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Featured Blog Posts (173)

Averages, Deviations, & Confidence (Part Three)

This three-part series began with a simple question, "If our client holds the S&P 500, what annual return can he/she expect?" To answer this question, in Part One I began with averages and moved through standard deviations, confidence intervals, and empirical maximums and minimums along the way illustrating that these common approaches could not provide a complete answer to our question. Ultimately, I concluded that estimating the annual return of the S&P500 is an epistemological problem… Continue

Added by Austin Senseman on August 11, 2010 at 5:30pm — No Comments

Mulla Nasreddin, Gaussian Distribution and Capital Asset Pricing Model

Mulla Nasreddin, a 13th century legend lived somewhere between Turkey and Afghanistan (both countries included). I am sure he must have been a kid and a young man in his time but he is remembered as an old man, old and outrageously wise. One evening he was seen looking for some lost article under a street lamp. A passerby inquired what was the Mulla looking for. “My ring”, came the reply . “Now, where exactly did you lose it” the stranger persisted. “Oh, yonder on the commons while grazing my do… Continue

Added by Sachidanand (Sacha) Singh on August 4, 2010 at 7:30am — 12 Comments

Profitability solution for Bank

When we talk about the profitability solutions for the banks it is calculated by using information from various sources. Typical profitability calculation starts with the Net Interest Income. This is the difference between the Net Interest income and the charge for the funds. Also Interest expenses and the credit for the funds for the deposit products are used for calculations. This information is available from the Fund Transfer Pricing (FTP) solution. The difference between these gives the Net… Continue

Added by Rajendra Patil on July 31, 2010 at 11:13pm — No Comments

Whither infrastructure finance?

Some bank specific issues that may be coming our way... Basel III It is important to keep in mind that infrastructure loans are typically heavily structured, long term and illiquid. Regulators seem not to like those features. With Basle II they targeted bank involvement in infrastructure finance by initially specifying very high risk weightings for structured finance transactions. Successful lobbying by banks, including a jointly commissioned Standard &Poor's study on project credi… Continue

Added by Kofi Adusei Koduah-Sarpong on July 23, 2010 at 12:00pm — 1 Comment

Euro

I am revising my lecture notes on euro as I have been assigned to take International Financial Management. I had last revised it in 2005 when euro was just six years old. It had stabilized and it also had the backing of enormous political commitment of leaders and citizens alike. I expected, as many others did, that euro would sail through any storms that may come its way. I had also, somewhat boldly, shared my view that in coming decades euro would offer stiff competition to dollar as the inter… Continue

Added by Sachidanand (Sacha) Singh on July 11, 2010 at 1:30am — 3 Comments

Averages, Deviations, & Confidence (Part Two)

Once again, IF OUR CLIENT OWNS THE S&P500, WHAT ANNUAL RETURN CAN HE/SHE EXPECT? If you are looking for a fast and firm response to the above question, go ahead and stop reading. You're not going to find a definitive answer here. The question above, as well as all questions about future performance, are more generally questions in the form of "How can I forecast the future when the the future is unknown?" In Part One of this series, I moved through three distinct ways of describing past re… Continue

Added by Austin Senseman on July 14, 2010 at 11:30am — No Comments

Averages, Deviations, & Confidence (Part One)

IF OUR CLIENT OWNS THE S&P500, WHAT ANNUAL RETURN CAN HE/SHE EXPECT? ASSUMPTION(1): An average historical return is useful for describing the range of possible future returns. ANALYSIS: Averages, as measures of central tendency, are, alone, not useful in describing future returns. For example, annual rolling-period returns of the S&P500 (1926-2008) average 10.10%. Could we then assure our client of a return of around 10%? Certainly not, for we must take into account the dispersion of r… Continue

Added by Austin Senseman on July 5, 2010 at 6:30pm — 2 Comments

What Salary Should You Expect For Your Next Job?

Salary expectations present a difficult question for job seekers. Gone are the days that you could expect a 10%-20% increase just for changing jobs.

In today's job market that features an over supply of labor, job seekers (especially unemployed candidates) may have to face accepting a lo… Continue

Added by Phil Rosenberg on July 2, 2010 at 6:57pm — 2 Comments

Unemployment Rate Drop Blues

Classic good news is bad news. It was great news to hear the unemployment dropped to 9.5% in June. Unfortunatly the bad news was it wasn't due to more people getting jobs...it was due to over 600,000 giving up looking for jobs and thus being removed from the denominator of a simple math equation. How can this be with Leading Economic Indicators improving for months? We've heard for months the US Leading Economic Indicators have been improving. In many cases th… Continue

Added by Bill M Wright on July 3, 2010 at 4:30pm — 2 Comments

Perspectives on Allowing Yuan to Float Freely

In 2007 China recorded trade surplus at a whopping 11% of its GDP. In December 2007 People’s Bank of China (PBC) held foreign exchange reserves of 1.5 trillion USD in addition to over six hundred tonnes of gold. In December 2009 PBC held foreign exchange reserve of 2.4 trillion and about 1100 tonnes of gold. PBC had been keeping most of its foreign exchange reserves in US treasuries. Its purchases helped keep USD high and US rates low. US on the other hand have been running huge trade deficits.… Continue

Added by Sachidanand (Sacha) Singh on July 4, 2010 at 4:46pm — 3 Comments

"Push and Pull" in ABC

Those who are familiar with the manufacturing system must have heard or used this “Push and Pull’ technique. In this technique the downstream manufacturing process does not produce the part unless it is required by the upstream process. This is true for the final product also. It has got another name also “Top down and bottom up” approach. This is very popular with the planning and budgeting process. In the Top down approach the budget amount from the parent is distributed among the children wit… Continue

Added by Rajendra Patil on July 1, 2010 at 10:43pm — 3 Comments

Letter from the U.S President to G-20 Leaders

Dear G-20 Colleagues: When we met in London in April of 2009, we were facing the worst worldwide economic financial crisis since the 1930s. We acted with unprecedented speed and aggressive action to boost demand and repair our financial systems. It worked. In Pittsburgh, with recovery… Continue

Added by Daniel Chow on June 20, 2010 at 6:30am — 2 Comments

The iMagic Man

Steve Job… Continue

Added by Bill M Wright on June 17, 2010 at 11:30am — No Comments

The PIIGS Must Face The Facts - America's Next

What's The Biggest Problem With Socialism? Margaret Thatcher once said that “the problem with socialism is that eventually you run out of other people’s money.” Right now the PIIGS (Portugal, Italy, Ireland, Greece and Spain) are learning that the hard way. Greece, on the verge of total economic collapse, has received a $1 trillion bailout from the European Union and the International Monetary Fund. America, as the biggest contributor to the IMF, gave 17% of… Continue

Added by Bill M Wright on June 8, 2010 at 5:00pm — No Comments

Standards tug of war risks more Lehmans-style accounting

Proposed accounting rules could open the door to Lehmans-style off balance sheet trickery, investors and standard setters have warned. The International Accounting Standards Board (IASB) is debating new rules on derecognition, which dictate when companies remove items from their balance sheets. Derecognition rules set out when listed companies “derecognise” items from their balance sheets. The issue has taken on a political dimension in the last 10 years following the Enron scandal, when the U… Continue

Added by Kofi Adusei Koduah-Sarpong on May 13, 2010 at 6:44am — 5 Comments

The Wall Street Casino

A decade ago a Mutual Fund Industry legend John "Jack" Bogle wrote this article in the middle of a NASD TECH Boom. We were in the middle of a Dot.Com and TECH buying frenzy. The NASD was soaring on its way to 5,800 in the USA. At the time he like Warren Buffett were consider out-of-fashion and too… Continue

Added by Bill M Wright on May 7, 2010 at 2:28pm — 1 Comment

Who should pay for credit rating?

Who should pay for rating – investors or issuers? In the aftermath of the GFC this has become a point of serious debate. Credit Rating Agencies (CRAs) maintain that their internal systems and procedures are adequate to take care of any conflict of interest between their marketing (get more business) and rating functions. Others are not so sure. Many seem to be thinking that an investor-pays-model will be better. CRAs are quick to point out that an investor-pays-model too will give rise to pressu… Continue

Added by Sachidanand (Sacha) Singh on May 6, 2010 at 10:24am — 5 Comments

Benjamin Franklin Facelift A Work Of Art & Security

Benjamin Franklin gets a facelift as the Treasury Department just unveiled a new $100 bill, the first remake of the denomination since 1996.

The $100 note is the highest value denomination of U.S. currency in general circulation and 2/3 circulate outside the USA. The denomination is popular when large amounts of cash need to be carried internationally. Anti-counterfeiting measures are the main reason the United States has been making changes in currency. Th… Continue

Added by Bill M Wright on April 27, 2010 at 1:07pm — No Comments

Mother of all V Recoveries Continues

The steady economic recovery is continuing according to the Conference Board economic indicators released on Monday. The US has major long-term economic and social issues to manage. Still, there can be no denying that this Stock Market and Leading Economic Indicators (LEI) has been th… Continue

Added by Bill M Wright on April 22, 2010 at 11:30am — 1 Comment

Risk Measurement - A Multi-Dimensional Concept

Risk Measurement - A Multi-Dimensional Concept! By Sharath Sury Posted On SURYONLINE.NET at 3/11/2010 6:47 PM For the past 50 years, many financial economists and professional investment managers relied upon the concept of "mean variance optimization (MVO)" to design investment portfolios. The principle was sim… Continue

Added by Sharath Sury on April 7, 2010 at 1:13am — No Comments

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