Thursday, 29 March 2012

Iran's Wheat Problem

Iran's nuclear program seems to making a lot of news lately. Israel is strongly considering preemptive strikes on Iran, claiming that Iran is closer to obtaining a nuclear weapon than most countries think. The United States is not pushing towards war as much but will still support Israel in its efforts. Even more frustrating for Iran is that more sanctions seem to be piling up on them. What does this mean for Iran? They will buy more wheat.

Traders have been watching Iran's wheat imports closely, and they have seen a robust increase in recent imports. Iran has been stockpiling tons of wheat from the US, Brazil, Kazakhstan, and India in what seems to be in preparation for more sanctions which will prevent access to wheat and possible war. Access to wheat is vital for the nation, as it prevent spikes in the cost of bread.

This move can be seen as a preparation for war. Stockpiling more wheat than necessary means that Iran does not see these tensions dying down. Instead they see tensions building to new highs in light of more sanctions and possible military strikes. While mobilizing for war usually means building weapons and organizing troops, in Iran's case it is economically preparing itself for conflict. This does not look good for those wanting to end these problems through diplomacy.

Also, why would the Iranian government care so much if its bread costs rise? Sanctions do not affect government officials; all the burden of high food costs are passed down to its citizens. History has shown through fraudulent elections, false imprisonments, and suppression of protests, that Iran does not view the needs of its citizens as its number one priority.

This conflict is inevitably going to escalate, it is only a matter of when.

-Smit Purohit

Tuesday, 27 March 2012

BATS Falls Flat

BATS Global Markets, the Kansas based alternative trading platform planned its IPO for last Friday. BATS is the third largest trading platform in the US behind the NASDAQ Euronext and NYSE OMX Group accounting for 10.3% of equity trading in the US. However, their IPO went horribly wrong.

Due to a software bug, BATS internal systems failed which affected trades of stocks with tickers ranging from A to BF. Investors, realizing what was going on decided to sell their allotment of BATS shares, further placing downward pressure on the new stock. Within a span of 3 seconds, the stock fell from trading at $15.25 to 3 cents. BATS thought about restarting their IPO in the afternoon, but feared it would fall below $16 threshold which is lower bound of their prospective offering. Instead they decided against it since investors could sue the company for not adequately marketing the risks associated with the firm and its business if the stock tanked again.

The good news out of the whole fiasco: the checks put in place after the Flash Crash are working. Apple’s shares fell 9% triggering a circuit breaker to halt in its trading.

As a result of the botched IPO, bonuses related to the float would not be paid out. This could have devastating consequences for the firm as it tries to retain talent. The firm currently employs only 150 people, substantially less than industry rivals. Nevertheless, BATS is lucky to have the chance for a redo which is not always possible on Wall Street.

~ Ravi Tamboli

Monday, 26 March 2012

The Apple of My Eye

With Apple’s stock recently touching $600 per share and posting gains in approach of 50% through 2012 alone, investors are beginning to wonder if the Cupertino based tech behemoth can keep its stock price soaring.

Just last week, after sitting on its $98 billion “war chest” for some time, Apple announced plans to issue a $2.65 dividend and to repurchase $10 billion worth of shares. By market capitalization, Apple has become the largest company in the world, and it has a lot to show for it.

Markedly, Apple’s record sales seem to continue indefinitely. Soon after its announcement earlier this year, the third generation of the iPad tablet sold more than 3,000,000 units over its first weekend available. Additionally, the firm had reported nearly doubled revenue of $46.3 billion for its holiday quarter. Record numbers like the previous are what keep both institutional and individual investors excited about Apple’s potential growth. Moreover, updates to the Mac, the Apple TV and the iPhone are due soon enough and should keep the company’s pipeline secure for the coming year. And, should they announce a new product, Apple’s history of innovation and design give reason to suspect a successful release.

So long as Apple keeps posting record numbers, investors will remain interested. As demand for their product’s continues to rise, Apple’s success has reason to continue. And if it falters, Apple still has its war chest to fall back on.

-Patrick Malanga

Sunday, 25 March 2012


Professor Series: Aswath Damodaran - Valuation

Date: Tuesday, March 27th, 2012
Time: 12:30 pm - 1:45 pm
Location: Tisch 201

Come and check out the next in our Professor Series as Professor Aswath Damodaran discusses Valuation. Professor Damodaran is one of the most highly regarded faculty at Stern. He teaches two classes at the MBA level, so this is a great chance to get a glimpse of what goes on in his highly regarded lectures. Professor Damodaran also teaches Valuation workshops to many of the Wall Street banks analyst classes, so this is one event you don't want to miss!

Margin Call: Screening

Date: Wednesday, March 28th, 2012
Time: 6:30 pm - 8:30 pm
Location: Tisch UC-01

For those who have yet to see it, we will be showing a screening of Margin Call this Wednesday. Next week we will be bringing in J.C. Chandor, director of the film, for a Q&A session. Even if you have seen it, this will be a good refresher. Popcorn will be served!

Professor Series: Thomas Cooley, former dean of NYU Stern

Date: Thursday, March 29th, 2012
Time: 12:30 pm - 1:45 pm
Location: Tisch 200

Come and check out the latest installment in our Professor Series with Professor Thomas Cooley. Professor Cooley periodically gives economic commentary for Forbes magazine. He is also the former dean of Stern.

Saturday, 24 March 2012

Sometimes Taking Action Does Help

About three weeks ago (3/6/12), I included the following story in an entry in this blog:

“I immediately walked to my study and sent an email to one of my students. ‘You made a D on your first test in my class. Since then, I have not noticed one iota of improvement. None. You are not one bit better prepared for my class. You are not trying any harder as far as I can see. I can only surmise that your primary goal is to make a D in my class.’

“The next day in class that student was clearly better prepared. Not sure how long it will last but it was nice to see him more engaged.”

I basically confronted the student directly for not making changes in his attitude toward my class. I cared enough about him as a person to be confrontational. He may well have thought I hated him but, in truth, if I had not cared about him as a person, I would not have wasted my time. He made a D on the first test of the semester and seemed ready to make a D on the second test. Rather than fume to myself about his failure to reach his potential, I decided to be more direct and tell him of my concerns.

Waste of time? Certainly could be.

I gave my second test of the semester this past Monday. Intermediate Accounting II is an incredibly hard course with lots of complex topics. The second test covers some of the hardest stuff in all of accounting: bonds, leases, troubled debt restructuring, and deferred income taxes. If you are not an accountant, let me assure you these are difficult topics.

I gave an 80 minute test that 90 percent of the students didn’t finish. It was meant to be a challenge. The student above, the one I fussed at, made a 99 – tied for the top grade in the entire class of 51 students. Jumped from one of the lowest grades in class to the best grade.

I’m not naïve. I don’t think my one email made a great deal of difference. However, I do think it made some difference. As long as students feel anonymous, there is no push to do better. If not one person ever noticed them, if no one cares, it can be tough to really put out a strong effort.

But, when you say to a student “I’ve been watching your effort and you can do better,” (or, the reverse “I’ve been watching your effort and I am pleased”), you strip off that anonymity. There is something about being seen, being noticed, that makes a student more conscience of their own efforts. Often students fall into denial and you make them look at the reality of their situation.

My guess is that this student would have done better than a D if I had I said nothing but I don’t think the student would have made 99 had I not been willing to confront him. Not every professor can be confrontational but I do think, if done just occasionally by saying “I have looked at your work and I believe you can do better,” you can light a fire under a student.

I sometimes think that our tendency as human beings to avoid confrontation is one of the attributes of teaching that can actually hold a student back. Sometimes, they need to have that mirror held up so they can see themselves. Not because you hate them but because you care about them.

Friday, 23 March 2012

Myanmar Soon to Open Its Banking Industry

Myanmar, one of two Asian countries (along with North Korea) that have not yet opened up its banking industry to foreign firms, could open its market as late as the year 2015. The Myanmarian government has lately been executing several attempts of reform: the first national election in 20 years was held in 2010; the country has recently begun to use ATMs; it hopes to adopt a new foreign-investment law soon. But the country's financial system is still rudimentary in international standards. Only a few people use credit cards, a confusing multiple-exchange-rate system is used, and the central bank is too weak to sustain itself.

I believe that with multiple reforms such as employing a single-exchange-rate system and amending its banking laws, allowing foreign banks to operate in the country can uplift the Myanmarian financial system. I suspect the process to be competitive and chaotic, as attacking an opening market is always in the interest of business, not to mention the acquisition of valuable Myanmarian resources. However, this can be a great opportunity for the country to improve its own central bank and raise the standard of living. I hope, in the long run, the continual effort of the Myanramian government will construct a stronger nation. Future actions are definitely something to follow.

Chris Kim

President Obama Nominates Dartmouth's Kim

Robert Zoellick’s five year term as head of the World Bank comes to a conclusion this June as expected and nominations are coming in for who is to be the new leader.
The debate for who should replace Zoellick is heating up as of late as developing nations are poised to mount another challenge on the U.S.-EU hold over the position. While it has been clear that the U.S. has significant influence over who is elected, President Barack Obama made a smart decision today to counter criticisms by nominating the prestigious Jim Young Kim of Dartmouth College to be the successor.
Kim is a global health expert and has put years of effort into aiding developing nations. He recently launched an initiated to assist over 3 million patients suffering from aids in African countries. It is rare to see a non-politician or financial expert nominated but Obama believes that “It’s time for a developmental professional to lead the world’s largest developmental agency.”
It is still very known that whoever the White House supports has the strongest chance to win but I think the President made a smart move in easing the minds of these argumentative nations who will have a much easier time accepting Kim as the new head over some American politician.
However there is still at least one other strong candidate that developing nations could support in Nigeria’s Finance Minister Ngozi Okonjo-Iweala. It will be interesting to see who has more support. If Kim wins will African countries accept it?

The next Iraq on the way?

It seems that the crude oil market is destined to be the market of this year. Since NATO's proposal of a series of actions against Iran's nuclear experiment carried out later last year, the issue considering oil price has never lost the attention of mainstream media. We've already seen that in last two months shot up over nearly 20 percent as EU announced its freezing of various transactions with Iran among its members. Iranian governors counterattacked immediately by cutting its oil supply to Britain and France and threatned further ban on oil exports to other "unfriendly" European countries. And this morning the oil price spiked on global market to $108.25 (the three-week high) but soon pulled back. Some experts anticipated that Iran's oil export might drop by 300,000 barrels per day this month.

This little variation may not be quite considerable yet it is delivering out some messages. Recently Iranian government stated publicly a breakthrough on producing Uranium with concentration of 20% or more. It should warn all the NATO countries to some extent that since they prohibited every route they can imagine to prevent Iran from developing nuclear technology, Iran's progress has never halted. The western countries cut its smuggle of uranium from Argentina, kept the secret of high-speed centrifuger and banned all the potential exports of raw material of building nuclear facilities. They did everything they can to stop Iran but none of these worked. This kind of accomplishment could add confident to Iran so that it might furtherly shutdown oil supplies to more western countries. And since America and the EU find difficult to block Iran, is it possible that another Gulf War is under the table? We still remember that Iraq, a decade ago, was under siege for exactly the same reason--nuclear. Will the destiny of Saddam pass onto Ahmadinejad?

Oscar Zhang

Wednesday, 21 March 2012

Are Fund of Funds Worth It?

Hedge funds spend endless time and money strategizing and actively managing portfolios to get the highest return for their investors, who in turn pay them a 2% management and 20% performance fee. Hedge fund of funds spend even more resources on top of that on manager selection and other things. But is all their effort really worth it? Perhaps not. Back in 2008 Warren Buffet made a bet with Ted Seides and Jeffrey Tarrant of Protégé Partners LLC, a fund of hedge funds. He bet that funds that invest in hedge funds couldn’t beat the stock market over 10 years. The Protégé co-founders took him on and made an index of five hedge fund of funds to put up against Vanguard’s low-cost Admiral mutual fund, which tracks the S&P 500. For those of us looking to start investing our own money into these kinds of funds within the next 5-10 years, this may be a worthwhile bet to follow until its conclusion on December 31st, 2017.

Protégé’s reasoning was that hedge funds’ ability to hold securities both long and short, and hence bet on both rising and falling prices enabled it to outperform the S&P even after fees. On the other hand, Buffett argued that while “a number of smart people are involved in running hedge funds…their efforts are self-neutralizing, and their IQ will not overcome the costs they impose on investors.” In addition to the regular 2% management fee and 20% performance fee, fund of funds charge an average extra 1.25% and 7.5%, while Vanguard’s fund charges a mere 0.07%.

Buffett may have drastically 'lost' the bet in year 1 when stock markets crashed in 2008, but he has 'won' years 2, 3 and now 4, as Admiral shares returned 2.2% versus Protégé's -4.5%. It is now almost fully caught up with Protégé, who is down a cumulative 5.89% since the start of the bet, while Admiral is close behind at -6.27%. However, with both funds fighting a close battle, it is hard to say who will be proven right in six years when the bet is over. The only sure winners are the chosen charities that will be receiving a hefty $1 million from the eventual loser of the bet.

Vivien Sung

Tuesday, 20 March 2012

Apple Initiates Dividend

Turns out investors need Apple’s money more than Tim Cook after all. In a press conference Tuesday morning, Apple announced its first dividend since 1995 and will pay shareholders $2.65 per share in the coming quarter. This is approximately equivalent to a 1.8% dividend yield, slightly lower than the 2.1% average for the S&P500. In conjunction with a $10bn share buyback program, the company expects to return $45bn in the next three years. This makes it the largest annual dividend payer in the S&P500 after AT&T, which expects to pay close to $10bn in the year.

Apple’s near $100bn war-chest is a relic of its leaner days in the mid-90’s, when it is said to have been 90 days from bankruptcy and had to get support from Microsoft in form of platform development support and a $150mn infusion. Since then, Steve Jobs had been running the company with tight purse strings despite the enormous and stable cash flow in recent years. Indeed, his biography included comments indicating he planned to use large amounts of the cash to enforce Apple’s (slightly dubious) intellectual property claims and had a new vision for how the future of the television would work.

But his passage brought Tim Cook to the helm, who as COO had been more pragmatic in running the company and as CEO initiated reviews of the best way to use its cash only months after Steve Jobs. Though Tim Cook may not have Jobs’ charisma, he is seen as being more investor friendly. The 0.7% return that Apple was earning on its $100bn drew the ire of many investors who think they would be able to better use the money (such as buying even more Apple stock with it).

There was much speculation about what announcement Apple was going to make for its cash pile, ranging from plain vanilla dividends, buybacks, stock splits, acquisition sprees, and even an in-house technology private equity shop to encourage sophisticated App Store software. But for a company with no debt and $13bn in the last quarter alone, most people expected that the strategic review would bring some important decisions. This move will likely allow income-investing managers to buy Apple, since many of them are required to only buy companies with dividends—watch for a jump at the beginning of next month as managers rebalance their portfolio to include Apple.

-Vipul Jaju

Sunday, 18 March 2012

FS UPCOMING EVENTS **Please note room change**

Professor Series: Thomas Sargent, Nobel Laureate

Date: Tuesday, March 20th, 2012
Time: 12:30 pm - 1:45 pm
Location: Tisch 201 **Please note the room change!**

Join Finance Society and EHS this week as we host Stern's very own Professor Thomas Sargent. He will discuss elements of his Nobel prize winning work and how it links to current events unfolding in the world today, with a focus on the European sovereign debt crisis. His presentation will also expand on an article he authored in the Wall Street Journal entitled "An American History Lesson for Europe." This is one event you don't want to miss!

Citi Summer Analyst Panel

Date: Thursday, March 22nd, 2012
Time: 12:30 pm - 1:45 pm
Location: Tisch 200

Join the Finance Society this Thursday, March 22nd, as we invite a panel of Summer Analysts from Citi Group to speak about the "Life of an Analyst." For Juniors who have a summer internship in the Financial Services Industry, this will be a great opportunity to find out what to expect for your upcoming summers and full-time positions. For sophomores and freshmen this is an opportunity to learn more about the career paths you wish to pursue as well as network with professionals at Citi Group. See you this Thursday!

Finance Society

Friday, 16 March 2012

The Blast on Goldman

The hottest talk on the Street lately is unsurprisingly the blast that Greg Smith, the London-based executive, released through an op-ed column of the New York Times upon his departing Goldman Sachs. With an explicit title, “Why I Am Leaving Goldman Sachs,” Smith shines light onto his 12-year experience with the firm to debunk the crooked morals of the famous investment bank. In the article, Smith laments the leeching nature that Goldman has developed over several years, as current business is primarily conducted to make money. With meetings that discuss mainly the amount of money earned off of clients, or “muppets,” as managing directors sometimes call them, Goldman Sachs has exhibited a profit-driven aspect sometimes at the expense of client needs. Such loss of Goldman’s original culture – the spirit of achievement, humility, diligence – is what is driving Smith to leave the firm. The article made quite an impact; not long after its release, the article caused the firm to lose $2.2 billion for shareholders. Different reactions have sprung across the nation: derailing against Wall Street, doubt against Smith, and even a parody titled, “Why I am leaving the Empire, by Darth Vader.”

I personally believe that it was unprofessional and rather daring of Smith to have released information about his former workplace. Even if he found it crucial to announce to the public, revealing internal information is not the most venerable deed. Nonetheless, it definitely served as a wake up call for those banks that have been prioritizing generating profit over meeting client interest. Although a large number of people seemed to have been surprised by the sudden article, I however found it rather obvious. Being around a wealth of information regarding the finance industry, I was given the opportunity to understand some aspects of the working environment of investment banking. Over some time, the equation of banking equals money was slowly established in my mind. Of course, not all firms operate in the way this article describes -- we need to cast doubt upon the information provided in the article. There are firms that provide great quality service to clients, but it does raise the question of profit versus ethics, the question of how that equation was slowly embedded in my mind. Goldman as well as Wall Street can now take a quick moment to reflect its operations and perhaps veer towards what first caught young Smith’s attraction.

Chris Kim

I Said It Before and I Still Believe It: There Are No Short Cuts

Before I ever started this blog, I wrote a short little teaching book titled “Tips and Thoughts on Improving the Teaching Process in College--A Personal Diary.” I wanted to push myself to think about teaching and I wanted to encourage other folks to think about teaching. The book was a bit of work but it seemed like everyone would benefit. When finished, I put it up on web at and forgot about it. However, the book got a very nice review in The Chronicle of Higher Education and people started sending me questions or suggestions. For a while, I got emails from teachers around the world. What fun.

Eventually, I wanted to add to those original essays. I had more thoughts on teaching. Plus, I missed the writing. But, instead of starting a second book, I created this blog which has allowed me to stretch out the thinking and writing process indefinitely.

A couple of weeks ago I was chatting with a former student of mine who has gone on to get a Ph. D. and is now beginning her first tenure-track position. She recently joined the faculty of a major university. She told me that she had gone back to my original Teaching Tips book and that one essay in particular had been extremely meaningful to her as she began her career as a teacher. I was touched that she had consulted my writings as she started her teaching. So, I decided to reprint the essay that she said was helping her. So, JPD, this one is for you.

Learning The Secret For Becoming An Excellent Teacher

At a crucial point during my first semester as a faculty member, I was lucky enough to unlock the ultimate secret for improving as a teacher. This IS the magic bullet. That was more than 30 years ago and, in my mind, the secret has not changed one iota in all these intervening decades. If you have a serious desire to do a better job in the classroom, this is the one absolute fact that needs to be accepted--sooner rather than later.

The secret is nothing more than a simple formula:

If it takes a person X number of hours to be an average teacher


it will take that same person 2X hours to be a good teacher


3X hours to be an excellent teacher.

Here is the moment of truth; it is time to face reality. Anyone who has a genuine wish to become an excellent teacher must be willing to invest a significant number of hours. There are no shortcuts. If you are reading this book in hopes of discovering quick and easy tricks, my advice is simple: Close the book and walk away. Preparing for class, grading tests and papers, working with students, and all the rest of the normal, daily teaching activities require an almost infinite number of hours of thought and labor.

How much time are you willing and able to devote to improve? That is the question that each teacher needs to address in an honest and realistic fashion. We live in a hectic society; almost no one has sufficient hours to complete everything that needs doing. We all scramble to become more efficient just to keep our heads above the proverbial waters.

Teaching takes time; good teaching takes more time; excellent teaching can quickly become a 24/7 pastime. Faculty members face serious pressures to research and write; committee assignments seem to multiply like the heads of the Hydra. Time is like gold.

But there will always be periods when a class is struggling. You are dissatisfied and frustrated with the failure of students to grasp concepts that seem self-evident. In such situations, the number one remedy is to put in additional hours. To tell the truth, that extra time might best be spent sitting alone in the corner of a dark room thinking about the topic, the assignments, the class, and the each student. Such reflection is helpful.

Radical (or even subtle) improvements in the educational diamond are difficult when the teacher is flying through life at warp speed. If it is important, invest the time. Because the hours in life are finite, learn to make use of moments that might otherwise be wasted. I have a 25-minute commute to campus. During that drive, I often listen to National Public Radio; other days, it is a book on tape. On occasion, though, the sound is turned off and I mentally walk through the steps plotted for the coming class, trying to envision exactly what is supposed to happen. When I take this third path, class invariably goes better. Adequate time has been invested and nothing is more essential in teaching.

Saturday, 10 March 2012

Greece's Debt-Swap--Signs for the Future?

The Eurozone Debt Crisis has been around the news for a long time, and yesterday (Friday, March 9) there was a new progress: Greece sealed a historic 206 bn (USD266 bn) debt restructuring deal. Over 83% private sector bond holders in Greece agreed to change their bonds to new ones at less than half their value in order to prevent a disorderly default. Once the collective action clauses (clauses that allow decisions made by majority of creditors to be binding for all creditors) are added into the bond contracts, the response rate will be increased to 95.7%, which means Greece could lower the negativities in the debt-swap plan.

This restructuring is the largest sovereign-debt default in history and is the first one in Western Europe in half a century. While it is an integral part of a second, 130 bn bailout loan for Greece, it will trigger pay outs for CDS (credit-default swaps, contracts that pay off if creditors suffer default). In any case, this I believe this debt exchange signals a strong result that gives more time for Greece to move on with more economic reform programs. It allows the world’s economy to stabilize and thus allow more effective implementation of the bailout loan in Greece’s rescue package.

Sophie Tam

Friday, 9 March 2012

FBI Busts International Corporate Espionage

For the first time in US history, a US official is filing corporate espionage charges against a foreign state-owned company. The two company involved in this legal scandal are Dupont, a US company, and Pangang Group, a Chinese company. The story involves an obscure chemical and an almost obsolete technology that DuPont has wanted to keep secret for years. The two employees of DuPont alleged of stealing the technology and selling it to the Chinese company are pledging not guilty of the charges.

The FBI didn’t really find evidence for the case until one agent, who understood Chinese, caught a conversation between the Ms. Christina Leiws and her husband. The agent then followed Ms. Leiws and eventually found a safe deposit box containing files of a decade long documented plot for stealing DuPont’s technology.

I think the fact that Pangang Group is a state-owned company adds another level of complexity to the story. Though the intent of espionage for Pangang Group may be purely for corporate benefit, the political component is somehow dubbed to the picture. The interesting thing is, after ten years of planning for the espionage, Pangang Group is still willing to take the risk of getting caught despite the depreciated value of the technology. May be somewhere in the story, there is a political spinoff.

--Rong Pang

Tuesday, 6 March 2012

Wall Street Loses Significantly for the First Time in 2012

On Tuesday, the Dow dropped 1.57%, its first significant loss in 2012. While it was widely expected by analysts that the huge gains to start 2012 would slow down because stocks were overbought, the true culprit was Greece. Fears of a possible default in Greece brought the market to a halt, lowering the three major indices by over one percent each. A Greek default could cause over one trillion euros of damage to Europe. In addition to Greece, both China and Brazil showed slowing growth that added to the fears of the global economy. Because of these global issues, the dollar gained and the euro/dollar dropped to 1.3115. The last time the Dow dropped over 200 points was on November 23, ending a run of over three months without a major loss. Also, the S&P 500 dropped over one percent for the first time since December. The markets have started off hot in 2012, but fears in Europe and in the global economy as a whole finally took precedence over Wall Street optimism. Only time will tell if this is just a minor pullback or if Wall Street has major worries that lie ahead.

Michael Felicetta

The Geneva Motor Show

The 82nd Geneva Motor Show opened its doors today for the press, while the public can only start entering on the 8th. The Geneva Motor Show is one of the many annual auto shows where carmakers from around the world can show off new designs, models, and technologies for the cars of tomorrow. This is a great marketing scheme on the carmakers end because their new cars will receive much hype, especially the ones that are due to be released soon, like the new Mercedes Benz A-Class line or the new Audi A3. What's important about these annual shows is that carmakers, although hurt from the recession, are still heavily investing in new technologies for their cars in order to make their cars more efficient and advanced, thus benefiting all types of technology sectors. For example, Apple's stock price went up today, after Mercedes announced that its new A-Class line was fully integrated with Apple's Siri technology.

Vincent Tang

I Have An Assignment For You

My wife often watches “Morning Joe” on cable television as she gets ready for the new day. It is a group of people who discuss and debate politics and the world in general each morning. Last week, I wandered through and the people on the show that morning were discussing education. Just as I passed by, one person asserted: “We all know how to get great education: Demand Excellence and Expect Excellence.”

Demand Excellence and Expect Excellence. Hmm, sounds good. I wonder how many of us really do that? Do we really demand excellence from our students? Really? In fact, do we really demand excellence from ourselves? Or, maybe, they are just two sides to the same coin.

RESPONSE ONE TO MORNING JOE: After hearing the commentator, I immediately walked to my study and sent an email to one of my students. “You made a D on your first test in my class. Since then, I have not noticed one iota of improvement. None. You are not one bit better prepared for my class. You are not trying any harder as far as I can see. I can only surmise that your primary goal is to make a D in my class.”

The next day in class that student was clearly better prepared. Not sure how long it will last but it was nice to see him more engaged.

Was I demanding more excellence from him or was the email a way of demanding more excellence in my own teaching?

RESPONSE TWO TO MORNING JOE: However, that was not the part of “Demand Excellence and Expect Excellence” that really stuck with me. Since then, I have wondered a lot about two questions. First, what do I mean by excellence? Second, do my students understand what I mean by excellence?

How can I demand excellence if I don’t know what it means?
How can I expect excellence if my students don’t know what I mean?

Excellence is a word that is bounced around a lot in teaching. But is it just a word or does it have a real meaning to you?

So, I have an assignment for you. Write a short paragraph where you describe what you mean by a person being an excellent student in your class. Should be simple stuff. In your class, what is excellence? Is excellence just being able to achieve a certain score on a test? Surely not. If so, no wonder our education system is troubled.

For your students, what do you really mean by the term “excellence?” Then, email that paragraph directly to your students (and send me a copy at

Here’s what I mean by student excellence (not good, but truly excellent):
The student needs to come to every class having prepared and thought about the assignment so that they can discuss and debate each question with the teacher and other students. They need to show me that they understand the material so well that they can legitimately address any and all related questions. It’s not the first question that counts but where they can go from there. They don’t have to be right but their answers have to show a logical thought process. They need to spend sufficient time immediately after class organizing and reviewing our discussions so they can start to see the patterns and structure that form the foundation for the discipline. Then, they need to prove that they have gained a working understanding of this knowledge. They have the opportunity of doing this by showing me on a test that they can take a question they’ve never seen before and break it down into its component parts so that they can connect it to the logic and structure of the discipline in the same way we have done in class. In other words, they can use that connection to come up with a resolution to a problem that makes sense and that they can support.

In my class, that is excellence.
That really does deserve an A.

Monday, 5 March 2012

EVENT RECAP: Inner Circle - Sports Investment Banking

Last Thursday, we had the pleasure of inviting in David Becker, from Inner Circle Sports, to discuss his career path and some of the things that differentiate sports investment banking from standard investment banking. The event was co-sponsored with STEBA, and we had an attendance of over 90 students!

Smit Purohit and Kunal Agrawal, two E-Committee members, began the event by presenting our weekly market update and discussing some of the recent headlines in the financial world. Mr. Becker then took over to introduce the firm, and discuss the basics of sports investment banking. Above, you can see him discussing the various valuation methods used in investment banking, and then narrowing down to the ones that apply specifically to sports teams. The discussion then turned to some recent activity in the space including the restructuring of the LA Dodgers, as well as Inner Circle's recent work with FC Liverpool.

This week we're going to switch the focus by beginning our Professor Series for this semester. Professor Robert Whitelaw will be coming in to discuss his recent research regarding exchange rates. Definitely be sure to come to this event, Thursday from 12:30 to 1:45pm!

Executive Board

Sunday, 4 March 2012


Professor Series: Robert Whitelaw
Chair of the Finance Department

Date: Thursday, March 8th, 2012
Time: 12:30 pm - 1:45 pm
Location: Tisch 200

Come and check out the first in our Professor Series as Professor Robert Whitelaw discusses his latest research topic, Exchange Rates. This will also be a great opportunity for those of you who are taking FFM next semester as Professor Whitelaw is the chair of the Finance Department and one of the main FFM professors!

Saturday, 3 March 2012

O’Neill to Replace Parsons as Citigroup Chairman

(Photo of Richard Parsons, current chairman of Citigroup)

Citigroup announced yesterday that its current chairman Richard Parsons will be stepping down at Citi’s shareholder meeting in April. As part of a pre-existing succession plan, Michael E. O’Neill, former chief executive of the Bank of Hawaii Corp., will succeed Parsons as the head of Citigroup.

Parsons, 63, became chairman of Citi since 2009 and played an important role in leading the firm’s recovery coming out of the crisis. Previously, he had been on the board for over a decade and a half and took over the chairman position shortly after a $45 billion bailout by the U.S. government. Parsons is known for his political connections and close relationships with officials, according to Mike Mayo, the author of “Exile on Wall Street”, who thinks that this change will be good for Citigroup.

Parsons was quoted earlier saying that “Citi still faces a challenging environment, as do all the large banks, but the crisis is behind us. Given the strong position that Citi is in today, I have concluded that the time has come for me to leave.” Last year, Citi reported a net income of $11.3 billion, up from the $10.6 billion from 2010 and the total losses of $29.3 billion from 2008 and 2009 combined.

Parsons has probably chosen a smart time to leave now, as Citi’s revenue fell 9.5% from a year earlier while expenses increased by 7%, leaving the shares tumbling down 44%. O’Neill will be taking over when the board is trying to deal with lower revenue, higher costs, and unfamiliar regulation as the Vikram Pandit, CEO of Citigroup, continues to push the firm into emerging markets. We can only hope that O’Neill can translate Pandit’s vision into positive returns for Citigroup.

- Jennifer Zhang

Friday, 2 March 2012

Yelp's Rise (and Fall?)

In what will surely be the year of the Internet IPOs, another Web 2.0 offering debuted on Friday. Yelp, the go-to site for local business reviews and advertisements initially priced its shares at $15—above its initial $12-14 filing range. At opening, it jumped up to 73% and is currently priced at $24.43 (roughly 63% up). While it may have a smaller valuation at $1.6 billion than other Internet companies, it does seem a little expensive (as much as I love Yelp).

Keep in mind that Yelp lost $16.7 million last year. Another important fact to consider is how saturated its market is becoming. Yelp will need to compete with Open Table and Groupon as well as upcoming web companies Angie’s List, LivingSocial and Google’s Zagat. These competitors are well-equipped to take on Yelp in the reviews and local business deals arenas. Of course it is too early to tell how the stock price will change in the coming weeks. I believe that Yelp does stand a good chance against its competitors but it will need to differentiate itself further. If it brings something unique to the table, things can only go up from there. What else do you think has investors going crazy about Facebook?

Norman Bae