Before Facebook Deal, Instagram's Talks With Twitter - NYTimes.com

Before Facebook Deal, Instagram's Talks With Twitter - NYTimes.com:

This one will be talked about for years:

"Facebook’s deal to buy Instagram for $1 billion stunned Wall Street and Silicon Valley when it was announced in April. But executives at Twitter had an additional reason to be surprised. Instagram’s founders “held several meetings as late as March with top Twitter executives,” The New

Irving Fisher, the First Celebrity Finance Professor - Bloomberg

Irving Fisher, the First Celebrity Finance Professor - Bloomberg:

A history lesson on the man behind the "Fisher effect"

"Fisher developed revolutionary insights into financial theory that are still invoked today. He explained that the market interest rate coincides with the human tendency to discount an uncertain future when compared with the more pressing present. He argued that we distribute

Take the money: Why we make better financial decisions for strangers than family


Take the money: Why we make better financial decisions for strangers than family

This
one should not really surprise anyone and is essentially the logic
behind my recent test question of "what is the role of a financial
planner in the face of investors prone to behavioral biases".


"They
found participants were more likely to select a smaller immediate
reward than delay for a larger

Why Should Hostess Executives Get The Bonuses They're Demanding? - Forbes

Why Should Hostess Executives Get The Bonuses They're Demanding? - Forbes:

"AP is reporting that the Irving, Texas company is planning to ask a bankruptcy judge to grant approval of bonuses totaling up to $1.8 million for its executives....It’s tough to see why managers should get bonuses for driving a company into the ground and sacrificing some 18,000 jobs. Hostess had become horribly

Former baseball star Doug DeCinces indicted for insider trading - Yahoo! Finance

Former baseball star Doug DeCinces indicted for insider trading - Yahoo! Finance:

"DeCinces was charged with 42 counts of criminal securities fraud and one count of money laundering over the 2008 purchase of stock in a medical device company based on insider information, according to an indictment filed in a federal court in Southern California.

DeCinces, 62, bought $160,000 worth of stock in

No Credit Check No Fuss Loans

Payday loans are the fastest and most convenient option for getting a cash advance for emergencies before your next payday. However getting payday loans and their repayments involve certain important aspects. Herein we are attempting to answer all your general queries related to Payday loans and we hope it will serve as a tool to open up any mystery surrounding payday loans or cash advance. What Is A Payday Loan Or Cash Advance Loan? We daily come across many loan types like housing loan, personal loan, and education loan. However, the payday loans are a new buzz in the market, and it is very popular. This loan is known by many names like "Cash Advance", "Paycheck loan", "Check loans", and "Payday advance loans". Let us understand what is a payday loan or cash advance loan and how and when it should be used for your maximum advantage. Payday loans are unsecured loans, which can be used for meeting your emergency financial needs and is paid back out of your next paycheck on your payday. Thus, payday loans are the shortest tenure loans among the other loans available in the market. Are there any limitations on payday loan or cash advance loan usage? Many a times we face a situation when we need money badly but feel like our hands are tied as our payday is still several days away. In such a scenario, we either have to shelve or defer our plan of purchasing something or go for a heavy interest credit card loan to meet the obligation. The requirement could be to pay up unexpected medical bills, your kid's school fee, to avoid bouncing of your issued checks or any other financial obligation. In such trying times, payday loans or a cash advance comes in handy. Thus, you can use this cash advance for whatever purpose. There is no restriction on the usage of payday loans. Am I eligible to receive a payday loan or cash advance loan? The best thing about payday loans is that they can be had even if your credit rating is not very good. The second best thing about payday loans is that taking a cash advance does not affect your credit rating. All you need to be eligible to receive the payday loans is to have a running checking account and a regular job. How should I apply for a payday loan? To apply for the payday loans, we would say it is easier to do than to say. You can apply for payday loans online using Internet. You may be required to supply some basic information such as your Name, Address, and your employer details. Some companies offering payday loans may ask for your Bank Statement or pay stub over fax. The documents required by these companies for payday loans are minimum in comparison to other types of loans. What is the fee charged for payday loans? Before applying for payday loans, we suggest that you scan 5-6 companies for the fees they are charging. Some companies offer payday loans without any fee for the first week. How much cash can I get with a payday loan? The amount of payday loans ranges from $100 to $1000 depending upon the repaying capacity of the borrower. What is the length of payday loans? Normally a cash advance is supposed to be paid back on or before your coming payday. Therefore, the maximum length of payday loan could be up to 30 days. However, some companies are flexible with respect to the loan duration as well. Payday loans can be extended until the next payday. This extension of payday loans however comes at a price. How long does it take to get a payday loan? Payday loans are much easier to get and in less time than other loans. After applying for a payday loan online, you will get a telephone call from the payday lender. After completing the small formalities, the cash advance will be credited to your checking account the next business day. Does this mean I can enjoy my pay without waiting for my payday? Before you jump for a payday loan, please note that the rate of interest charged for these loans are higher than other loans. Extending the duration of payment will only increase the fees charged. The payday loans or cash advance loan should be used very prudently and only for meeting financial exigencies that cannot be avoided. Please remember that getting a payday loan or cash advance loan too frequently could upset your monthly budget and you may find it difficult to get out.

How Do Banks React to Increased Asset Risks? Evidence from Hurricane Katrina by Claudia Lambert, Felix Noth, Ulrich Schuewer :: SSRN

How Do Banks React to Increased Asset Risks? Evidence from Hurricane Katrina by Claudia Lambert, Felix Noth, Ulrich Schuewer :: SSRN:

Two takeaways:
Banks increase risk-based capital ratios in times of great uncertainty.
The increase comes largely from well capitalized banks and by reducing loans.  

From the Abstract:
"[We] find that banks in the disaster areas increase their risk-based

Diversifcation: good but not as good as you probably think






Index cohesive force (Photo credit: Wikipedia)


For years (at least since 2001) this idea has been a
mainstay in my classes.  The benefits of diversification have been
overstated.  Why?  The correlations that are used to diversify and get
the so called optimal portfolio change and the change is NOT in a random format:
the correlations go up in bad times.


The Physics of Finance: Why

'Drunken' Broker Sent Oil to 8-Month High in 2009: Report - US Business News - CNBC

'Drunken' Broker Sent Oil to 8-Month High in 2009: Report - US Business News - CNBC:

 "...an admin clerk called Perkins to ask why he had bought 7 million barrels of crude during the night. Perkins had no recollection of the transactions, and it turned out that he had made the trades during a “drunken blackout," according to the FSA."

ATM fees hit record high, free checking accounts decline - Sep. 24, 2012

ATM fees hit record high, free checking accounts decline - Sep. 24, 2012:

" McBride says that the banking industry has lost income due to an increase in regulations, and that's made free checking accounts harder to find.

"Two regulatory changes in particular have cut the legs out from free checking, he said, "one putting restrictions on overdraft charges, and the other limiting swipe fees when

CEO pay in the FTSE 100








English: Differences in national income equality around the world as measured by the national Gini coefficient. The Gini coefficient is a number between 0 and 1, where 0 corresponds with perfect equality (where everyone has the same income) and 1 corresponds with perfect inequality (where one person has all the income, and everyone else has zero income). (Photo credit: Wikipedia)

CEO Pay

New 'Tail Hedge' ETF Hunts Black Swans - Seeking Alpha

New 'Tail Hedge' ETF Hunts Black Swans - Seeking Alpha:

It is a little eearly in the school year for my classes to cover this, but oh well, we will anyways!  lol

" First Trust recently launched a new "Black Swan" styled ETF that pairs a tail risk hedge with equities, which will help limit an investor's downside risk.....The tail hedging strategy protects a portfolio from extreme market

Mark Gongloff: Libor Fraud Was Happening In 1991, Trader Says, 17 Years Before Timothy Geithner Claims He Knew


Mark Gongloff: Libor Fraud Was Happening In 1991, Trader Says, 17 Years Before Timothy Geithner Claims He Knew:


"...the earliest time-stamp on Libor manipulation we've seen yet -- is a Financial Times op-ed by former Morgan Stanley trader Douglas Keenan. He claims that Libor, a key short-term bank lending rate that affects mortgages and other interest rates throughout the economy, was being

The Agenda: A Closer Look at Middle Class Decline - NYTimes.com


The Agenda: A Closer Look at Middle Class Decline - NYTimes.com:

Interesting NYTimes Blog article:


"Since median inflation-adjusted family income peaked in 2000 at $64,232, it has fallen roughly 6 percent. You won’t find another 12-year period with an income decline since the aftermath of the Depression.

Why?  Hard to say, their attempt:


"In the simplest terms, the relatively meager gains

ANALYSIS: Should airlines hedge their bets on fuel?




English: Chart of jet fuel prices for major US airlines. (Photo credit: Wikipedia)

ANALYSIS: Should airlines hedge their bets on fuel?:

Remember the difference between operational hedges (example Delta's purchase of an oil refinery) and financial hedging (hedging with financial derivatives).  And my prior on this is that hedging should be done and it is best to do it with financial hedging

Sandy Weill: Break up the big banks - Jul. 25, 2012




English: Sanford Weill outside Waverly Inn restaurant in New York City on December 17, 2007. (Photo credit: Wikipedia)

Sandy Weill: Break up the big banks - Jul. 25, 2012:
Reverse course?  Weill seemingly admits the repeal of Glass-Steagall was a mistake.


"The man responsible for creating Citigroup -- the world's first financial supermarket -- said Wednesday that the nation's largest banks

What Americans Earn : Planet Money : NPR

What Americans Earn : Planet Money : NPR:

Some takeaways: Almost one household out of every four (24.9 percent) makes less than $25,000 a year. About one in three households (30.1 percent) made between $50,000 and $100,000. One in five households (19.9 percent) made more than $100,000 a year.

Why Floundering Is Good | Psychology Today


Why Floundering Is Good | Psychology Today:


Yes!  I have ammunition now. :)  but My students may not like this but it fits exactly what I have said since even before I started teaching.     (thanks to Farnam Street for pointing this one out!


"...it’s better to let the neophytes wrestle with the material on their own for a while, refraining from giving them any assistance at the start. In a

NBA Players Forced to Save Toward Retirement for First Time - Bloomberg




English: Chicago Bulls Scottie Pippen 1995 (Photo credit: Wikipedia)

NBA Players Forced to Save Toward Retirement for First Time - Bloomberg:


To combat the near epidemic problems of professional athletes going broke after failing to safe for tehir retirement, the new NBA agreement includes a forced saving plan:

"Beginning next season, players also will surrender 5 percent to 10 percent of

Futurity.org – In tool trade, chimps reveal a quirky bias


Futurity.org – In tool trade, chimps reveal a quirky bias:

The endowment effect essentially says that you value something you own more than it is worth from an outside perspective.  Now it appears that chimps suffer the same bias:

"Drawing on prior theoretical work by Jones on the evolution of seemingly irrational behaviors, Brosnan and Jones found consistency between chimpanzees and humans

PolitiFact | Viral Facebook post on CEO-worker pay ratio has obscure past

PolitiFact | Viral Facebook post on CEO-worker pay ratio has obscure past:

Several of my facebook friends have posted this and, well, there are so many things wrong with this picture it barely deserves mention, but if it is not mentioned, people will only see one side of the discussion. 



So let's see is this true? 

Yes US CEOs are highly paid both historically (excluding late 1990s-early

A Home in the Colonias | The New York Times

A Home in the Colonias | The New York Times

This video is about 5 years old, but it shows some the living conditions where we will be working in South Texas.    The New York Times


Here is some more:
Border Communities: The Case of Colonias in Texas by Cecilia Giusti

"Education levels are very low there. In El Cenizo, one established colonia in Webb County, only 15 per cent of people older

Shrinking Universe


AM reading: Common Sense of Mutual Funds by John Bogle.  Here is a really cool insight:

Page 359: he is writing about the fact that given normal restrictions (not owning more than 2% of portfolio in any single asset and not owning more than 5% of shares of any individual company), the number of potential investments drops significantly.  For example, using 2009 data, a 1 Billion fund could

Why U.S. Companies Continue to Pay Dividends - Bloomberg

Why U.S. Companies Continue to Pay Dividends - Bloomberg:

Love it!  Virtually identical to our class discussions:

"It seems clear from our recent work that dividends are very resilient, and are unlikely to disappear. What explains this staying power?

First, some argue that dividends provide important “signals” about the strength or quality of the firm’s underlying earnings stream. (Because

Wall Street Warriors

A look at what it can be like to work on Wall Street. (this episode focuses on "winners" in Hedge funds, commodities, and currency trading):

I am back

I realize I have been gone, but I was very busy nursing my mom in her battle against breast cancer. It pains beyond words that we lost the battle. I will try to get more articles up in the coming weeks. I also encourage you to "like" financeprofessor on facebook where I do share articles in a much faster manner.

Wall Street Bonus Drop Means Trading Aspen for Discount Cereal - Bloomberg

Wall Street Bonus Drop Means Trading Aspen for Discount Cereal - Bloomberg

Everything is relative. Pay cuts at $35,000 or $350,000 a year hurt:

Bloomberg has a personal interest story on how Wall Street bonus cuts have hurt those who had expected to get more money.

"The smaller bonus checks that hit accounts across the financial-services industry this month are making it difficult to

5 Simple Hedge Strategies for Volatile Times - Forbes

5 Simple Hedge Strategies for Volatile Times - ForbesI am not convinced these are really "strategies", but more ideas of things you should give some attention. For example market volatility, credit risks, risk of low returns, inflation. Not so much a "how to" article, but more of a useful reminder of the various risks investors face. :A rather long "look-in":"Dawal encourages a portfolio that

Could Twitter predict the stock market? | Reuters

Could Twitter predict the stock market? | ReutersNice article for class from Reuters:"A basic premise of behavioral economics is that the markets aren't perfectly rational machines, but are expressions of human emotions like greed and fear. If you agree with that premise, and are looking for an immediate gauge of those human sentiments, then Twitter is one of the greatest tools ever invented.

Why Do Individuals Exhibit Investment Biases? by Henrik Cronqvist, Stephan Siegel :: SSRN

Why Do Individuals Exhibit Investment Biases? by Henrik Cronqvist, Stephan Siegel :: SSRN



Abstract:
"We find that a long list of investment biases, e.g., the reluctance to realize losses, performance chasing, and the home bias, are "human," in the sense that we are born with them. Genetic factors explain up to 50% of the variation in these biases across individuals. We find no

Too Much Cash in the Corner Office - Businessweek

Too Much Cash in the Corner Office - BusinessweekA definite must-read for my classes!"In 2008, the CEOs who run companies in the Standard & Poor’s 500-stock index earned, in total, less than 1 percent of what everyone who’s a 1 percenter earned. So it’s unfair to blame CEOs alone for fostering inequality. Defenders of the system cite such data to advance a larger claim. Pay for public company

UBS hires former Bear Stearns CFO Molinaro | Reuters

UBS hires former Bear Stearns CFO Molinaro | Reuters"UBS has hired former Bear Stearns financial chief Sam Molinaro as operating head of its investment bank effective March 1, according to a memorandum seen on Friday by Reuters."Congratulations to St. Bonaventure Graduate Sam Molinaro:

The Dog that Did Not Bark: Insider Trading and Crashes by Jose Marin, Jacques Olivier :: SSRN

The Dog that Did Not Bark: Insider Trading and Crashes by Jose Marin, Jacques Olivier :: SSRNInteresting. And sort of unexpected.Marin and Olivier document "that at the individual stock level, insiders’ sales peak many months before a large drop in the stock price, while insiders’ purchases peak only the month before a large jump.We provide a theoretical explanation for this phenomenon based

Hedging Demand Halts Issuance of Credit Suisse VIX Note: Options - Bloomberg

Hedging Demand Halts Issuance of Credit Suisse VIX Note: Options - Bloomberg:"Credit Suisse suspended the creation of new stock in the VelocityShares Daily 2x VIX Short-Term ETN on Feb. 21 after its market value more than quadrupled in 2012 to a record $694.4 million, data compiled by Bloomberg show. Shares outstanding have surged 699 percent since Dec. 30 as the S&P 500 climbed 8 percent and

Everything You Ever Needed to Know About Payday Loans But Were Afraid to Ask

A payday loan is a small short term loan you can use to cover expenditure until your next payday. You can apply online and the decision to loan you the money is made almost straight away. In most cases the whole application can be completed online and the money loaned can be credited into your bank account on the same day as you make your application. A payday loan is an unsecured loan, so it is not dependent on collateral, such as you owning a house or car etc. Generally when you make your first application you can borrow any amount up to £300, depending on your take home pay. You are more likely to be approved the less you want to borrow, so it is advisable to borrow only what you need. Once you have successfully repaid loans with one particular company they may then offer to lend you anything up to about £750 in subsequent loans. Payday loans can provide a useful solution for short term cash flow problems. Who can apply for a Payday loan? In order to be eligible for a payday loan you must be over 18 years old and in employment with a take home wage of at least £750 per month. You must also have a bank account with a valid debit card. Even if you have bad credit history you should still be able to obtain a payday loan as long as you fulfil the above criteria. How do you get a Payday loan? The majority of payday loans are available online, so there is no delay with faxing or posting of documents. The application process is quick and easy to complete. You will be asked for your name, address, details about your monthly income and employment, when your next payday is, along with the amount you wish to borrow and your bank account details. Once you have submitted your application you should hear back from the payday loan provider within minutes. They will email you with their decision to the email address you have registered with your application. Payday loan providers partly make their decision as whether to lend you money dependent on the amount you want to borrow compared to the amount you earn. Only borrow what you need, the less you borrow the more likely that your application will be accepted and the smaller the amount of interest you will accrue. If your application is successful you will be sent, by email, your loan agreement showing the amount that will be lent to you, the repayment date and the amount of interest you will pay on the repayment date. Along with the loan agreement you should also be sent loan conditions. These loan conditions should outline your rights under the Consumer Credit Act 1974 along with details about repaying the loan, cancelling the loan and the use the personal information you supply when applying for the payday loan. If you are happy to proceed you sign online by providing details of your name and answering a security question such as your mothers' maiden name. Then, email this back to the loan provider and the money will be deposited into the bank account you registered at the application process. The money can be deposited in your bank account on the same day you make the application, so this is a very fast and efficient way of borrowing money short term. How do I repay the loan? You will need to repay the loan amount and the interest accrued on the repayment date as specified in the loan agreement. The repayment date is usually your payday, hence the name payday loan. The repayment will be collected by the loan provider by debiting the bank account you registered at the application process, which is the bank account into which you get your wages paid. Repayment over a longer period Payday loans may be extended if you find yourself in a position to be unable to satisfy all or part of the amount due on the repayment date. If this happens it is recommended that you contact your payday loan provider as soon as possible and explain your circumstances to them. They will then be able to explain your options and how to go about extending your loan. Even if you are not able to fully settle the repayment amount, it is advisable to pay off as much as possible on the repayment date. This will help to keep the amount of interest you owe to a minimum. Some companies may charge you additional fees for extending your loan, you should check if this is the case before you sign your loan agreement. Regulation of Payday Loan Companies Properly regulated payday loan companies must adhere to strict laws governing the finance industry. As with any financial product you apply for it is always advisable to check that the company offering the loan is properly regulated. The payday loan company you are applying to should show its Consumer Credit Licence number within its loan conditions and it should also be authorised by the Office of Fair Trading. If you are in any doubt as to whether the payday loan company you are considering applying to is fully regulated then you are within your rights to contact either of these bodies for further information. As long as the payday loan company you are applying to is properly regulated, there will be a recognised body to make any complaints you may have to and you can be assured that you will not be subject to any unfair practices. What are the benefits of a Payday loan? Fast One of the main benefits of a payday loan is the speed at which the cash can be credited to you. The money you need can be available to you in your bank account on the same day that you make the application. This can provide valuable assistance if you have a short term cash flow problem and need money in an emergency. Simple The application process is very simple, it takes just minutes to apply for a payday loan and you do not have waste time posting or faxing documents to the payday loan provider, as you would with other more traditional high street loans. Poor Credit History Payday loans are available to people with a poor credit history. This is because payday loan companies do not solely make their decision to lend based on a persons credit history. As long as you fulfil the application criteria you have a good chance of obtaining a payday loan. For many people a payday loan may be the only way they are able to obtain credit, especially in the current financial climate where the majority of lenders are unwilling to provide loans altogether, never mind to a person with a poor credit history. Use of the Loan Money You do not have to tell the payday loan provider what you need the payday loan for. You can use the money for whatever you want. You may need money in an emergency which can not wait until payday for instance; emergency medical or dental treatment, to settle a bill quickly, extra spending money on holiday or even for a romantic weekend away. The choice is yours as long as you make the repayment due on the repayment date. No Upfront Costs There are no upfront costs associated with a payday loan. You do not pay anything back until the repayment date you have agreed to in the loan agreement. Why does the APR appear high on payday loans? The APR applied to payday loans appears at first glance to be high. This is very misleading, but there is a simple reason why this figure looks so high. APR is an Annual Percentage Rate, and as such is calculated over a whole year (365 days). However, a payday loan is taken usually only over a number of days or weeks. The APR calculation was not designed to apply to very short term loans such as payday loans. It was designed to apply to long term loans in existence for a year or more. It is really a theoretical figure than enables people to compare similar longer term loan products, like mortgages or ongoing credit balances. Rather than relying on the APR rate it is more advisable to look directly at the loan agreement to see exactly how much interest you will be charged for the period of your payday loan. Some companies have a standard interest charge for the amount you wish to borrow regardless of the duration of the loan. It is then up to you to decide whether you will be able to repay both the cash advance you receive initially and the interest amount on the repayment date. To Conclude Many people do not have savings or access to credit cards or more traditional loans and so the convenience of a regulated payday loan provides piece of mind should the occasion arise that they need some money quickly. If you need money in a hurry, can not wait until payday and are confident that you can make the necessary repayments on the repayment date, this could be the ideal solution for you.