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Wednesday, August 31, 2005

"Hedonomics" - The Un-Dismal Science

I thought this was amusing.

Madsen Pirie at The Adam Smith Institute has a link to a tongue-in-cheek article on "hedonomics" - the "dismal science with its own happy ending". I think there are mostly two types of people (10, if you speak binary) - hedonomicists, and their opposite number (although I haven't decided what best to call them - maybe skeptonomicists, or gloomonomicists?) Here's an excerpt:
This is the newly identified branch of economics which exists to show that every story has a happy ending. As so often happens, practice has been running far ahead of theory. Chancellors work on it, deal-makers live by it, tycoons try their luck with it. In the stock market, hedonomics finds its natural home.
Click here for the whole thing.

Two observations:
  • I wonder how much of which camp a person is in is is determined by their basic nature, and how much by their incentives to be optimistic or pessimistic.
  • IMHO, many journalists tend to be practitioners of gloomonomics.

Housing Bubbles and Insider Sales (from WSJ)

Talk is always cheap. That's why I like prediction markets like Tradesport.com and the Iowa Electornic Markets. the prices of these contracts give you an idea of the predictions by people who are willing to put their money where their mouth is. So, you could say that the purchase of a prediction-market contract is a costly signal.

Insider trades are also often viewed as a signal. If we believe that corporate insiders have better information than outsiders about their companies' prospects, their trading behavoir cold have predictive power.

Tuesday's Wall Street Journal (online subscription required) has an article titled Insider Sales Hit Record at Builders that indicates insiders at home-building firms are engaging in insider selling, and that it could signal the end of the housing boom. It says:
Merrill Lynch quantitative analyst Richard Bernstein said he has seen record net insider selling during the past 10 months at eight of the 12 home-building companies he has tracked.

"This record level of selling comes despite the general perception that the stocks are undervalued, and despite that Wall Street analysts have few 'sell' recommendations on the stocks," Mr. Bernstein said in a note to clients.

He sees parallels between the housing sector and the technology industry before the bursting of the tech bubble. He said that within a year of the tech bubble's peak, about 14 of the 20 tech companies he tracked at the time reported record net insider sales and 16 of 20 within 18 months of the peak.

He could be right, but there are a few reasons to be skeptical. First off, "net insider selling" is typically defined as "sales-purchases". Most academic studies of insider trading indicate that insider selling is a lot less informative than insider buying. Insiders purchase their company's stock because they believe it's undervalued. OTOH, they sell for a variaty of reasons - the company is overvalued, they want to diversify (and they're recently gotten a lot of stock because of stock or option grants), or they simply need liquidity (maybe their teenage son just wrapped the family Porshe around a telephone pole). So, aggragating sales and purchases (like the net selling measure does) might not be a very informative measure.

In addition, the analyst quoted in the story has a pretty small sample to work with - 12 firms. Still, it's food for thought.

Monday, August 29, 2005

This Week's Carnival Of The Capitalists

The week's COTC is up and running at Casey Software. There seem to be more posts than usual, but these are my picks:

For a refresher on supply and demand, see Paradise Lost? - Price Controls in Hawaii from Rofasix, where he discusses (you guessed it - price controls).

In further "gasblogging", David Tufte at VoluntaryXchange gives us Gas Station Profits.

And finally, Searchlight Crusade's talks about Levels of Mortgage Documentaton. It's worth reading if you're thinking of buying a house.
Again, there are lots of iteresting things there. These just caught my eye.

This Week's Carnival of Personal Finance

This week's Carnival of Personal Finance is up at AllThingsFinancial. It's an interesting bunch of articles this time. As usual, I'll give my picks of the week:
Financial Fruition discusses Important Financial Documents. I know JLP's discussed this before, but it's worth revisiting. Darn - I just have to get more organized!

The Real Returns has an interesting piece on Focus Funds.

Searchlight Crusade
has a good one titled Getting Rich Quick in Real Estate (it could have easily been titled "No, you're not getting rich quick in real estate").

FrugalforLife has some good information, titled Tips for Buying Your First Home. If you're in this boat, learn as much as you can - mistakes can easily cost you thousands of dollars.
Of course, browse around - your tastes are probably different from mine.

Saturday, August 27, 2005

Michael Yon And The Deuce Four

I'm a bit late to the party, but I just came across this blog by Michael Yon. He's an embedded freelance reporter with the 1-24th (the "Deuce Four") in Iraq. I don't think it would be too far out of line to say that he could end up being the Ernie Pyle of our time.

For two of the best dispatches he's written, check out Gates of Fire and Jungle Law. The second one is a bit of a nail-biter - it recounts the countdown as one of the unit's vehicles approaches the site of an IED (Improvised Explosive Device).

It's particularly interesting because Yon is an ex Green Beret, so he understands both combat and the martial culture from the inside. Critics might say that he looks at the unit with uncritical eyes, but as someone says, "that's a feature, not a bug".

If you want to hear about soldiers lifes in IRAQ, you could do a lot worse.

Friday, August 26, 2005

Mortgage Securitization and The Housing Boom

Wednesday's Wall Street Journal has a very interesting article titled "Housing-Bubble Talk Doesn't Scare Off Foreigners". It shows how the phenomena of securitization has changed the mortgage market. For the uninitiated, "securitization" is the process whereby mortgage loans are pooled and then used to back securities that are sold in the open market. It benefits all the players in the mortgage market- lenders, borrowers, and fixed-income investors.

These benefits occur because securitization allows lenders to reallocate risk to other parties (fixed income investors) that have a comparative advantage on bearing (or alternately a greater preference for) it. Since the lenders no longer have to keep the loans in their portfolio, they are willing to lend to borrowers with less pristine credit. As an example of this trend:

...Strong investor interest has also made loans available to borrowers with poor credit and many other people who might otherwise have trouble getting a mortgage. Subprime loans included in mortgage securities totaled $401.5 billion last year, nearly double the total for 2003, according to Standard & Poor's. Meanwhile, loans with less than full documentation of the borrower's income and assets accounted for 70% of mortgage securities rated by Standard & Poor's in this year's first half, double the level recorded in 2000.
As a result, interest rates are lower all along the risk spectrum. Finally, investors willing to bear the risk (in this case foreign investors) have more investment options.

Click here for the whole article (note: online subscription required).

How to Succeed in Graduate School (via The Austrian Economists)

Here's some excellent advice from The Austrian Economists for new PhD students: get started on topics for articles ASAP. While they're stressing the particular need for students to have pubs when coming out of "non-mainstream" programs, it also holds for those at lower-tier programs across the boards. Here are the best lines:
PhD in hand + refereed publication(s) + strong teaching evaluations = tenure track job.
The other factor in the equation is the "lunch tax" that the individual represents. The more difficult the person is to take as a personality, the stronger publications they will have to have in order to signal that they are worth it.
Click here for the whole thing.

Thursday, August 25, 2005

What's in Your Syllabi? (compliments of SCSU Scholars)

It's that time of the year - a new crop of students has arrived. Along those lines, SCSU Scholars has a post titled "How Long Is Your Syllabus" that discusses several things syllabi-related. In particular, they note that the online versions that many professors now use are longer and more revealing about the professors approach, biases, and personality (or lack thereof).

A related issue is what to do on the first day of class. In my case, I have an extended syllabus online (over 8 pages at latest count, and growing every semester), but cover very little "admistrivia" on the first day. There's nothing that sucks the life out of the first day like going through all the minute details of the class. In any event, with add/drop going on for the first week, you'd just end up repeating it anyway. So, all I do in this vein on the first day is give the barest details - the grading, my office hours, how to contact me, and where the class website is. Then it's on to some substantive work. It's always good to get things rolling right from the start.

Robert Bruner of U. of Virginia's Darden School has an excellent piece on how to conduct the first day of class. Like much of his writing, this piece (titled "Opening A Course") can be found here on SSRN. It's chock full of advice from some very, very good teachers (and short, too).

Beloit College - class of 2009 mindset list

Beloit College has just published its Mindset List for the Class of 2009. Interesting stuff. For those who aren't familiar with it, the list describes some of the experiences that shape the current crop of college freshmen. Some of the items are amusing/nostalgic (#71 - Miss Piggy and Kermit have always dwelt in Disneyland), while others demonstrate how much they take technological advances for granted (#3 - Heart-lung transplants have always been possible).

It gets easier and easier as we get older to forget how much the world we grew up in has changed in the intervening years (man, does that sound like my parents talking - I'm getting old...).

Wednesday, August 24, 2005

Taxes and Real Estate Bubbles

One of the principles I try to teach my students is that taxes are important, since it's after-tax cash flows that matter. Patri Friedman at Catallarchy makes an excellent point that can be used to illustrate this concept. He argues that the real estate bubble may in part be due to the elimination of taxation (within limits) on gains from sales of a primary residence. This makes the after-tax proceeds from selling a house higher, and makes houses more attractive. Hence, prices increase.

Click here for the whole piece.

A similar argument can be made for the effect of the recent cut in tax rates on dividends. Bloin, Raedy, and Shackelford have a paper on the topic, titled "the Initial Impact of the 2003 Reduction in the Dividend Tax Rate. It can be downloaded free (PDF format) from the SSRN here. In short, they find that firms increased dividend payouts (and decreased the extent of share repurchases) following the tax cut.

So just remember - taxes matter.

Tuesday, August 23, 2005

The Non-7% IPO Underwriting Fee

Monday's Wall Street Journal (online subsription required) has an interesting article on IPO underwriting fees. Since Ritter and Chen's 2000 article, it's been pretty well known that there's an inordinate number of underwriters fees at the 7% level for bringing a company public.

However, lately there have been a lot more deals coming in at less than a 7% fee. Some of this is due to deals being reduced in size (an underwriter will negotiate a lower percentage if there are more proceeds. If the deal proceeds end up less than expected, the percentage isn't renegotiated. So, the underwriters end up with the originally agreed upon percentage.

But, the more interesting factor could be the increased number of private equity firms being involved in the IPO process. Compared to the owner of a private company, these investors tend to be sophisticated "repeat" customers. As a result, they understand the limits of how they can negotiate far better than the relatively unsophisticated owners. Consequently, they're likely to negotiate a lower percentage fee.

Hard to work up much sympathy for the investment bankers - they've merely gone from having an incredibly lucrative business to one that's just slightly obscenely profitable.

Click here for the whole article.

Housing Prediction Markets

John Whitehead at Hypothetical bias has some excerpts from recent articles on how players in housing prediction markets view a couple of major real estate markets (like New York San Franciso, etc...):
San Diego? Prices will rise another 5 percent in the third quarter, according to the bettors at HedgeStreet, another Web site. New York? They will inch up 2 percent. In Los Angeles, they will jump 7 percent. In each of the cities, as in San Francisco, prices will be more than 10 percent higher than they had been a year earlier.

HedgeStreet began accepting bets this year on house values in a handful of major cities. In the weeks leading up to the release of new numbers from the National Association of Realtors, bettors can buy contracts that make a payout according to a metropolitan area's average price.

Click here for the whole thing (note: the original NYT article Whitehead mentions is available only if you have an online subscription).

Here's a link to the Hedgestreet contracts.

Monday, August 22, 2005

This Week's Carnival of The Capitalists

This week's COTC is up at Strange Brand. There's a lot of good stuff there, but I'll highlight two that are particularly finance related:

Searchlight Crusade
gives a nice explanation of Mortgage Rate, Points, and Closing Costs. It's worth reading -- I've bought a couple of houses, and I'm just now beginning to understand some of the subtleties.

View From a Height has a piece that talks about some of the ways analysts make forecasts, titled Markets That Aren't Always So Wise. He argues that their forecasts of stock prices already are based on stock prices, so...

As usual, look around - you may find some new sites to add to your list.

Friday, August 19, 2005

A National Sales Tax (via About Economics)

The Boortz/Linder book on the Fair Tax Proposal has been getting a lot of press lately. While I personally think the chance of a National Sales Tax replacing our current tax system is somewhere between slim and none, the book will probably have an impact on discussions about tax reform.

Mike Moffatt at About Economics has a very thorough and even-handed analysis of what might happen under a National Sales Tax. He addresses the following questions:
  1. What impact will the change have on consumer spending and the economy?
  2. Who wins and who loses under a national sales tax?
  3. Is such a scheme even feasible?
It's probably the best "plain language" analysis of the topic I've read yet.
Click here for the whole thing. It's worth a read - you'll probably hear more about the issue in the months to come.

Thursday, August 18, 2005

Money Management For College Students (via Sound Money TIps)

It's getting near the time that the younguns are going off to college. Many will be on their own for the first time. Sound Money Tips has a link to a great guide put out jointly by ScholarShop and the National Endowment for Financial Education. The guide, titled '40 Money Management Tips Every College Freshman Should Know', and can be found here (in PDF version). Look in the section titled "Money Management".

Ah well, off to more useless meetings...

Wednesday, August 17, 2005

This Is The Best Article Title I've Seen In A While

The article is actually about agency problems, but I loved the title (from the Fund Industry Discussion Forum):

Dwarf-tossing Is No Smoking Gun, And The Idependent Chairman Rule Is No Silver Bullet…

It sounds like the Jerry Springer show.

Good Advice On Arguing (via Catallarchy)

While on vacation, I didn't spend all that much time on blogging. Mostly, I marked things I found interesting for later use. So, over the next few days, I'll be spending a bit of time emptying the cache.

Patri Friedman at Catallarchy gave some excellent advice on arguing (from some reading he's doing on Ben Franklin):
When another asserted something that I thought an error, I denied myself the pleasure of contradicting him abruptly, and of showing him immediately some absurdity in his proposition. In answering I began by observing that in certain cases or circumstances his opinion would be right, but in the present case there appeared or seemed to me some difference, etc.
Click here for the whole thing.

He's on to something, particularly in the academic world. All too often, we have a tendency to take each argument as a one-shot game. So, without humulity we try to win the current argument at all costs. Unfortunately, this is counterproductive both in the short run and in the long one.

I'm a bit of a "conference rat" (I've averaged better than two conferences a year for the last five years). I've seen a lot of work presented over the years that was seriously flawed (some of it was my own). Sad to say, but I wasn't a very good follower of Franklin's advice early in my career. As a result, some of the people I made comments or suggestions to not only didn't give the comments a fair hearing, but they also were less likely to want to share a drink with me after the presentation. While I'm not the brightest bulb in the lamp, I am teachable, so I eventually learned better (mostly due to good advice given in Franklin's style). Once I loosened up, I not only found people listening to what I had to say, I also found myself with a lot more people to hang out with, and both are good things.

One of my grad school mentors (I'll call him Dr. Jones) was notorious for the way he would ask questions/make comments during presentations at our school. Near the beginning of a presentation, at some point he would typically scratch his head and look mildly puzzled. Then he'd start out by saying something like, "I'm sure this is me, and I'm just missing something. But, it seems to me like.... Could you explain to me why...". At this point, he's ask a question that typically cut to the heart of the matter.

It was so effective (and fun to watch) because he was always polite and non-confrontational. It was kind of like seeing an academic version of Columbo (without the sloppy appearance - Jones was a very stylish dresser).

To this day, a couple of my classmates call this style of questioning "pulling a Jones". Sometimes when we're in a presentation, one of us will start scratching his/her head just to get a smile out of our friends.

Tuesday, August 16, 2005

Pandering vs. Warmth in The Classroom

Robert Bruner (at the U. of Virginia's Darden graduate school) has probably written more good material about teaching than any other currently active financial academic. He has another excellent (and better yet, short) one on SSRN titled 'Do you Expect Me to Pander to the Students?' The Cold Reality of Warmth in Teaching.

In it, Bruner answers a colleague who thinks that being "warm" to the students is equivalent to pandering to them. He discusses how the two things are quite different, and how being "warm" in the classroom can significantly aid in the learning process. Here's the abstract

Many instructors struggle with the role of rapport in teaching. For some, the response is a cool and distant teaching style. This essay argues that a style of appropriate warmth can promote student learning. It offers definitions, examples, and implications for the instructor.

From a purely cynical (i.e. getting better teaching evaluations without much more work) perspective, being a little warmer in the classroom helps a lot. I've found that when students think you care about them, they'll forgive you just about anything (including tough assignments, difficult tests, and high standards for grading); if they think you don't care, they'll forgive you nothing. Of course, warmth can be faked, but it's a costly signal. If you're like some of my former colleagues, it's just too hard to fake it, since they'd rather be done with the class so they can get back to their research. .

Since I'm accused of always thinking in terms of quotes, here are two to leave you with:

"The secret to success is sincerity. Once you can fake that, you've got it made" - Jean Giraudoux

"Tact is the ability to tell someone to go to hell in such a way that he looks forward to the ride" - unknown, but I'll claim it if no one wants it. .

HT to Jim Mahar at Financeprofessor.com for pointing out the article.

Monday, August 15, 2005

This Week's Carnival of Personal Finance

Monday is Carnival day. This week's Carnival of Personal Finance is up and running at Blueprint For Financial Prosperity. As usual, here are my picks for the week:

MMB’s Personal Journal has ten tips to help you boost your credit score. It's worth reading --numbers 7 & 10 were new to me, and I occasionally teach this stuff.

Ironman of Political Calculations has excerpts of a speech where Rob Arnott makes the claim that better returns may be obtained by restructuring how stock market indices are put together, titled Indexing Fundamentals. Given efficient market theory, I'm not sure I buy it, but it's thought provoking.

Searchlight Crusade has an article that explains Exclusive versus Non-Exclusive Buyer’s Agent Agreements.

JLP of AllThingsFinancial has ten tips to hep you avoid investment fraud.
As usual, browse around. People have different tastes and needs, so other pieces might also interest you.

This Week's Carnival Of The Capitalists

This week's Carnival of the Capitalists is up at Weekend Pundit. It's the usual fine job associated with the Carnival. While there are a lot of interesting posts, here are the ones that particularly tickled my fancy:
The Skeptical Optimist has an excellent diagram of how money and bonds flow into and out of the US Treasury. It's suitable for classroom use.

Patri Friedman at Catallarchy illustrates the concept of “regulatory capture”, where certain interests take control of the regulatory agency that was supposed to regulate them.

David Tufte at voluntaryXchange has been watching the share prices of the parties involved in the Unocal takeover bidding war. The prices haven't followed the usual pattern (i.e. "bidder prices drops while target price rises").

Kim Snider discusses “Where to put your safe money?”, since she feels that we won't likely see any great returns in stock or bonds for the foreseeable future.

Barry Ritholtz at the Big Picture describes signs he interprets as some softening in the market.

Dan Melson explains mortgages, the providers thereof, yield spreadsheets and why we have to be careful when shopping for mortgages.

As usual, your mileage may vary. Check out the whole Carnival if you have the time.

Sunday, August 14, 2005

Back In The Saddle

Just to let y'all know - I'm back from vacation (10 days at the Unknown In-Laws in Connecticut). A good time was had by all - lots of cycling along the Connecticut shoreline, good seafood, and catching up with family and colleagues in the area.

Regularly scheduled blogging will continue tomorrow. I'm eager to get back in the swing of things, and to get back to my research. I have another two weeks before classes start, but unfortunately my school has a number of "ceremonial" activities I have to go to in the next fortnight (by "ceremonial", I mean events that serve no real purpose but to make the administration feel like they're doing something useful by putting them together). For example, there's a required two-day series of talks that all faculty on campus have to attend before classes start each year. Supposedly, it helps us all get on the same page on the "critical" topic of the year (I think this year's theme is "assessment"). Unfortunately, the page it puts us on is one where we make snide comments to each other about what a colossal waste of time the whole thing is - my experience is that a half day would be enough to cover the important stuff. The rest is just filler to stretch it out to two days.

After all, a longer meeting must be better, right?

Wednesday, August 10, 2005

This Week's Carnival of Personal Finance

I'm a bit late to the party, but this week's Carnival of Personal Finance is up at Consumerism Commentary. Here are my picks of the week:

Jim from Blueprint for Financial Prosperity gives a great resource for figuring out which home renovations pay of (and how much) in Best Value Home Renovations.

Changing employers? You'll have to figure out how to roll over your 401k. Jonathan at MyMoneyBlog has a mulitpart series on his options for rolling over his account. In Part One, he weighs the pros and cons of sticking with Fidelity.

Jon at Smart Money Daily talks about the problems associated with investing with your emotions.

Dan Melson at Searchlight Crusade has some nice resources explaining how to qualify for a house or mortgage.

There's plenty more good stuff there - look around.

Narrow Research Can Lead To Generalized Teaching

BizDeansTalk is quickly becoming one of my favorite blog reads. It's unique in that it's run by two top B-school deans (Paul Danos of Dartmouth and Santiago Iniguez of Instituo de Impresa). In the latest installment, Danos takes on the common complaint that research-oriented faculty have a hard time generalizing in their teaching. He writes:
Sometimes we assume that our academic researchers are narrowly focused and that non-researcher teachers give a broader perspective, but I believe that it can be just the opposite. The top researchers give generalizations based on sampling of populations and/or very general principles. So, for instance, when they generalize about the effects of promotions on subsequent sales, they are not talking about one company or one person's experiences but about the class of companies under study.
Click here for the whole thing.

One of my mentors had an amazing breadth of knowledge about pretty much every sub discipline in Finance. I asked him once (over coffee) how he got that way. His response was that as an assistant professor, they made him teach a lot of different classes. Before each new prep (even though they were often undergrad courses) he'd read some of the journal articles in the discipline to make sure he was on proper footing (being a cynic, he often didn't trust the textbooks). So, he'd get an overview of whatever topic he was teachings from a rigorous perspective. Then he could boil it down for his students.

I talk a lot with business people. My experience echoes Danos' comments - most successful businessmen have a deep understanding of their specific circumstances. However, as deep as it is, it's often also very narrow. While a researcher's own interests may also be very focused, the best ones are in the habit of reading a diverse selection of journal articles that are not directly related to their specific topic. This gives them the "broad sample" exposure that makes them good teachers.

Now if only these two guys would post more often.

Tuesday, August 09, 2005

This Week's Carnival of The Capitalists

This week's Carnival of the Capitalists is up at View From a Height. My picks for the week are:

Political Calculations has some nice charts showing historical stock market data

Roth & Company breaks down recent changes in SEC rules regarding stock options granted to corporate insiders.

All Things Financial goes through how much you'll need to save to send your kids to college

Real Returns makes the claim that large-cap indices (like the S&P) aren't necessarily overexposed to large-cap stocks, since large companies are themselves pretty well diversified.
There's other good stuff there too, but this'll get you started.

Sunday, August 07, 2005

Some Options Strategies are Not As They Seem (from Forbes)

A call option gives the holder of the option the right (but not the obligation) to purchase the underlying stock at a given price within a given time period. The price the holder pays for this right is called the call "premium". People who sell (or "write") calls do so to collect the premium.

The last few years, interest rates have been relatively low by historical standards. At the same time, the stock market hasn't exactly overwhelmed either. So, in an attempt to gain more income , some investors have taken to writing call options (to collect the premiums).

Forbes has an article titled "Some Options Strategies Are Not As They Seem" which gives a good and relatively low-tech discussion of this practice. Here's what's probably the best quote in the article:

"...There's a disconnect between what people are doing and the reason for
buying stock in the first place," Schaeffer said. "Why are you risking your
money if you're not expecting, potentially, some very attractive appreciation
down the road?"

For the full piece, click here.

Once again, let's review what the principle of Efficient Markets would say -- thatprices and returns of publicly traded investments are "fair". In other words, they accurately reflect the risk of the investment. So, there's no such thing as a free lunch. If an investment strategy looks like a way to make more return without taking on more risk (or without giving up something else in return), you're missing something.

Saturday, August 06, 2005

Summer Time and The Livin is Easy

No, I haven't fallen off the face of the earth.

We're now at the Unknown In-Law's house, and I doubt I'll get much more than the occasional post in. Ther're very much with it. Mom-in-law is 76 and Dad-in-law is 84. He still runs an occasional 5k road race (was a very good miler in his 20s), and they regularly drive up and down the east coast - he's from Maine, and they were just in West Virginia for a family reunioin.

They even finally got broadband after many months of my suggesting it. Now, they're hooked --when it goes down they can't stand it. So, I can now keep up with what's going on in the larger world.

For those who care (I know I have at least three avid cyclists among my readers), I just got back from a 90 minute bike ride along the Connecticut coastline - saw the ocean a few times, and a LOT of New-England scenery.

Thursday, August 04, 2005

Net Roundup

I'll be traveling today to the Outlaws (the Unknown Father-In-Law and the Unknown Mother-In-Law). Since we head out shortly, I thought I'd "flush the buffer" and do a quick list of some interesting posts I've seen recently:
Tyler Cowen at Marginal Revolution relays an interesting example of a market-based system for setting cab fares - they bid for your services on line.

The Motley Fool has an article titled 9 Ways to Pay Off Debt. I know it sound like I beat on this drum a lot, but good advice bears repeating.

Arnold Kling attempts to explain the CAPM without using numbers in his Tech Central Station column titled One Price For Risk. The article is part of an extended series explaining financial markets using the anaogy of a food court (mmmmm, donuts!).

Keith at To Done gives 10 Tips To Better Meetings. Give this to the members of any committee you serve on (and to your department chair)

Jim Garven (a finance/insurance prof at Baylor). Explains catastrophe (or "cat") bonds. For the uninitiated, they're a cross between a plain vanilla corporate bond and an insurance policy.
This should keep you all busy while we drive up the East Coast.

Wednesday, August 03, 2005

Better Conference Presentations (from The Program)

I've written previously on how many academic conference presentations are (put mildly) somewhere between sleep-inducing and cringe-inducing.

This post at The Program lists an impressive collection of advice on how to do a better job at it. Of the ten pieces, I've only read a couple so far, but they're worth the time spent checking them out. Definitely read them before your next conference presentation.

BTW - the worst presentation was a job market presentation someone made at my school while I was still a grad student. It was a highly technical one - on option pricing. The candidate's slides consisted of page after page of calculations (with little intuition), and his transparencies were photocopies of hand-written notes ON LINED PAPER. What's more, they had obviously been done on a copy machine that was both running out of toner and was very, very much in need of a good cleaning.

In fairness, this was in the days before widespread use of presentation software. But really - for a job talk at a fairly respected research school, is it too much to ask that you wipe the glass on the copier off with some Windex?

Monday, August 01, 2005

This Week's Carnival Of Personal Finance

Monday is Carnival Day - this week's Carnival of Personal Finance is hosted by In Cash Flow We Trust. There are a couple of other posts of note that were also mentioned in the Carnival of The Capitalists this week, so I won't repeat those here. My picks are:
The Real Returns discusses current bond yields and how they don't put investors ahead of inflation.

Jim at Blueprint for Financial Prosperity talks about some of the ways some various ways some banks and credit card companies use to take advantage through fees or other charges.

Dan at Searchlight Crusade has a great list of indicators that you might want to choose another mortgage provider.

Frank at Hello, Dollar gives a half-million reasons for brown-bagging your lunch. Brown bagging my lunch, o.k. - but hands off my StarCrack habit. Gotta have my lattes.
Of course, your tastes may differ. Look around and check out the others, too.

This Week's Carnival Of The Capitalists

This week's COTC is up and running at Local Small Business Marketing And Advertising. As you know, I'm a finance/econ kinda guy. Most weeks, I find that the Carnival has a few posts I like, and a lot of stuff that I'm not interested in. However, this week's selection was pretty target rich. Here are my picks:
I've blogged repeatedly on the unintended consequences of Sarbanes-Oxley. Frank Scavo of The Enterprise System Spectator: has an interesting post titled Sarbanes-Oxley: Stop The Insanity. He goes into some of the ways companies are trying to comply with SOX, sometimes through some pretty bizarre policies. It's more from a software perspective than a financial one, but worth reading.

Tom O’Neill of Buyout Blog talks about "overshopping" a firm when trying to attract money form banks and private equity groups in Laser vs. Shotgun in Raising Capital. Good advice for entrepreneurs.

Warren Meyer of Coyote Blog talks about the common but misplaced idea that “wealth is somehow zero sum - that it can be stolen or taken or moved or looted but not created" in Physics, Wealth Creation, and Zero Sum Economics. Last night, the Unknown Brother and I were talking about how businesses make money by making other people better off. He's a small business owner who's done pretty well for himself, so he understands this from a practical level.

Joshua Sharf of View From A Height talks about how how markets process information in Can Markets Both Be Efficient and Make Mistakes? He discusses how markets aren't perfect, just better than the alternative.

Free Money Finance has been asking personal finance bloggers what their favorite (personal finance) books are, and why. Here's their answers in The Best Financial Book I’ve Ever Read, Part 1.

Flexo from Consumerism Commentary goes into all things 401 - both plain vanilla and the new Roth 401(k) in Hands of the 401(k).

Big Cajun Man of Canadian Financia Stuff talks about putting his kids allowance on auto-pilot in Real World Example: Kids Allowances. I wonder if this would work for my kids ($2 and $3 per week each). Nah - they like counting the quarters.

JLP at AllThingsFinancial points us to the CNN/Money series called Money 101 in JLP Looks At The Money 101 Series. Scroll down and read them all when you have the time.

And, for somethingcompletely different:
Mike Pechar, the Interested-Participant, writes all the British government trying to regulate beer advertisements in Brits Ban Hunks in Beer Ads. Oh, the humanity. You can watch this to see how it might play out if Burger King had folowed their guidelines in the infamous Paris Hilton BUrger King commercial (caution - may cause fluids like milk, coffee, or soda to fly out of you mouth at high speeds). Unfortunately, after watching it you might need some "mental floss".
That's all for this week, folks.