFA® Level II Weekly Review - Session B Tuesday
Thursday January 26, 2016
Instructor: O. Nathan Ronen, CFA