Financial markets: Hurrah before the storm; Low volatility risks lulling investors into false sense of security

June 21, 2014 Leave a comment

June 13, 2014 7:30 pm

Financial markets: Hurrah before the storm

By Ralph Atkins

Low volatility risks lulling investors into false sense of security

After Lehman Brothers collapsed in late 2008, financial markets around the world panicked. Almost six years later, the world may feel as vulnerable to geopolitical and economic shocks but serenity has broken out. Read more of this post

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Silicon Valley Tries to Remake the Idea Machine

June 21, 2014 Leave a comment

Silicon Valley Tries to Remake the Idea Machine

JUNE 10, 2014

By CLAIRE CAIN MILLER

image001

Like any supersecret lab that’s supposedly trying to invent the future, Google X looks rather nondescript from the street. Besides the occasional hot pink driverless car parked out front, the facility is an archipelago of unmarked, low-slung, redbrick buildings, more Sunset Park than Silicon Valley. Inside, however, whiteboards offer clues about what exactly the future — at least as Google sees it — might look like. And while some diagrams — including one with parts labeled “snooze” and “set time” — suggest more mundane inventions, others, like one outlining a “space elevator,” seem a bit more ambitious. Read more of this post

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Barron’s: Picking Up the Pieces; Our investment experts see little growth for the market averages, but plenty of opportunities among stocks

June 20, 2014 Leave a comment

Picking Up the Pieces

Our investment experts see little growth for the market averages, but plenty of opportunities among stocks.

LAUREN R. RUBLIN

June 14, 2014

Say goodbye to sunny skies and ditch the rose-colored glasses.

That’s the collective advice of the investment seers who populate the Barron’sRoundtable, and whose market forecasts for the back half of 2014 range from meh to feh. Specifically, the bulls in the bunch see a meager 5% gain in the Standard & Poor’s 500 in the months ahead, while the rest see a volatile rout in late summer that could leave stocks 10% lower, at least. Read more of this post

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Why Clay Christensen is abandoning the traditional approach to academic research

June 20, 2014 Leave a comment

Why Clay Christensen is abandoning the traditional approach to academic research

BY MATT MCFARLAND June 12

Professor Clay Christensen is trying something new on the Harvard Business School campus. (Kevin Ma/Bloomberg)

Clay Christensen, the Harvard Business School professor and godfather of innovation, fittingly has some fresh ideas about academic research. He scrapped the traditional academic approach for his latest paper, theCapitalist’s Dilemma, which was published in the June issue of the Harvard Business Review. Read more of this post

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Indonesian property developers shaken by housing-loan regulation

June 20, 2014 Leave a comment

Developers shaken by housing-loan regulation

Anggi M. Lubis, The Jakarta Post, Jakarta | Business | Sat, June 14 2014, 1:02 PM

The central bank’s policy of tightening the loan-to-value (LTV) for property purchases, introduced late last year, has made the country’s publicly listed property developers more pessimistic about sales this year, as buyers are now required to pay a strict minimum down payment. Read more of this post

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Ignore the market rally; Modi has limited room to turn things around

June 20, 2014 Leave a comment

Ignore the market rally; Modi has limited room to turn things around

By Sunil B.S. @sunilbs_tweets June 13, 2014

Not so fast, bull market.

Earlier this week, president Pranab Mukherjee laid out Narendra Modi’s plans to reignite investment into India. But it is easier said than done.

A recent report by Credit Suisse says that markets have overestimated the powers of the central government. It pointed out that of the projects worth $1,391 billion that are under implementation, only those worth $351 billion have reached the central government for approval. The rest are stuck because either there are problems within respective organizations or these projects come under purview of state governments. Read more of this post

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Uber is offering helicopter rides over Mumbai and Bangalore for $85

June 20, 2014 Leave a comment

Uber is offering helicopter rides over Mumbai and Bangalore for $85

By Shruti Chakraborty June 13, 2014

While the cab-hailing app Uber is in the news elsewhere as traditional taxi drivers rise in protest in European capitals, the company, recently valued at $17 billion, looks set to enjoy a weekend of buzz around the brand in India.

In Mumbai and Bangalore, Uber is offering a one-time service this weekend–users can “hail” a chopper. Effectively, they can book a chopper ride from within the app. For Rs5,000 ($85) for two people, an Uber cab will pick you up and take you to a helipad, from where a chopper service operated by a commercial operator will take you on a 20- to 30-minute ride around the city. This will be followed by brunch and a ride back home. Read more of this post

Filed under Macro Trends, TMT Trends

Does the advertising business that built Google actually work?

June 20, 2014 Leave a comment

Does the advertising business that built Google actually work?

By Tim Fernholz @timfernholz June 13, 2014

What if the advertisers who pay Google most of the money it earns are getting a negative return on their investment, to the tune of -63%?

That’s the question raised by a new paper that uses internal eBay data to assess whether the company’s investment in search-engine marketing is actually paying off. When major brands spend to make sure their results are at the top of a Google search page for certain keywords, they like to think they’re effectively targeting the customers looking for their products. But what if they are paying for something that they could be getting for free?

image001 Read more of this post

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Transcript of Full Commencement Address by Jim Carrey at Maharishi University of Management

June 20, 2014 1 Comment

http://www.youtube.com/watch?v=V80-gPkpH6M

Transcript of Full Commencement Address by Jim Carrey    

Official Commencement Address Graduating Class of 2014
from Maharishi University of Management, May 24th, 2014
by Jim Carrey

Thank you Bevan, thank you all!

I brought one of my paintings to show you today. Hope you guys are gonna be able see it okay. It’s not one of my bigger pieces. You might wanna move down front — to get a good look at it. (kidding)

Faculty, Parents, Friends, Dignitaries… Graduating Class of 2014, and all the dead baseball players coming out of the corn to be with us today. (laughter) After the harvest there’s no place to hide — the fields are empty — there is no cover there! (laughter) Read more of this post

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Can You Handle the Market’s Stress Test?

June 20, 2014 Leave a comment

15 HRS AGOMONEYBEAT

Can You Handle the Market’s Stress Test?

Investing graybeards like to say that “bull markets climb a wall of worry.” This one has been sleepwalking up a wall of boredom.

By Jason Zweig

As of this Friday, the S&P 500 has gone 980 days without a 10% decline, according to Birinyi Associates, the fifth-longest such stretch on record. This past week’s nervousness, set off by the insurgency in Iraq and the surprise defeat of U.S. Rep. Eric Cantor, is thus the perfect pretext for investors to think about what they will do when the market takes a serious beating. Read more of this post

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In print or on dead trees, there’s money in long-form journalism

June 20, 2014 Leave a comment

In print or on dead trees, there’s money in long-form journalism

BY TED RALL 
ON JUNE 13, 2014

Like others who got into journalism while print media was fading, I have been offering my theories about what has been going wrong. (Hint: newspaper circulation has been declining since the 1960s, so industry executives might want to stop blaming the Internet.) Read more of this post

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Infosys founder plays down top management exits; focuses on innovation

June 20, 2014 Leave a comment

Infosys founder plays down top management exits; focuses on innovation

11:08am EDT

By Lehar Maan and Soham Chatterjee

BANGALORE (Reuters) – Infosys has enough senior managers to run the business even if more executives leave India’s second-largest IT services exporter, its founder said on Saturday, after a spate of staff exits triggered concerns about a leadership vacuum. Read more of this post

Filed under Macro Trends, TMT Trends

What bugs foreign investors about China?

June 20, 2014 Leave a comment

Updated: Saturday June 14, 2014 MYT 9:20:56 AM

What bugs foreign investors about China?

BY TAN SRI LIN SEE-YAN

I spent the last week of May at Shanghai’s Fudan University – attended two global conferences there. The network is quite fantastic, full of “lao-wai” (foreigners) academics and policymakers seeking analytical clarification on four main areas of concern: (i) Surely, China can’t keep on growing at 7.5%; (ii) Is the property bubble going to bust? (iii) Will China ever reform?; and (iv) Can the yuan go international? Investors expect wrenching change. Here’s my take. Read more of this post

Filed under Macro Trends

Challenges in Malaysia’s SPAC land

June 20, 2014 Leave a comment

Updated: Saturday June 14, 2014 MYT 11:54:03 AM

Challenges in SPAC land

BY STARBIZWEEK TEAM

HOW much control should Special Purpose Acquisition Companies (SPACs) exert over the assets they acquire? This is a question that is increasingly becoming a moot point with listed SPACs.
Here’s one indication of this: According to sources, Reach Energy Bhd, the oil and gas SPAC seeking a listing on Bursa Malaysia, has tweaked one the clauses in its prospectus relating to control over the assets it hopes to buy. It has now stipulated that it will seek to secure majority control over the assets it buys into.  Read more of this post

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Joe Queenan’s Guide to Public Speaking: How to avoid utterly humiliating yourself in front of a bored and yawning crowd

June 20, 2014 Leave a comment

Joe Queenan’s Guide to Public Speaking

How to avoid utterly humiliating yourself in front of a bored and yawning crowd.

JOE QUEENAN

June 13, 2014 2:24 p.m. ET

People routinely say that being asked to speak in public is their No. 1 fear, inspiring more dread than flying. The idea of speaking to a group of people, even if they know the audience, scares them…well…speechless. And when it does come time to mount the stage, inexperienced speakers only make things worse by resorting to corny jokes and sappy, improbable anecdotes. Their agony makes everyone else in the room feel uncomfortable. The room reeks of flop sweat. Read more of this post

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Iron Ore Prices Hit Fresh 21-Month Lows As Commodity Ponzi Probe Escalates

June 20, 2014 Leave a comment

Iron Ore Prices Hit Fresh 21-Month Lows As Commodity Ponzi Probe Escalates

Tyler Durden on 06/13/2014 11:24 -0400

Anxiety over the Qingdao port and warehouse probe is slowly but surely creeping through all the commodities that were used in China’s commoditty-financing-deals (as we noted here). With Copper hurting (and gold picking up), Iron Ore prices have tumbled to 21-month lows (near the lowest since 2009) as ‘real’ demand slows as the economy slows and ‘financial’ demand is crushed as “banks are more vigilant about iron ore financing.” As Bloomberg reports, investigators are trying to determine if individual batches of commodities were used multiple times to secure loans. This is making banks nervous (shadow and non-shadow) and while iron ore inventory is falling, prices are adjusting lower rapidly as traders anticipate “financing problems forcing traders to dump ore.” Read more of this post

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Does Mandatory Shareholder Voting Prevent Bad Acquisitions?

June 20, 2014 Leave a comment

Does Mandatory Shareholder Voting Prevent Bad Acquisitions?

Marco Becht 

Université Libre de Bruxelles (ULB) – Solvay Brussels School of Economics and Management; European Corporate Governance Institute (ECGI)

Andrea Polo 

Universitat Pompeu Fabra – Faculty of Economic and Business Sciences; Barcelona Graduate School of Economics (Barcelona GSE); Stanford University – Arthur & Toni Rembe Rock Center for Corporate Governance

Stefano Rossi 

Krannert School of Management; Centre for Economic Policy Research (CEPR)
May 30, 2014
European Corporate Governance Institute (ECGI) – Finance Working Paper No. 422/2014
Rock Center for Corporate Governance at Stanford University Working Paper No. 188

Abstract: 
Corporate acquisitions can be ruinous for acquirer shareholders. Can shareholder voting prevent such corporate disasters? Previous empirical studies based on U.S. data are inconclusive because shareholder approval is discretionary. We study the U.K. setting where bids for relatively large targets are subject to mandatory shareholder approval. Our findings suggest that under the U.K. listing rules shareholder voting can deter bad acquisitions. We find that shareholders gain 8 cents per dollar at the announcement of a Class 1 deal or $13.6 billion over 1992-2010 in aggregate. In the United States acquirers lost $214 billion in matched deals during the same period. In the U.K. relatively smaller Class 2 transactions do not require a vote and shareholders lost $3 billion. Our results are robust to confounding effects and other controls. A Multidimensional Regression Discontinuity Design (MRDD) inspired test supports a causal interpretation of our findings. Class 1 deals just above the assignment threshold perform better than Class 2 deals just below. Our evidence suggests that mandatory voting makes boards more likely to refrain from overpaying or from proposing deals that are not in the interest of shareholders.

 

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Assessing the Cost of Accounting-Based Long-Short Trades: Should You Invest a Billion Dollars in an Academic Strategy?

June 20, 2014 Leave a comment

Assessing the Cost of Accounting-Based Long-Short Trades: Should You Invest a Billion Dollars in an Academic Strategy?

William H. Beaver 

Stanford University

Maureen F. McNichols 

Stanford University

Richard A. Price III

Utah State University – Huntsman School of Business
February 26, 2014
Rock Center for Corporate Governance at Stanford University Working Paper No. 177

Abstract: 
The bulk of the academic literature studying market efficiency assumes that investors are fully diversified and that they can construct long-short portfolios at zero cost. We relax these assumptions and under more realistic assumptions examine the attractiveness of long-short strategies as stand-alone investments and as a part of a diversified portfolio. We highlight costs and considerations unique to our setting which include: the relevance of idiosyncratic risk and nontrivial downside risk; the generally positive short position returns which reduce long-short strategy returns; the cost of capital; financing costs; and rebates received on the short portfolio. Our analysis reveals that as stand-alone investments, long-short strategies are not preferable over the market. However, long-short strategies do contribute significantly to the performance of an overall diversified portfolio.

 

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Can Governance and Forensic Accounting Metrics Predict Stock Returns?

June 20, 2014 Leave a comment

Can Governance and Forensic Accounting Metrics Predict Stock Returns?

Ophir Gottlieb 

GMI Ratings
May 23, 2014
Rotman International Journal of Pension Management, Vol. 7, No. 1, 2014

Abstract: 
Arguably, governance and forensic accounting metrics should be predictors of future stock returns. Do empirical tests confirm this view? This article describes the logic and analytics used to calculate a metric called the Forensic Alpha Model (FAM), which was then used to test the hypothesis that it could predict future stock returns. The results of these tests, conducted with out-of-sample data, confirm that forensic accounting and governance metrics did indeed predict future stock returns. Implementing the FAM requires enormous data collection, detailed peering, industry normalizations, forensic accounting and governance taxonomies, sophisticated measures of association and interactions, rigorous testing, and advanced supervised machine learning.

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Uber’s Real Challenge: Leveraging the Network Effect

June 20, 2014 Leave a comment

Uber’s Real Challenge: Leveraging the Network Effect

JUNE 13, 2014

Neil Irwin

Most of the headlines about Uber, the rapidly growing transportation service, involve its battles to do business in more cities around the world. Not surprisingly, cabdrivers who have enjoyed being part of tightly regulated cartels in cities like Madrid, Miami, London and Los Angeles do not much care for the San Francisco-based upstart that brings them new competition. Read more of this post

Filed under TMT Trends

Wharton’s Adam Grant on the key to professional success

June 20, 2014 Leave a comment

Wharton’s Adam Grant on the key to professional success

The author of Give and Take explains why generosity in the workplace continues to be more effective than selfishness and why it is critical for personal fulfillment.

June 2014

Knowledge economy: Givers wanted

Screening out the takers

Turning takers into givers

The knowledge economy has not only spurred entirely new industries but also placed different demands on how people work effectively. In this video interview with McKinsey’s Rik Kirkland, Wharton School professor Adam Grant elaborates on his recent book, Give and Take: Why Helping Others Drives Our Success, which explores the evolving world of workplace dynamics, why selfishness fails, and how working with, for, and through others continues to be the recipe for personal and organizational success. An edited transcript of Grant’s remarks follows. Read more of this post

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Global Rules for Auditors? Don’t Hold Your Breath

June 20, 2014 Leave a comment

Global Rules for Auditors? Don’t Hold Your Breath

JUNE 12, 2014

By FLOYD NORRIS

Chris Cox, who as chairman of the Securities and Exchange Commission tried to bring international accounting rules to the United States, has now done an about-face.

“The first thing we should give up is the counterproductive fiction that the United States is going to replace Generally Accepted Accounting Principles with International Financial Reporting Standards,” he said in a speech at a conference in Pasadena, Calif., last week. Read more of this post

Filed under Macro Trends

Business Wisdom from the Commencement Speakers of 2014

June 20, 2014 Leave a comment

Business Wisdom from the Commencement Speakers of 2014

by Walter Frick  |   9:00 AM June 12, 2014

Commencement speakers face an impossible challenge: to inspire, advise, and entertain, without overstaying their welcome. In the age of YouTube, there’s the added pressure to craft a speech that could go viral, and perhaps even inspire a book. And this year, those invited to take the podium were no doubt aware of the student protests that forced some speakers to cancel. Read more of this post

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What to Do When Success Feels Empty

June 20, 2014 Leave a comment

What to Do When Success Feels Empty

by Boris Groysberg and Robin Abrahams  |   8:00 AM June 12, 2014

Why do career “wins” often leave people feeling empty and dissatisfied? And — more important — how can you avoid that problem? We recently asked HBR readers to share their thoughts, and several of the responses call to mind Douglas T. Hall’s classic model of psychological success.

Hall’s model suggests a number of reasons that a success might feel like a failure: Read more of this post

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What Does Pixar’s Collective Genius Look Like?

June 20, 2014 Leave a comment

What Does Pixar’s Collective Genius Look Like?

by Linda Hill, Greg Brandeau, Emily Truelove and Kent Lineback  |   2:00 PM June 11, 2014

What happens when an organization innovates? What does that process look like?

It’s an important question if you want more innovation, because the answer will shape what you do as a leader. If you think, as many do, that innovation comes from hiring a few “creative” people and implementing their best ideas, then you might assume your job is to find those people, sequester them in R&D or Product Development, review the solutions they propose, and adopt the winners. Read more of this post

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What Tesla Knows That Other Patent-Holders Don’t

June 20, 2014 Leave a comment

What Tesla Knows That Other Patent-Holders Don’t

by Walter Frick  |   5:15 PM June 12, 2014

Tesla made a seemingly unusual move today: it invited competitors to use its patents, for free. In apost on the company’s blog, CEO Elon Musk declared that Tesla’s “true competition is not the small trickle of non-Tesla electric cars being produced, but rather the enormous flood of gasoline cars pouring out of the world’s factories every day.” Read more of this post

Filed under TMT Trends

Why Smart People Struggle with Strategy

June 20, 2014 Leave a comment

Why Smart People Struggle with Strategy

by Roger Martin  |   2:00 PM June 12, 2014

Strategy is often seen as something really smart people do — those head-of-the-class folks with top-notch academic credentials. But just because these are the folks attracted to strategy doesn’t mean they will naturally excel at it. Read more of this post

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Priceline flies into the restaurant business with $2.6 billion OpenTable deal

June 20, 2014 Leave a comment

Priceline flies into the restaurant business with $2.6 billion OpenTable deal

Laura Lorenzetti

@FortuneMagazine

JUNE 13, 2014, 8:13 AM EDT

Acquisition expands the traditionally travel-only booking site’s services.

Priceline is snapping up restaurant-reservation platform OpenTable for $2.6 billion in cash, expanding the traditionally travel-only booking site’s services. Read more of this post

Filed under TMT Trends

The 23-Year-Old Wordsmith Behind The Hip, New Voice Of The Times Crossword Puzzle

June 20, 2014 Leave a comment

THE 23-YEAR-OLD WORDSMITH BEHIND THE HIP, NEW VOICE OF THE TIMES CROSSWORD PUZZLE

THANKS TO ANNA SHECHTMAN, YOUR CLUE FOR “BRO” IS NO LONGER “SISTER’S SIB.” IT’S “PREPPY, PARTY-LOVING, EGOTISTICAL MALE, IN MODERN LINGO.”

BY REBECCA GREENFIELD

The answers to the May 29th New York Times crossword puzzle included “epicness,” “twitter hashtag,” “where it’s at,” and “hell no.” Although the 61-year-old Will Shortz edits every single submission that graces the Gray Lady’s pages, that day’s entry (a Thursday) had sprung from the mind of 23-year-old Anna Shechtman, Shortz’s assistant and a four-time puzzle contributor for the Times. Read more of this post

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Commodity finance in China: An assay-light strategy; A fraud investigation casts a shadow over China’s metal imports

June 20, 2014 Leave a comment

Commodity finance in China: An assay-light strategy; A fraud investigation casts a shadow over China’s metal imports

Jun 14th 2014 | From the print edition

AT THE best of times, seizing collateral on defaulted loans in China is a fraught task, plagued by patchy enforcement. These are not the best of times in the port of Qingdao, a trading hub in the north-east. Police are investigating whether companies have committed fraud by pledging the same holdings of copper and aluminium to multiple banks, multiple times. The banks are scrambling to see how much of the metal sitting in Qingdao’s warehouses actually belongs to them. Read more of this post

Filed under Macro Trends

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