Finance sites

Stocks in the "lobbying index" significantly outperform the S&P 500. HT: Ron.

Hitting the news today is the "revelation" of the person behind the  @GSElevator  twitter feed.   The twitter feed is an insight into the minds of some of the Wolves of Wall Street.   Some quotes confirm all that you suspect is wrong about Wall Street, other quotes are brilliant. A recent sampling; #1: I just want to be rich enough to not be motivated by money. — GS Elevator Gossip (@GSElevator) December 14, 2013 #1: Don't apologize for being late with a Starbucks latte in your hand. — GS Elevator Gossip (@GSElevator) December 19, 2013 33% of DJIA is 5 stocks. Gauging the economy on that is like putting the back of your hand on your forehead for a health exam. — GS Elevator Gossip (@GSElevator) December 2, 2013 #1: Some chick asked me what I would do with 10 million bucks. I told her I'd wonder where the rest of my money went. — GS Elevator Gossip (@GSElevator) November 12, 2013 And finally.. #1: I don't have an iPhone case. I'm not irresponsible or poor....

You'd think a that finance professor would be monitoring his portfolio daily... however this prof usually has better things to do.  That said, I have to admit that I've been neglecting my portfolio.  But tonight I did a thorough bit of house keeping.  I also learned a few things along the way. Like most academics my retirement money is with TIAA-CREF, although the basic ideas are the same regardless of provider. I have two primary goals - first to get all expenses ratios to be under 10 bp or 0.1%, and second to rebalance to 80% equities, 20% bonds.   The first goal is no brainer.  The second goal will either seem horribly aggressive or way too conservative depending on your perspective.   Here's what I found. 1. Some fees are surprisingly high I discovered that I had quite a few funds in my account that had expense ratios of 0.40-0.50%.  But there are options in the plan that have expense ratios of less than 0.1%.   What was I thinking!!...

Mr. Buffet recommends indexing Via: Andy Silton

http://www.thereformedbroker.com/2014/02/24/people-who-cannot-accurately-forecast-markets/

Good stuff.   http://www.huffingtonpost.com/the-motley-fool/stupid-things-finance-people-say_b_4810315.html HT: Anand

A couple of divergent opinions on the latest shopping spree from Facebook. Felix Salmon: Zuckerberg will dominate the mobile market at any cost because he has almost bottomless pockets. Kid Dynamite: This looks like an April Fool's day deal.  FB has paid through the nose for people who by definition use Whatsapp because it is basically free.  It's Groupon all over. Me: I've given up trying to figure out whether what FB does makes any sense.  I note that as of today, the price of  FB is trading close to $70 .   My  earlier prognostications  about the stock being overvalued at IPO were wrong.   This is why I index - I am a useless stock picker, but to my credit, I know this.

Excellent and funny post from Josh Brown on the current state of the market.

David Lowery of Camper Van Beethoven on twitter's profits (or lack thereof)

Great post by my colleague, Steve Allen on a recent MOOC offered by John Cochrane of Chicago.

http://thebillfold.com/2014/02/employee-stock-options-as-explained-by-an-english-major/ Key quote:   Always join a company before the lawyers do.

From the Counterparties Twitter Feed . Study says: Planet Money podcast better at teaching students macro than "boring lectures" http://t.co/OeASey7cjq — Counterparties (@counterparties) February 11, 2014

Rental homes are the latest in the long list of financial assets that are been securitized .  On one hand, having capital moving into the real estate market should help to reduce the backlog of foreclosed homes.  But on the other hand it is hard to ignore our past experience of securitization.   The spectre of house prices being bid up to a point that creates another bubble looms large. Another concern, as indicated by the graphic in the article, is the high density of ownership by a single investor (in this case - Blackstone) It seems as though Blackstone is trying to control the market in rental properties in some locales. There really can only be one reason for this - and that is to have sufficient market power to control the rental level in an urban region.

Brace yourselves -   Hedge Fund TV is coming .   I won't be letting my kids watch - I don't want to pollute their minds.

An article asks whether Apple's huge buyback could be better used  - perhaps in developing new products. The motivations for a buyback are complex ( and responding to Karl Icahn's pressure may be one ), but in terms of a simple IRR analysis, a buyback generates a return of about 3% + 0.8*5% = 7% for shareholders.  This is the expected return on AAPL stock (using the the CAPM). While I am sure Apple has plenty of interesting research and development projects, it might be the case that returning money to shareholders so that they can invest it, rather than keeping it money market securities provides the best return.  Shareholders are then free to reinvest this money in other firms which might be seeking dollars to finance their R&D programs. CAPM assumptions: RF = 3% Market Risk Premium = 5% AAPL Beta = 0.8

I've written before about pigovian taxes (i.e. carbon taxes) .  These are taxes lobbied to reduce consumption of some item.  In the case of carbon taxes, they are designed to reduce fossil fuel consumptions.  Such a reduction would presumably have environmental benefits.  The key to such taxes is that they must be revenue neutral.  In other words, all revenue from them should be channeled back in the form of rebates or tax reductions elsewhere.  A good example would be a reduction in payroll taxes. But here's a new take on the idea of pigovian taxes.   A meat tax .  The logic is simple - animals produce a lot of methane, and methane gas is a green house gas.  Therefore a policy that reduces methane emissions would be good for the environment.   Personally I am all for it.  But then again, I don't eat meat.

In a 10 year, $1 million bet against a hedge fund manager, Warren Buffet put his money on an S&P 500 index fund.  We're now in year 6.   Guess who's ahead? HT: Rob.

A recent paper attempts to tackle this question and finds that the total citation count of the incoming department chair's research publications is a strong predictor of future departmental research output. In other words, if you want to up your department's research, appoint high powered researcher as the chair.

I had to chuckle at Bob Dylan's nauseating  super bowl commercial about Chrysler  which gushed with American pride.  Clearly Bob ignores the fact that Chrysler is wholly owned by Fiat, and that of the top 10 American made cars, only one is a Chrysler product .

Recently, I was mentioned on BlueNC (a progressive website) in their Tuesday Twitter round up I quote: But university professors should know better than relying on safe tactics to back up their positions. North Carolina's pension plan  weathered the storm  admirably: Year/Value of assets/Accrued liability/Unfunded liability/Funded ratio 2006 $68,808,403,000 $65,862,247,000 $(2,946,156,000) 104.47% 2007 $72,952,274,000 $70,573,970,000 $(2,378,304,000) 103.37% 2008 $73,124,299,000 $73,627,879,000 $503,580,000 99.32% 2009 $74,447,112,000 $76,976,542,000 $2,845,127,000 96.71% 2010 $76,599,104,000 $79,558,260,000 $2,959,156,000 96.28 Perhaps I can explain to the folks at BlueNC the difference between underperformance and underfunding.   Underfunding happens when the state doesn't put enough money into the pension plan, or the plan lags its return assumption over a long period of time. Underperformance can occur at anytime and is when the pension fund earns a return that is ...

Two professors (from Florida State) are caught by the SEC for illegal naked shorting .   While they don't admit guilt, they did agree to pay a hefty fine. Shorting isn't illegal, but naked shorting can be.  Naked shorting occurs when you sell a stock that you don't own and then fail to deliver the stock to the person you sold it to. HT:Rob.