Tuesday, September 16, 2014

Link to Jim Bianco's 9/16/2014 Presentation at Marquette University





Jim Bianco


The September 16, 2014, presentation by Jim Bianco at Marquette University can be accessed on the AIM web site or by following this link: http://business.marquette.edu/content/uploads/AIM/BiancoPresentation914.pdf

Jim Bianco will be speaking on campus on Tuesday, September 16 at 3:30 pm in Todd Wehr (Room 100)


Please note that the Jim Bianco talk with now be held at Todd Wehr Chemistry Building (Room 100) on Tuesday (9/16/2014) beginning at 3:30 pm. The talk was originally scheduled for the AIM Room – please notify anyone you invited about the room change. His presentation will be posted here after the event.



Saturday, September 13, 2014

On NPR's MarketPlace Dr. Krause commented on Twitter's new $1.5B bond offering

​Click to play clipTwitter
Twitter has gone to the bond market in an effort to raise as much as $1.5 billion as it remains unprofitable. 
This week, Twitter announced its plan to raise at least $1.3 billion by issuing convertible bonds. Unlike some companies that turn to the debt markets, the company doesn’t appear to be in dire need of cash. So what is their grand strategy?
“I don’t think it’s so much ‘What is the big strategy?’ I think the question many people will be asking is: ‘Is there a really meaningful strategy?’” says Nate Elliott, vice president at Forrester Research. He points out that Twitter’s user base, while large, is still closer to Google+ than Facebook, and the company is not yet profitable.
“If Twitter’s revenues matched its notoriety, it’d be doing just fine,” Elliott says.
But bond market investors are not in a skeptical mood, says David Krause, finance professor at Marquette University. “Companies are raising record amounts of debt right now.” 
The primary reason: With near-zero interest rates, other options are slim pickings — a rather unhappy economic indicator. “It’s the result of an economy that is still struggling, and it’s also due to what we’re seeing globally,” says Brian Rehling, chief fixed income strategist at Wells Fargo Advisors. “We’re seeing very weak if not negative growth over in Europe."
On the positive side, the drive to issue debt now may be motivated by a belief that the macroeconomic picture is going to change. “I think there is a sense from some that this is not going to last,” says Rehling.
“It’s a very opportune time for companies that may not be investment grade to be able to go out and lock in some long-term money at some very attractive rates,” says Krause.
Krause thinks Twitter’s offering will be very attractive to investors.
Even if all it buys Twitter in the short term is more time.

Thursday, September 11, 2014

Largest Milwaukee-area investment managers (ranked by managed assets as of Dec. 31, 2013)

Locally Researched by: Barbara Zaferos, Milwaukee Business Journal
22-Aug-14
The list of largest Milwaukee-area investment managers is ranked by assets managed (Dec. 31, 2013)
Rank
Company
Managed assets as of 12/31/13
Investment strategy, style
Top local executive
1 Mason Street Advisors LLC $118,500,000,000 Fixed income - investment grade corporate, securitized, government, high yield Ronald Joelson, president
720 E. Wisconsin Ave. equity - domestic growth
Milwaukee, WI 53202
2 Artisan Partners $105,500,000,000 Independent investment firm that provides broad range of high value-added strategies Bob Batchelor, managing director, head of marketing and communications
875 E. Wisconsin Ave.
Suite 800
Milwaukee, WI 53202
3 Fiduciary Management Inc. $20,650,900,000 Equity strategies that apply a value discipline, with a focused approach firmly rooted in fundamental research Ted Kellner, executive chairman
100 E. Wisconsin Ave. Patrick English, CEO, chief investment officer
Suite 2200 John Brandser, president, COO, CCO
Milwaukee, WI 53202
4 Baird Advisors $20,105,160,000 Structured, short,intermediate, taxable and tax-exempt, core fixed income, including long duration customized benchmarks Mary Ellen Stanek, managing director, chief investment officer
777 E. Wisconsin Ave.
Suite 2500
Milwaukee, WI 53202
5 Geneva Capital Management $6,700,000,000 U.S. mid-growth and small-cap growth Nick Bauer, principal, director of consultant relations
100 E. Wisconsin Ave. Amy Croen,
Suite 2550 Scott Priebe, managing principals
Milwaukee, WI 53202

Young, Fabulous and Unemployed: Strategies for Survival


This appeared in a recent posting on the New York Society of Security Analysts (NYSSA) site. Susan Mach, PhD, is a communication coach, trainer, and strategist. She teaches management communication part time at major NYC-area business schools, and investment research report writing at NYSSA.

Early-autumn weather is bracing. Millions of students eagerly gear up for a new school year.  Business leaders fine-tune their strategy for the fourth-quarter push.  It’s a time of optimism, renewed energy, and forward-looking thinking. 

But these times are painful for people who are unemployed. So, if you’re a recent college grad, it’s understandable that you miss the structure, rhythms, and deadlines of the semester. 

Bottom line: Take a job—any job.  As long as it won’t harm our health or violate you ethics, any job is better than no job.  If you hate it, leave it.  But it’s worth a try. 
Here’s why:

  • Structure:  Having a job means having a schedule. Regardless of what kind of job it is, you have to manage time, balance family and work responsibilities, and plan your days. Plus, as you continue to search for the job of your dreams, you have to stay focused, in shape, and highly presentable. So you might as well earn some money.
  • Revenue: Even if it’s a low-paying job, at least you have a revenue trickle, if not a stream. It will enhance your emotional intelligence: Imagine the challenges people face when they have no education, no skills, no credentials, no network.
  • Network: Video games, Facebook, and texting can be fun, but they are also time vampires. And having no job can lead to loneliness and isolation—which have deadly effects on your morale. Most jobs require you to interact with others. You never know where your big break—an idea, a contact, a job lead--will come from. 
  • Skills: Today’s job market is a skills game. Every job is an opportunity to add to our personal skills arsenal. If you can wait on a table of six demanding customers ordering breakfast with a total of 18 unique configurations of coffee, omelets, and toast, you know how to stay calm under pressure. If you can stock shelves in a grocery store, you learn a lot about inventory management, customer preferences, and global trends in the food retail industry. If you’re working as an assistant day-care worker, you observe a wide variety of learning styles and you sharpen your ability to communicate clearly and concisely.
  • Forward movement: Taking any job demonstrates your work ethic. It’s not giving in to paralysis. It’s not standing still—and that’s what matters most these days.


Tuesday, September 9, 2014

Insider Trading: SAC's Martoma gets 9 year prison sentence for illegal actions

In the AIM program we have a course devoted to investment ethics. Unfortunately, there is no shortage of 'real world' material to learn from. In this most recent case, Mathew Martoma, a former portfolio manager at billionaire Steven A. Cohen's SAC Capital Advisors LP hedge fund, was sentenced on Monday to nine years in prison for engaging in what authorities called the most lucrative insider trading scheme in U.S. history. (Note: much of this material is from news accounts from Reuters and Bloomberg).
U.S. District Judge Paul Gardephe in New York said he had to account for the "enormous" $275 million gain SAC obtained as a result of illegal trades in pharmaceutical stocks. Prosecutors said the trades were based on tips Martoma received about a clinical trial for an Alzheimer's drug.
"I cannot and will not ignore that the gain is hundreds of millions of dollars more than ever seen in an insider trading prosecution," Gardephe said.
The sentence came despite appeals for leniency by Richard Strassberg, Martoma's lawyer, who cited "fragile family circumstances." Gardephe also ordered Martoma to forfeit $9.3 million, including his Boca Raton, Florida, home.
While Martoma, 40, faced up to 19-1/2 years in prison under federal sentencing guidelines, Gardephe said such punishment should be reserved for repeat offenders or criminal enterprise leaders.

But the judge said a severe sentence was nonetheless necessary, saying "there was nothing accidental about Mr. Martoma's conduct or the gain realized."
The nine-year sentence is among the longer prison terms in U.S. insider trading cases, reflecting a trend of increasingly lengthy sentences in recent years.
In 2012, corporate lawyer Matthew Kluger was sentenced in New Jersey to 12 years for trading on information from law firms about mergers. A year earlier, Galleon Group hedge fund founder Raj Rajaratnam was sentenced in New York to 11 years.
Manhattan U.S. Attorney Preet Bharara, whose office is engaged in a broad crackdown on insider trading, called the nine-year sentence "well-suited to the audacity of the illegal trading in this case."
The case against Martoma, who worked in SAC's CR Intrinsic Investors unit, stemmed from a long-running insider trading investigation of the hedge fund.
Eight employees have been convicted, and SAC last year agreed to pay $1.8 billion in criminal and civil settlements and plead guilty to fraud charges.
SAC recently changed its name to Point72 Asset Management, and the Stamford, Connecticut-firm was transformed into a family office managing Cohen's fortune.
Prosecutors said Martoma sought confidential information from doctors involved in a clinical trial of an Alzheimer's drug being developed by Elan Corp, since acquired by Perrigo Co (PRGO.N), and Wyeth, now a unit of Pfizer Inc (PFE.N).
Based on a tip Martoma received from Sidney Gilman, a former University of Michigan professor who chaired the drug's safety monitoring committee, SAC Capital in July 2008 began selling its $700 million position in Elan and Wyeth, prosecutors said.
They said most of the trading occurred in accounts controlled by Cohen, who had a 20-minute phone call with Martoma after receiving information about the negative results of the study.
Cohen has not been criminally charged. He faces a U.S. Securities and Exchange Commission civil action seeking to bar him from the financial services industry for failing to supervise Martoma and Michael Steinberg, an SAC portfolio manager convicted of insider trading in a separate trial in December. Cohen denies wrongdoing. 

Monday, September 8, 2014

The Under Performance of the Common Investor Relative to the Overall Stock Market

In his 2013 and 2014 MOOC on Applied Investing, Dr. Krause, director of Marquette's Applied Investment Management (AIM) program, talked about the significant underperformance of the common investor relative to the overall stock market. 

Dr. David Krause
He made reference to Dalbar, a company which studies investor behavior and analyzes investor market returns. The results of their research consistently have shown that the average investor earns below average returns. For the twenty years ending 12/31/2013 the S&P 500 Index averaged 9.22% a year – which is an attractive historical return. The average equity fund investor earned a market return of only 5.02%.

Why is this?  Academic studies show that when the stock market goes up, retail investors put more money in it. And when it goes down, they pull money out. This is akin to running to the mall every time the price of something goes up, and then returning the merchandise when it is on sale - but you are returning it to a store that will only give you the sale price back. This irrational behavior causes investor market returns to be substantially less than historical stock market returns.

What would cause investors to exhibit such poor judgment? After all, at a 9% return, your money will double every eight years. Rather than chasing performance, you could simply have bought a single index fund, and earned significantly higher returns.

The problem is the human reaction, to good news or to bad news, is to overreact. This emotional reaction causes illogical investment decisions. This tendency to overreact can become even greater during times of personal uncertainty; near retirement, for example, or when the economy is bad.

The study of behavioral finance documents and labels our money-losing mind tricks with terms like recency bias and overconfidence. Despite research and education, the performance gap continues. So what can the average investor do to avoid this fate? 
Consider the following four rules:


  1. Do little or maybe even nothing. A conscious and thoughtful decision to do nothing is still a form of action. Have your financial goals changed? If your portfolio was built around your long-term goals (as it should be), a short-term change in markets shouldn't matter.
     
  2. Hands off. To quote Dr. Eugene Fama, the famed University of Chicago financial economist, “Your money is like soap. The more you handle it, the less you’ll have.”
     
  3. Never sell equities in a down market. If your funds are allocated correctly, you should never have a need to sell equities during a down market cycle. This holds true even if you are taking income. Just as you wouldn’t run out and put a for sale sign on your home when the housing market turns south, don’t be rash to sell equities when the stock market goes through a bear market cycle. Wait it out.
     
  4. Science works. It’s been academically proven that a disciplined approach to investing delivers higher market returns. Yeah, it’s boring; but it works. If you don't have a discipline, you probably shouldn't be managing your own investments.

Saturday, September 6, 2014

TEN JOB SEARCH RULES TO BREAK

Break the Rules and Get a Great Job by Liz Ryan 

This was a recent post I read about some unorthodox approaches in the job searching process. I would say that these are somewhat controversial and might raise a few eyebrows with the traditional human resources professionals. I would not suggest breaking every rule, but it does provide some interesting approaches to stand out in your interviews.

1) Break the rule that tells you not to use "I" in your resume. How absurd! Your resume is a marketing document. You are the product. Six or seven uses of the word "I" in your resume will make it a personal document between you and the reader -- the person who could easily become your next boss.
2) Next, break the rule that tells you to list your tasks and duties on your resume. Who cares? You're different from anyone who has ever held any of your past jobs. Don't tell us about the job description. We can guess from your title what each job required. Tell us what you left in your wake in each job, instead!
3) Now, break the rule that tells you to reply to a job ad by pitching a resume into the Black Hole of an automated career portal. Your chance of hearing back are close to zero.
Write directly to your own hiring manager -- the person you'll be working for if you get the job. Send that manager a Pain Lettertogether with your Human-Voiced Resume,right through the mail.
4) Break the rule that says "No direct contact with your hiring manager," an instruction that shows up in job ads sometimes. Since when are you responsible for reading job ads? You can stop reading job ads right now. You can send a Pain Letter to anyone you want. You just have to find your hiring manager's name on LinkedIn, and that's not difficult.
5) Defy the rule that tells you to report your salary history as you apply for a job. Is the employer going to tell you the history of salaries they've paid to other people in the same role? They won't, so why should you lose negotiating leverage by passing on your private financial details? All they need is a target salary number, so give them that.
6) Break the rule that tells you to go into an interview ready to answer questions like a good little sheepie and then go silent, waiting for the next question.
An interview is not a citizenship exam. You can get your manager off the script and into a real human conversation if you try -- and if your efforts are unsuccessful, what does that tell you about the person you'd be working for?
7) Ignore the rule that tells you to hand over your job references before you've established that a strong mutual interest exists. Firms that pressure you to fork over your references early may be planning to misuse your contacts for their own purposes, as horrifying as that sounds (and is).
8) Blow past the rule that tells you to spend your energy in a job search pleasing people, from the initial resume screener to the recruiter who never calls back. The title of this story is "Break the Rules and Get a Great Job," not "Follow the Rules and Take any Crappy Job You Can Get." That is a different story that I will write the minute Hell freezes over.
9) Break the rule that tells you to wait around for weeks while a search committee takes its sweet time getting back to you. Three business days after an interview is more than enough time to decide whether you're still in the mix or not.
Leave one voice mail message that says "Just checking in before I close the file, since I'm assuming you're going in a different direction" and then truly close the file and move on. It's incredibly satisfying to do, as Christopher found out.
10) Last, break the job-search rule that tells you that employers are in the driver's seat. That may be true in the general please-someone-hire-me sheepie job seeker talent marketplace but it's never been the case in the talent bazaar where eyes-open managers hire people to solve real business problems that could otherwise tank their companies.