Archive for May, 2009
Sunday, May 31st, 2009
Will Higher Education Be the Next Bubble to Burst? - Chronicle.com:
“Is it possible that higher education might be the next bubble to burst? Some early warnings suggest that it could be.
….According to the National Center for Public Policy and Higher Education, over the past 25 years, average college tuition and fees have risen by 440 percent — more than four times the rate of inflation and almost twice the rate of medical care.”
What can be done?
“What can they do to keep the bubble from bursting? They can look for more efficiency and other sources of tuition…..recently argued for the year-round university, noting that the two-semester format now in vogue places students in classrooms barely 60 percent of the year,….Colleges can also make productivity gains by using technology and re-engineering courses. For the past 10 years, the National Center for Academic Transformation, supported by the Pew Charitable Trusts, has helped major universities use technology to cut instructional costs by an average of 40 percent while reducing the number of large course sections, graduate teaching assistants, and faculty time on correcting quizzes.”
Tags: bubble, education, higher-education, next, public-policy, rate, twice-the-rate, use-technology
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Sunday, May 31st, 2009
THE FREEDOM NETWORK AUDIO PORTAL - Free & Easy Access to worldwide Broadcasts on Economics, Social Security, Policy and Strategy:
“Podcasts on Economics, Social Security, Strategy, Liberty & Public Policy”
Wow. Amazing stuff. Thanks to Wayne Marr for point it out.
Tags: access, broadcasts, economics, education, for-point, public-policy, the, twice-the-rate
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Sunday, May 31st, 2009
At 64 years young, Wayne Lloy is grateful for the introduction of Maxgxl into his program, “my training and energy went thought the roof. For the first time in my life I was able to train twice a day with equal intensity, my recovery times were considerable shorter and I actually trained 7 days a week. My knee problem which prevented me from running was gone I was now running intervals with 8 minute miles. I have not run in over 20 years and had surgery on one knee. A problem I had called white hand… woke me up every night to get the blood flow back to my hands was gone.” More on this maxgxl testimonials.
Wayne Lloy found Maxgxl at a health and wellness show in Winnipeg. I took the product faithfully and have reaped the benefits as my body has a tool it always needed and produced naturally and that was already in ever cell increasing it to levels that I had in my 20’s. When my new friend Thomas McKee approached me about sharing this with others and wanted to show me the business end I said that I didn’t need the money. He said to me then do it to help people this was why you got into natural medicine in the first place and this is as natural as it gets you are giving the body the first ever compound patented Glutathione Accelerator in history. Now I just want to share Dr. Keller’s message and the Max products with everyone.
Tags: max gxl, max international, maxgxl, testimonials
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Sunday, May 31st, 2009
Max International is starting it international expansion opening in the Phillipines shortly in July. For those in waiting for MaxGXL in Australia there is a longer wait before Max opens officially here.
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Tags: australia, max international, maxgxl
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Friday, May 29th, 2009
Calendar and other similar anomalies are generally very interesting and students love reading about them (well as much as they love reading anything in finance) but do not fit well with efficient markets.
For instance, why? Consider the January effect If stocks were predictably up in January and investors had calendars that showed December was the month before January, investors would buy in December. etc etc.
The following article form CNN addresses this and other anomalies.
Selling stocks in summer often isn’t a smart thing to do - May. 29, 2009:
“Wall Street traders have a lot of funny ways to try and predict stock performance.
There’s the hemline indicator, which tries to equate fashion trends to stocks. According to that maxim, the shorter women’s skirts are, the better stocks should do. It’s also known as the bull market, bare knees phenomenon. Classy.
Then there’s the Super Bowl indicator. Stocks are supposed to go up in a year when an ‘old’ NFL team wins”
Tags: a-smart-thing, anomalies, cnn, had-calendars, known-as-the, nfl, predict-stock, shorter, street, super, super-bowl
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Friday, May 29th, 2009
In class we teach that IPOs are very risky and have historically been underpriced in short run and then overshoot their value and are overpriced in longer run. (see Ritter’s work on this)
The standard academic explanation for this is that with a float lower than shares outstanding the stock is very difficult to be shorted (See Bradley and Jordan 2002) and there are no options for a period so little way for those who believe the stock is overpriced to act on this mispricing.
While I have taught that many times and truly do believe it to be correct, I am always a bit concerned when academics meet practitioners. So I was very happy to hear that they agree.
From Research 2.0 Who is eating at the OpenTable?:
“We just published a research snapshot on OpenTable (OPEN - $28.75) which includes our typical intrinsic valuation analysis as well as a view of the company. Unfortunately for current investors the company is worth about 65% less than it’s currently trading at in the market.
This is explained in good part to the fact that you can’t short the stock and there are no options as yet since they just came public. But all this does is delay the inevitable decline to much lower prices before new long-term investors can buy shares.”
Tags: a-float-lower, cnn, eating-at-the, had-calendars, investors-the, known-as-the, mispricing, new-long-term, opentable, options-as-yet, overshoot-their, predict-stock, short-the-stock, street, super-bowl
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Thursday, May 28th, 2009
WOW! GM Bondholders reached a deal! SHOCKED.
They get 10% plus warrants to buy more shares.
G.M. Reaches a Deal With Bondholder Committee - DealBook Blog - NYTimes.com:
“General Motors said in a regulatory filing on Thursday that it has proposed a new deal to a committee representing many of its largest bondholders, offering up to a 25 percent stake in exchange for not opposing G.M.’s reorganization plan”
Tags: a-committee-representing, a-new-deal, bondholders, buy-more, exchange-for, filing-on-thursday, general-motors, its-largest, not-opposing, percent-stake, plus-warrants, wow
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Thursday, May 28th, 2009
Contrary to the attention grabbing headline, the Jury is still out on microfinance. Here is at least some evidence that it does not do all that we hope. That said, the conclusion is definitely more controversial.
The verdict is in on microfinance - PSD Blog - The World Bank Group:
“The results from the first large-scale randomized trial of access to microfinance indicate that it comes up short in many areas of human development. 52 of 104 slums in Hyderabad were randomly selected to receive new branches of a microfinance outfit called Spandana. Abhijit Banerjee and the other randomistas from the Poverty Action Lab describe the results in The Miracle of Microfinance? Evidence from a Randomized Evaluation:
…microcredit does have important effects on business outcomes and the composition of household expenditure. Moreover, these effects differ for different households, in a way consistent with the fact that a household wishing to start a new business must pay a fixed cost to do so. Existing business owners appear to use microcredit to expand their businesses….
[BUT] … it appears to have no discernible effect on education, health, or womens’ empowerment. Of course, after a longer time, when the investment impacts (may) have translated into higher total expenditure for more households, it is possible that impacts on education, health, or womens’ empowerment would emerge. However, at least in the short-term (within 15-18 months), microcredit does not appear to be a recipe for changing education, health, or womens’ decision-making.:”
The headline aside, the authors correctly point out that 15-18 months is a short a time period to measure dramatic changes. That the loans help the business (which in the longer term would be predicted to positively impact education, wealth, health, and MAYBE women’s equality issues), is enough for me to remain skeptical of any article saying the verdict is in.
BTW I included this for completeness and to overcome any bias I have in its favor 
In my limited personal experience, microloans have worked VERY well. True my experience is limited (I won’t count Kiva even thouh that has been positive too!), but locally the loans served their purpose (the borrowers had no access to credit) and the borrowers have made every payment to date.
So, I guess more research is needed to determine what about microfinance works (or under what conditions), and when it does not.
PS read the comments on this one.
Tags: a-committee-representing, a-new-business, a-time-period, bondholders, business, businesses, buy-more, conclusion, experience, investment, loans, not-opposing, percent-stake, plus-warrants, poverty-action
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Monday, May 11th, 2009
Zvi Bodie has been on PBS quite a bit of late:
Pocket Change: Answers to Your Finance Questions | Online NewsHour | May 5, 2009 | PBS: “In the first installment of Pocket Change, a regular forum on personal finance, NewsHour economics correspondent Paul Solman and finance professor Zvi Bodie tackle viewers’ questions on credit unions, credit scores, and whether gold makes a good investment.”
and then a discussion of Savings and Investing from the PBS FinanceFallacy series:
“ZVI BODIE: It’s what’s left over after you consume your income. How you invest it is about, you know, how much of it goes into a savings account, how much of it goes under a mattress, how much of it goes into stocks and other risky assets. So, investing in and of itself is not taking risk. You can invest safely. It’s simply how you are allocating your saving and the aggregate or the total investment in any given period of time is by definition equal to the total amount of saving.
PAUL SOLMAN: Well, but you can understand then why people would conflate the two and say, “Oh well, savings and investment - it’s the same amount, so it’s the same thing.” But…
ZVI BODIE: Well, I think what causes the confusion is that you’re using the word “safe” and you have things like savings accounts. So, in the popular parlance, as opposed to the economics definitions, it is the case that saving is what you put into a savings account.”
Bodie goes further and actually plays the role of an interviewer:
“At an annual meeting of economists, Paul and Zvi asked several professors of economics about the SEC’s explanations of saving and investing, as taught on the SEC’s Web site. The overwhelming response: The explanations are wrong.”
BTW the video gives you an idea of the exciting surroundings at most Finance/Econ conferences.
Tags: aggregate, allocating-your, chairman-thomas, confusion, economics, gold, money-managers, online-news, price, ralph-szygenda, taught-on-the, total, using-the-word
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Monday, May 11th, 2009
Seems like everyone os selling these days! Selling new shares that is. From raising money because of the stress test to raising money to repay TARP funds,
From the WSJ Banks Rush to Raise Capital:
“Wells Fargo and Morgan Stanley were among the first banks on Thursday to rush to raise capital following preliminary statements by the Federal Reserve. Wells Fargo said it would offer $6 billion in stock, while Morgan Stanley said it intends to sell $2 billion.
And then to repay TARP funds:
Three Banks to Sell Stock to Repay TARP Funds - DealBook Blog - NYTimes.com:
“The decision to sell new stock to help buy back government’s preferred shares and warrants shows that just a few months after last fall’s credit-market meltdown, some banks are feeling increasingly confident of their ability to stand on their own.
Other banks, including JPMorgan Chase and Goldman Sachs, have already declared their intention to buy back the government’s stake as soon as possible.
Funds allocated under the Troubled Asset Relief Program were meant to stabilize the banking industry after last fall’s turmoil, but they came with strings attached. Banks in the program face limits on executive compensation, as well as increased scrutiny of their practices, both by lawmakers and the public.”
Tags: among-the-first, goldman-sachs, government, intention, morgan-stanley, online-news, taught-on-the, using-the-word, wells-fargo
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