tag:blogger.com,1999:blog-57023405789396961792024-02-08T02:56:52.589-08:00Wake Forest MBA Finance NetworkThe WFU MBA Finance Network is a source for relevant current events and market updates to enrich the experience of students interested in finance.Wake Forest MBA Finance Networkhttp://www.blogger.com/profile/17519037781968108734noreply@blogger.comBlogger8125tag:blogger.com,1999:blog-5702340578939696179.post-66492305313148311642010-02-01T07:39:00.000-08:002010-02-01T07:42:35.893-08:00The Next Real Estate Bubble?<div style="text-align: justify;">Chinese regulators have begun restricting new loans in an effort to curb the incredible growth of the Chinese real estate market and to prevent a US style real estate meltdown in the future. Last year Chinese banks advanced 9.59 trillion yuan(1.4 trillion dollars) in new loans which helped increase the Shanghai Composite Index by 80% and cause real estate prices to rise to their biggest gain in 18 months. In reaction to government lowering the amount lending, the Shanghai Composite Index has slumped 7.9% since the beginning of the year. It is difficult to tell whether the Chinese government is preventing a future crises or a crisis is already brewing. The Chinese government exerts a large amount of control over its economy; with an almost fixed exchange rate of the yuan with US dollar and reported consistent economic growth in spite of the global financial crisis. Information supplied by the Chinese government needs to taken with a grain of salt and investors such as Jim Chanos of Kynikos Investments, who successfully bet on the fall of Enron, are already betting on a bubble bursting in China.
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<br />By: Jason Wu - WFU MBA 11'
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<br />For further information, please see full Bloomberg article:
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<br />Wake Forest MBA Finance Networkhttp://www.blogger.com/profile/17519037781968108734noreply@blogger.com1tag:blogger.com,1999:blog-5702340578939696179.post-69297948407291978602010-01-30T20:50:00.000-08:002010-01-30T21:11:53.950-08:00Obama Unveiled $90 Billion Bank Tax With Sharp Words<div style="text-align: justify;"><meta equiv="Content-Type" content="text/html; charset=utf-8"><meta name="ProgId" content="Word.Document"><meta name="Generator" content="Microsoft Word 12"><meta name="Originator" content="Microsoft Word 12"><link rel="File-List" href="file:///C:%5CUsers%5Ccoundw8%5CAppData%5CLocal%5CTemp%5Cmsohtmlclip1%5C01%5Cclip_filelist.xml"><link rel="themeData" href="file:///C:%5CUsers%5Ccoundw8%5CAppData%5CLocal%5CTemp%5Cmsohtmlclip1%5C01%5Cclip_themedata.thmx"><link rel="colorSchemeMapping" href="file:///C:%5CUsers%5Ccoundw8%5CAppData%5CLocal%5CTemp%5Cmsohtmlclip1%5C01%5Cclip_colorschememapping.xml"><!--[if gte mso 9]><xml> <w:worddocument> <w:view>Normal</w:View> 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The president's tough line dovetails with a political push by Democrats to capitalize on anger over bonuses and profits from banks that benefited from taxpayer bailouts during the nadir of the financial crisis.<o:p></o:p></p> <p class="MsoNormal" style="background: white none repeat scroll 0% 0%; -moz-background-clip: -moz-initial; -moz-background-origin: -moz-initial; -moz-background-inline-policy: -moz-initial;">
<br /></p><p class="MsoNormal" style="background: white none repeat scroll 0% 0%; -moz-background-clip: -moz-initial; -moz-background-origin: -moz-initial; -moz-background-inline-policy: -moz-initial;">The White House pushed hard against opposition to the tax. The president spoke of "obscene bonuses" and the "twisted logic" of bank executives who oppose the tax. White House spokesman Robert Gibbs suggested the banks were trying to pass the tab for their woes to taxpayers. Democratic leaders responded cautiously to the proposal, mindful that the president's pledge last year to retrieve bonuses paid to AIG executives has yet to be fulfilled, according to senior leadership aides. One senior Democratic aide said the House wouldn't move forward on the tax proposal until leaders there were sure the Senate would follow suit.<o:p></o:p></p> <p style="background: white none repeat scroll 0% 0%; -moz-background-clip: -moz-initial; -moz-background-origin: -moz-initial; -moz-background-inline-policy: -moz-initial;"><span style="font-size: 11pt; font-family: "Calibri","sans-serif";">While much of the banking industry is up in arms over the proposed tax, the impact would likely be a relatively modest dent to the companies' profits. The 10-year assessment on bank liabilities—dubbed the Financial Crisis Responsibility Fee—would fall most heavily on the nation's top six banking companies: Citigroup Inc., J.P. Morgan Chase & Co., Bank of America Corp., Goldman Sachs Group Inc., Morgan Stanley and Wells Fargo & Co. Each would likely face an annual bill of $1 billion or more, with Citigroup and J.P. Morgan facing the largest liabilities, likely more than $2.4 billion apiece. <o:p></o:p></span></p> <p class="MsoNormal" style="background: white none repeat scroll 0% 0%; -moz-background-clip: -moz-initial; -moz-background-origin: -moz-initial; -moz-background-inline-policy: -moz-initial;">If approved by Congress, the tax would force about 50 banks, insurance companies and large broker-dealers to collectively pay roughly $90 billion over 10 years. Under the plan, a 0.15% tax would be levied on liabilities and would apply to a range of firms that received taxpayer assistance, excepting the Detroit auto makers. The tax would be levied on total assets, minus a type of capital considered high quality, such as common stock, and disclosed and retained earnings. The nation's large regional banks would face smaller fees than their Wall Street counterparts, based on the composition of their balance sheets. <o:p></o:p></p> <p class="MsoNormal" style="background: white none repeat scroll 0% 0%; -moz-background-clip: -moz-initial; -moz-background-origin: -moz-initial; -moz-background-inline-policy: -moz-initial;">
<br /></p><p class="MsoNormal" style="background: white none repeat scroll 0% 0%; -moz-background-clip: -moz-initial; -moz-background-origin: -moz-initial; -moz-background-inline-policy: -moz-initial;">Industry officials warned that the new tax could constrain bankers' ability to make new loans, which could hurt the economy. However, the impact could be muted if the fee is tax-deductible, an issue that hasn't been addressed by the Treasury Department. In addition, some analysts cautioned that the plan could encourage banks, to reduce their exposure to the fee, to shift more assets and liabilities into the types of off-balance-sheet vehicles that helped sow the seeds of the financial crisis. <o:p></o:p></p> <span style="font-size: 11pt; font-family: "Calibri","sans-serif";">
<br />White House officials said the president was serious about his bank-tax proposal, which has been under discussion since August. A provision inserted in the legislation authorizing the Troubled Asset Relief Program required the administration to come up with a way to recover money spent to save the financial system. Still, it is the latest in a string of recent federal initiatives that could erode bank profits. In November, the Federal Reserve announced rules, set to take effect in July, that will bar banks from charging certain overdraft fees without explicit consent from their customers. And other changes that could be costly to the banking industry continue to work their way through Congress, such as legislation that would impose new restrictions on the trading of derivatives.
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<br />Article Provided by: Ajit Bhat - WFU MBA 11'
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font-size:10.0pt; mso-ansi-font-size:10.0pt; mso-bidi-font-size:10.0pt;} @page Section1 {size:8.5in 11.0in; margin:1.0in 1.0in 1.0in 1.0in; mso-header-margin:.5in; mso-footer-margin:.5in; mso-paper-source:0;} div.Section1 {page:Section1;} --> </style><!--[if gte mso 10]> <style> /* Style Definitions */ table.MsoNormalTable {mso-style-name:"Table Normal"; mso-tstyle-rowband-size:0; mso-tstyle-colband-size:0; mso-style-noshow:yes; mso-style-priority:99; mso-style-qformat:yes; mso-style-parent:""; mso-padding-alt:0in 5.4pt 0in 5.4pt; mso-para-margin:0in; mso-para-margin-bottom:.0001pt; mso-pagination:widow-orphan; font-size:11.0pt; font-family:"Calibri","sans-serif"; mso-ascii-font-family:Calibri; mso-ascii-theme-font:minor-latin; mso-fareast-font-family:"Times New Roman"; mso-fareast-theme-font:minor-fareast; mso-hansi-font-family:Calibri; mso-hansi-theme-font:minor-latin; mso-bidi-font-family:"Times New Roman"; mso-bidi-theme-font:minor-bidi;} </style> <![endif]--> <p class="MsoNormal" style="background: white none repeat scroll 0% 0%; -moz-background-clip: -moz-initial; -moz-background-origin: -moz-initial; -moz-background-inline-policy: -moz-initial;"><i style="">Source: The Wall Street Journal <o:p></o:p></i></p>
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<br />Wake Forest MBA Finance Networkhttp://www.blogger.com/profile/17519037781968108734noreply@blogger.com0tag:blogger.com,1999:blog-5702340578939696179.post-63273650788554483182009-12-15T13:41:00.000-08:002010-01-19T09:19:30.861-08:00More Trouble Ahead?<div style="text-align: justify;">It’s been awhile since a country in the EU has defaulted on their credit obligations since Germany in 1948. Credit Default Swap prices have increased significantly on Greek Sovereign Debt and Fitch has downgraded the debt to below investment grade at BBB+. In reaction, the Athens Stock Exchange has lost 11% in the last three days. Why is this a problem? Since the events of last year with the bankruptcy of Lehman, the bailout of AIG, the nationalization of RBS and Lloyd’s in England, credit spreads have narrowed and world stock markets have come significantly off their lows. The possible default of sovereign debt of both Greece and Dubai signals that there could be more significant problems in the future and that the world economy is not in a true recovery. What does this mean for us at Wake Forest Schools of Business? Jobs, without free flowing credit, companies cannot meet short term obligations such as payroll and they will not hire new permanent employees. Although temporary hiring has increased in the past few months which is generally a precursor to an increase in permanent hiring, we all know this “recession” is different than anything many people have experienced. Restoring a functioning credit market is one step in the right direction to recovery. Let us hope that these credit events with Greece and Dubai are just ripples in the pond and not the signal of a new downward trend.
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<br />By: Jason Wu - WFU MBA 11'
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<br />For further information, please see full Bloomberg article:
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mso-style-qformat:yes; mso-style-parent:""; mso-padding-alt:0in 5.4pt 0in 5.4pt; mso-para-margin:0in; mso-para-margin-bottom:.0001pt; mso-pagination:widow-orphan; font-size:11.0pt; font-family:"Calibri","sans-serif"; mso-ascii-font-family:Calibri; mso-ascii-theme-font:minor-latin; mso-fareast-font-family:"Times New Roman"; mso-fareast-theme-font:minor-fareast; mso-hansi-font-family:Calibri; mso-hansi-theme-font:minor-latin; mso-bidi-font-family:"Times New Roman"; mso-bidi-theme-font:minor-bidi;} </style> <![endif]--> <p class="MsoNormal"><b><span style="font-size: 10pt; font-family: "Verdana","sans-serif"; color: rgb(245, 147, 0);"><a href="http://www.bloomberg.com/apps/news?pid=20601087&sid=aDMQfsXXnSqw&pos=3"><span style="font-weight: normal;">Greece May Be First EU Country to Default, Former BOE Official Buiter Says </span></a><o:p></o:p></span></b></p>
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<br />Wake Forest MBA Finance Networkhttp://www.blogger.com/profile/17519037781968108734noreply@blogger.com1tag:blogger.com,1999:blog-5702340578939696179.post-82875173753797477902009-12-13T17:14:00.000-08:002009-12-13T17:21:13.667-08:00Opportunities: Where Are They?Recall a year ago at this time, when we braced for a colossal collapse of the financial system and settled into a notion that the Great Depression could repeat itself. A year later, with Lehman Brothers receding into Wall Street history, there are breaths of fresh air and hints that in banking and finance, opportunities for growth, expansion and employment exist.<br /><br /><span style="font-weight:bold;">Financial institutions</span> have resumed practice and protocol in recruiting in b-schools and in hiring in mid-career positions. The big banks launched "redeployment" efforts, re-hiring into growth areas those it may have dismissed in declining units. Opportunities exist, but institutions are proceeding cautiously and carefully.<br /><br />The ramping back up may not be as rapid as the ramp-down. After the dot-com collapse of the early 2000's, firms subtracted and eliminated quickly, but as soon as business and markets bounced back, they added and hired just as fast. This time, they may take baby steps first.<br /><br />Many students and alumni are asking, "If things have picked up and there are hopeful signs, where then are the opportunities?"<br /><br />They may exist at specific institutions. As the media note prominently, firms such as <span style="font-weight:bold;">JP Morgan </span>and <span style="font-weight:bold;">Goldman Sachs </span>are setting near records for quarterly performance (buoyed by investment-banking and trading revenues). Scattered opportunities exist in many spots at these firms. They are focused on building the "stable, sustainable" businesses (private banking, investment management, and retail banking) and supporting the businesses (investment banking and trading) that generated the incomes that put them in the headlines.<br /><br />These firms are hiring at all levels, but are being careful not to overdo it. Hence, they are not about to double the number of bankers they bring on board in the next year or two.<br /><br />Firms such as <span style="font-weight:bold;">BofA-Merrill</span>, <span style="font-weight:bold;">UBS</span>, and <span style="font-weight:bold;">Citi</span> are aggressively working to rebuild their brands and balance sheets. They have made progress, although they may need take the occasional, substantial asset write-down. They are presenting a confident, we-expect-to-be-around face to the marketplace, including their faces to prospective bankers. They are visible in recruiting, hiring and convincing top talent to come their way.<br /><br />Others such as <span style="font-weight:bold;">Morgan Stanley</span>, <span style="font-weight:bold;">Deutsche</span>, and <span style="font-weight:bold;">Credit Suisse</span> know that in a period of recovery, they can't afford to take a back seat to peer firms. It's in the abyss of a business cycle when firms ably strategize to pounce on opportunities to take them to the top of a finance sector (mergers, equities, fixed-income, retail banking, syndicated loans, etc.). Hedge fund <span style="font-weight:bold;">Citadel</span> (even after its crisis-related trading losses) is daring to start an investment bank from scratch.<br /><br />Firms like <span style="font-weight:bold;">Barclays Capital</span> and <span style="font-weight:bold;">Jefferies</span> are poised and eager to pick up trading and banking business left on the table when Lehman collapsed. <span style="font-weight:bold;">BNY Mellon</span> survived the crisis untainted, partly because it emphasizes stable, unsung businesses as securities processing, clearance, and custody. It aspires to be the industry leader in those segments.<br /><br />Nonetheless, careful, methodical steps in expansion is the common theme.<br /><br />What about opportunities in specific sectors, Consortium alumni and students ask?<br /><br />In investment banking, many banks tend to wait out the cycle, wait for M&A to return, wait for an inevitable rebound in equity and debt underwriting. They follow historical paths. The business collapses, but it bounces back.<br /><br />Others take advantage of new business in select specialties. For example, some firms are doing a brisk business in advising corporations in restructuring their debt or their organizations. Some are advising parties (creditors, debtors) in bankruptcy. Banks with financial-institution clients (FIG) are thriving by helping clients (banks) raise capital or sell assets. M&A bankers see opportunity when an industry wants to expand, but a different opportunity if that industry needs to reorganize, consolidate or reconfigure itself. Healthcare bankers are waiting in the wings, as the nation confronts healthcare reform.<br /><br />In sales & trading, opportunities are fleeting, sometimes momentary. Right now, many traders and hedge funds are focusing on distressed assets (mortgages, bonds, loans, e.g.), trying to take advantage of mis-pricing of assets or assets (bankrupt companies, e.g.) that are unfairly under-valued. Fixed-income traders have been taking advantage of low interest rates all year, although some think those opportunities will dim in time.<br /><br />Financial institutions took a beating last year because they took on too much risk (credit and market risks) or they didn't know how to manage it or compute it (or all of the above). Many are now hustling to beef up their risk-management units. Smaller firms are hustling to launch risk units where they hardly existed before.<br /><br />Large banks are evaluating their approaches to risk-taking, their tolerance for large balance sheets, large trading exposures, or gigantic loans to large corporations. As a result, some are looking to expand businesses that are less volatile and promise stable, predictable revenues. They are prepared to trade occasional home runs for frequent singles. Private banking, asset management, cash management, securities processing and custody offer such stability, and many banks want to grow those areas. Hence, opportunity.<br /><br />Other firms simply want to stick to the niche they know best. Growth and opportunity will be slow, steady, assured. This includes the banking boutiques (<span style="font-weight:bold;">Lazard, Greenhill, Evercore</span>, e.g.), the trading, dealing, market-making boutiques (<span style="font-weight:bold;">Knight, ITG, MF Global, Liquidnet</span>, e.g.), or the retail-brokerage boutiques (<span style="font-weight:bold;">Raymond James, Charles Schwab, Edward Jones, TD Ameritrade</span>, e.g.).<br /><br />A year makes a difference. Most of us were too scarred or scared to even mention "opportunity." Today we dare to highlight them, but that's opportunity with baby steps.<br /><br />By: Tracy Williams from CFNWake Forest MBA Finance Networkhttp://www.blogger.com/profile/17519037781968108734noreply@blogger.com0tag:blogger.com,1999:blog-5702340578939696179.post-82139748725574575882009-12-13T15:42:00.000-08:002010-01-19T09:22:39.522-08:00Bank of America makes first TARP payment<meta equiv="Content-Type" content="text/html; charset=utf-8"><meta name="ProgId" content="Word.Document"><meta name="Generator" content="Microsoft Word 12"><meta name="Originator" content="Microsoft Word 12"><link rel="File-List" href="file:///C:%5CUsers%5Ccoundw8%5CAppData%5CLocal%5CTemp%5Cmsohtmlclip1%5C01%5Cclip_filelist.xml"><link rel="themeData" href="file:///C:%5CUsers%5Ccoundw8%5CAppData%5CLocal%5CTemp%5Cmsohtmlclip1%5C01%5Cclip_themedata.thmx"><link rel="colorSchemeMapping" href="file:///C:%5CUsers%5Ccoundw8%5CAppData%5CLocal%5CTemp%5Cmsohtmlclip1%5C01%5Cclip_colorschememapping.xml"><!--[if gte mso 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mso-pagination:widow-orphan; font-size:11.0pt; font-family:"Calibri","sans-serif"; mso-fareast-font-family:Calibri; mso-fareast-theme-font:minor-latin; mso-bidi-font-family:"Times New Roman";} .MsoChpDefault {mso-style-type:export-only; mso-default-props:yes; font-size:10.0pt; mso-ansi-font-size:10.0pt; mso-bidi-font-size:10.0pt;} @page Section1 {size:8.5in 11.0in; margin:1.0in 1.0in 1.0in 1.0in; mso-header-margin:.5in; mso-footer-margin:.5in; mso-paper-source:0;} div.Section1 {page:Section1;} --> </style><!--[if gte mso 10]> <style> /* Style Definitions */ table.MsoNormalTable {mso-style-name:"Table Normal"; mso-tstyle-rowband-size:0; mso-tstyle-colband-size:0; mso-style-noshow:yes; mso-style-priority:99; mso-style-qformat:yes; mso-style-parent:""; mso-padding-alt:0in 5.4pt 0in 5.4pt; mso-para-margin:0in; mso-para-margin-bottom:.0001pt; mso-pagination:widow-orphan; font-size:11.0pt; font-family:"Calibri","sans-serif"; mso-ascii-font-family:Calibri; mso-ascii-theme-font:minor-latin; mso-fareast-font-family:"Times New Roman"; mso-fareast-theme-font:minor-fareast; mso-hansi-font-family:Calibri; mso-hansi-theme-font:minor-latin; mso-bidi-font-family:"Times New Roman"; mso-bidi-theme-font:minor-bidi;} </style> <![endif]--> <p style="text-align: justify;" class="MsoNormal">Bank of America, based in Charlotte NC will begin paying pack the Troubled Asset Relief Program (TARP) for money loaned to it during the financial turmoil last year. The total amount owed is 45 billion dollars with 19.3 billion being paid back on December 3<sup>rd</sup> with a preferred stock sale. Bank of America purchased troubled Merrill Lynch last year during the height of the financial crises amid some controversy. The purchase of Merrill is already paying off with Bank of America having more of an international presence in investment banking as well as a large, well regarded army of retail brokers. By beginning to pay back TARP, Bank of America will soon free of government restrictions on executive and bonus pay and is a signal to the market that it is a healthy institution. After the announcement of the preferred stock sale, BofA shares rose .7% in NYSE trading. Being one of the largest employers and internship providers to Wake Forest Schools of Business students, the repayment of TARP should bode well in terms of increased full time offers and internship positions.
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<br /></p><p class="MsoNormal">By: Jason Wu - WFU MBA 11'
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<br /></p><p class="MsoNormal">For further information, please see full Bloomberg article: <meta equiv="Content-Type" content="text/html; charset=utf-8"><meta name="ProgId" content="Word.Document"><meta name="Generator" content="Microsoft Word 12"><meta name="Originator" content="Microsoft Word 12"><link rel="File-List" href="file:///C:%5CUsers%5Ccoundw8%5CAppData%5CLocal%5CTemp%5Cmsohtmlclip1%5C01%5Cclip_filelist.xml"><link rel="themeData" href="file:///C:%5CUsers%5Ccoundw8%5CAppData%5CLocal%5CTemp%5Cmsohtmlclip1%5C01%5Cclip_themedata.thmx"><link rel="colorSchemeMapping" href="file:///C:%5CUsers%5Ccoundw8%5CAppData%5CLocal%5CTemp%5Cmsohtmlclip1%5C01%5Cclip_colorschememapping.xml"><!--[if gte mso 9]><xml> <w:worddocument> <w:view>Normal</w:View> <w:zoom>0</w:Zoom> <w:trackmoves/> <w:trackformatting/> <w:punctuationkerning/> <w:validateagainstschemas/> <w:saveifxmlinvalid>false</w:SaveIfXMLInvalid> <w:ignoremixedcontent>false</w:IgnoreMixedContent> 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<br /><span style="color: rgb(31, 73, 125);"><o:p></o:p></span></p> <p></p> Wake Forest MBA Finance Networkhttp://www.blogger.com/profile/17519037781968108734noreply@blogger.com0tag:blogger.com,1999:blog-5702340578939696179.post-4776260826610425672009-12-13T15:37:00.000-08:002009-12-13T15:48:33.986-08:00Citadel trying to start its own investment bank<meta equiv="Content-Type" content="text/html; charset=utf-8"><meta name="ProgId" content="Word.Document"><meta name="Generator" content="Microsoft Word 12"><meta name="Originator" content="Microsoft Word 12"><link rel="File-List" href="file:///C:%5CUsers%5Ccoundw8%5CAppData%5CLocal%5CTemp%5Cmsohtmlclip1%5C01%5Cclip_filelist.xml"><link rel="themeData" href="file:///C:%5CUsers%5Ccoundw8%5CAppData%5CLocal%5CTemp%5Cmsohtmlclip1%5C01%5Cclip_themedata.thmx"><link rel="colorSchemeMapping" href="file:///C:%5CUsers%5Ccoundw8%5CAppData%5CLocal%5CTemp%5Cmsohtmlclip1%5C01%5Cclip_colorschememapping.xml"><!--[if gte mso 9]><xml> <w:worddocument> 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mso-pagination:widow-orphan; font-size:11.0pt; font-family:"Calibri","sans-serif"; mso-fareast-font-family:Calibri; mso-fareast-theme-font:minor-latin; mso-bidi-font-family:"Times New Roman";} .MsoChpDefault {mso-style-type:export-only; mso-default-props:yes; font-size:10.0pt; mso-ansi-font-size:10.0pt; mso-bidi-font-size:10.0pt;} @page Section1 {size:8.5in 11.0in; margin:1.0in 1.0in 1.0in 1.0in; mso-header-margin:.5in; mso-footer-margin:.5in; mso-paper-source:0;} div.Section1 {page:Section1;} --> </style><!--[if gte mso 10]> <style> /* Style Definitions */ table.MsoNormalTable {mso-style-name:"Table Normal"; mso-tstyle-rowband-size:0; mso-tstyle-colband-size:0; mso-style-noshow:yes; mso-style-priority:99; mso-style-qformat:yes; mso-style-parent:""; mso-padding-alt:0in 5.4pt 0in 5.4pt; mso-para-margin:0in; mso-para-margin-bottom:.0001pt; mso-pagination:widow-orphan; font-size:11.0pt; font-family:"Calibri","sans-serif"; mso-ascii-font-family:Calibri; mso-ascii-theme-font:minor-latin; mso-fareast-font-family:"Times New Roman"; mso-fareast-theme-font:minor-fareast; mso-hansi-font-family:Calibri; mso-hansi-theme-font:minor-latin; mso-bidi-font-family:"Times New Roman"; mso-bidi-theme-font:minor-bidi;} </style> <![endif]--> <p style="text-align: justify;" class="MsoNormal">Citadel Investment Group or the “Citadel” is one of the largest hedge funds in the world with approximately 15 billion dollars in assets under management(AUM). Founded by Kenneth Griffin in 1990 and based in Chicago, Illinois, the Citadel specializes in a variety of investment strategies such as convertible bond arbitrage, algorithmic trading, and macro-event driven. The Citadel trades in almost all OTC and exchange markets in equities, fixed income, currencies, and commodities. Last year, the Citadel lost 55% in two of its main funds: Wellington and Kensington. Although the funds have recovered more than 50% this year, there is still a ways to go for the funds to return to their former status.</p><p style="text-align: justify;" class="MsoNormal">
<br /></p><div style="text-align: justify;"> </div><p style="text-align: justify;" class="MsoNormal"><o:p> </o:p></p><div style="text-align: justify;"> </div><div style="text-align: justify;"> </div><p style="text-align: justify;" class="MsoNormal">Recently the Citadel has started an investment banking and advisory arm in hopes of replacing the void left by the collapse of Bear Stearns and Lehman Brothers. Mr. Griffin hired Rohit D’Souza: a former banker at Merrill Lynch, approximately 12 months ago to run this new unit. However Mr. D’Souza recently left the firm and was replaced by Patrik Edsparr: a former banker at JP Morgan Chase & Co. Mr. Griffin is known for his hands-on management style which may have contributed to Mr. D’Souza leaving. The Citadel has recently arranged its first syndicated loan for Targa Resources; a gas and pipeline in Houston. Will the Citadel be able to take investment banking and advisory services market share from other firms such as Goldman Sachs and Morgan Stanley and become a major player? Although the syndicated loan is a positive first step, the revolving door leadership of the newly formed unit and the Citadel in general is troubling. The quick change in leadership is not a good sign to companies in need of investment banking and advisory services who crave more stable leadership rather than the constant change that hedge funds typically exhibit.</p><p style="text-align: justify;" class="MsoNormal">
<br /></p><p style="text-align: justify;" class="MsoNormal">By: Jason Wu - WFU MBA 11'</p><p style="text-align: justify;" class="MsoNormal">
<br /></p><p style="text-align: justify;" class="MsoNormal">For further information, please see the full Bloomberg article:
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<br /></p>Wake Forest MBA Finance Networkhttp://www.blogger.com/profile/17519037781968108734noreply@blogger.com0tag:blogger.com,1999:blog-5702340578939696179.post-45604780159855338832009-12-13T15:15:00.000-08:002009-12-24T10:03:14.237-08:00Life is All About Real Interest Rates.......Isn't It?<meta equiv="Content-Type" content="text/html; charset=utf-8"><meta name="ProgId" content="Word.Document"><meta name="Generator" content="Microsoft Word 12"><meta name="Originator" content="Microsoft Word 12"><link style="font-family: verdana;" rel="File-List" href="file:///C:%5CUsers%5Ccoundw8%5CAppData%5CLocal%5CTemp%5Cmsohtmlclip1%5C01%5Cclip_filelist.xml"><link style="font-family: verdana;" rel="themeData" href="file:///C:%5CUsers%5Ccoundw8%5CAppData%5CLocal%5CTemp%5Cmsohtmlclip1%5C01%5Cclip_themedata.thmx"><link style="font-family: verdana;" rel="colorSchemeMapping" href="file:///C:%5CUsers%5Ccoundw8%5CAppData%5CLocal%5CTemp%5Cmsohtmlclip1%5C01%5Cclip_colorschememapping.xml"><!--[if gte mso 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mso-pagination:widow-orphan; font-size:11.0pt; font-family:"Calibri","sans-serif"; mso-fareast-font-family:Calibri; mso-fareast-theme-font:minor-latin; mso-bidi-font-family:"Times New Roman";} .MsoChpDefault {mso-style-type:export-only; mso-default-props:yes; mso-ascii-font-family:Calibri; mso-ascii-theme-font:minor-latin; mso-fareast-font-family:Calibri; mso-fareast-theme-font:minor-latin; mso-hansi-font-family:Calibri; mso-hansi-theme-font:minor-latin; mso-bidi-font-family:"Times New Roman"; mso-bidi-theme-font:minor-bidi;} .MsoPapDefault {mso-style-type:export-only; margin-bottom:10.0pt; line-height:115%;} @page Section1 {size:8.5in 11.0in; margin:1.0in 1.0in 1.0in 1.0in; mso-header-margin:.5in; mso-footer-margin:.5in; mso-paper-source:0;} div.Section1 {page:Section1;} --> </style><!--[if gte mso 10]> <style> /* Style Definitions */ table.MsoNormalTable {mso-style-name:"Table Normal"; mso-tstyle-rowband-size:0; mso-tstyle-colband-size:0; mso-style-noshow:yes; mso-style-priority:99; mso-style-qformat:yes; mso-style-parent:""; mso-padding-alt:0in 5.4pt 0in 5.4pt; mso-para-margin-top:0in; mso-para-margin-right:0in; mso-para-margin-bottom:10.0pt; mso-para-margin-left:0in; line-height:115%; mso-pagination:widow-orphan; font-size:11.0pt; font-family:"Calibri","sans-serif"; mso-ascii-font-family:Calibri; mso-ascii-theme-font:minor-latin; mso-hansi-font-family:Calibri; mso-hansi-theme-font:minor-latin;} </style> <![endif]--> <p class="MsoNormal" style="text-align: justify;font-family:arial;"><span style="font-size:10;"><span style="font-weight: bold;">1.</span> <span style="font-weight: bold;">Real interest rates and CURRENCIES. </span>
<br /></span></p><p class="MsoNormal" style="text-align: justify;font-family:arial;"><span style="font-size:10;">
<br /></span></p><p class="MsoNormal" style="text-align: justify;font-family:arial;"><span style="font-size:10;">In a former life, I used to have as two of my five economic "Never Ignore" mottos, never ignore, short term real interest rate differentials, and never ignore long term interest rate differentials. (others were PPP, the G7 and current accounts, and I added, another, never ignore the charts). When I started here at GS, I introduced GSDEER, a fundamental valuation methodology which , luckily in recent years, Thomas Stolper and others have upgraded considerably in quality……….. </span><span style="font-size:10;"><o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;font-family:arial;"><span style="font-size:10;"> </span><span style="font-size:10;"><o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;font-family:arial;"><span style="font-size:10;">
<br /></span></p><p class="MsoNormal" style="text-align: justify;font-family:arial;"><span style="font-size:10;">Back in the 1990's, we also used to work with something called " Adjusted GSDEER" which would take our underlying valuation, and adjust it for 10 year real bond yield differentials, and we regarded this as an excellent guide to how $/DM actually moved. In the mid 1990's, about the same time, the Bundesbank actually published an econometric model, which was effectively the same. In the early years of the Euro, it seemed as though an Adjusted GSDEER approach worked even better, as all that seemed to matter ( given little change in relative US-European productivity) was a large actual or perceived move in real interest rates. </span><span style="font-size:10;"><o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;font-family:arial;"><span style="font-size:10;"> </span><span style="font-size:10;"><o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;font-family:arial;"><span style="font-size:10;">
<br /></span></p><p class="MsoNormal" style="text-align: justify;font-family:arial;"><span style="font-size:10;">As it relates to major currencies, we used to find that for the Yen, our adjusted GSDEER did NOT work at all.</span><span style="font-size:10;"><o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;font-family:arial;"><span style="font-size:10;"> </span><span style="font-size:10;"><o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;font-family:arial;"><span style="font-size:10;">
<br /></span></p><p class="MsoNormal" style="text-align: justify;font-family:arial;"><span style="font-size:10;">Now what is interesting in recent years, and Dominic Wilson is always correct to point out, is that $/Yen appears to have -dramatically compared to the old days- increased its correlation with interest rate differentials, with short term ones especially. </span><span style="font-size:10;"><o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;font-family:arial;"><span style="font-size:10;"> </span><span style="font-size:10;"><o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;font-family:arial;"><span style="font-size:10;">
<br /></span></p><p class="MsoNormal" style="text-align: justify;font-family:arial;"><span style="font-size:10;">Now I say all of this, because one of the things I might have got wrong in my silly thick head, is that I have stopped thinking a bit about real interest rate differentials as it could relate to the Yen. While it seems increasingly idiotic from a medium term to long term perspective for the Yen to carry on this relentless rally, if Japanese real yields continue to rise relative to the US- and elsewhere, then maybe the stupid Yen will rally, for now, even more. Indeed, as a number of clients have pointed out to me, the temporary rise in JGB yields and selloff in Japan CDS simply contributed even more to this, by raising the attraction of local real yields at the expense of overseas ones for Japanese investors.</span><span style="font-size:10;"><o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;font-family:arial;"><span style="font-size:10;"> </span><span style="font-size:10;"><o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;font-family:arial;"><span style="font-size:10;">
<br /></span></p><p class="MsoNormal" style="text-align: justify;font-family:arial;"><span style="font-size:10;">Given that the Japanese Government has now formally acknowledged " deflation " is back, you would think that they might do something about it- such as raising their JGB purchases, deliberately weakening the Yen given that this is the main transmission mechanism for inflation/deflation in Japan, but alas……….they simply make these statements.</span><span style="font-size:10;"><o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;font-family:arial;"><span style="font-size:10;"> </span><span style="font-size:10;"><o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;font-family:arial;"><span style="font-size:10;">
<br /></span></p><p class="MsoNormal" style="text-align: justify;font-family:arial;"><span style="font-size:10;">Perhaps the Yen might go pretty close to its all time highs before reality finally takes over, and we get what is necessary to start the long, and inevitable Yen decline………</span><span style="font-size:10;"><o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;font-family:arial;"><span style="font-size:10;"> </span><span style="font-size:10;"><o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;font-family:arial;"><span style="font-size:10;">
<br /></span></p><p class="MsoNormal" style="text-align: justify;font-family:arial;"><span style="font-size:10;">More broadly, as and when US real interest rates turn ( whatever the reason), so will the Dollar….</span><span style="font-size:10;"><o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;font-family:arial;"><span style="font-size:10;"> </span><span style="font-size:10;"><o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;font-family:arial;"><span style="font-size:10;">
<br /></span></p><p class="MsoNormal" style="text-align: justify;font-family:arial;"><span style="font-size:10;"><span style="font-weight: bold;">2.</span> <span style="font-weight: bold;">Real interest rates and GOLD. </span>
<br /></span></p><p class="MsoNormal" style="text-align: justify;font-family:arial;"><span style="font-size:10;">
<br /></span></p><p class="MsoNormal" style="text-align: justify;font-family:arial;"><span style="font-size:10;">Gold is a currency of course, in many ways. Tuesday night this week, I had the pleasure of attending a rather lively dinner discussion with a bunch of hedge fund commodity investors. I had forgotten just how "lively" many commodity market players can be, and certainly when it comes to Gold, it just does something to us all, and gets the emotions going more than virtually anything ( unless you come from a certain town by the coast in the north west of England of course………at one time in life, I believe they used to think they were good at footie there).</span><span style="font-size:10;"><o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;font-family:arial;"><span style="font-size:10;"> </span><span style="font-size:10;"><o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;font-family:arial;"><span style="font-size:10;">
<br /></span></p><p class="MsoNormal" style="text-align: justify;font-family:arial;"><span style="font-size:10;">Anyhow, as our own Gold guru David Greely shows in his own modeling, Gold is essentially driven by real interest rates. I hear all these views about central banks buying, and supply issues, etc, etc, and they are no different than I have heard in the past. Flow things in all markets come and go, don’t get sucked in by them. If US, and G7 real interest rates decline, Gold tends to go up, and vice versa…….</span><span style="font-size:10;"><o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;font-family:arial;"><span style="font-size:10;"> </span><span style="font-size:10;"><o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;font-family:arial;"><span style="font-size:10;">
<br /></span></p><p class="MsoNormal" style="text-align: justify;font-family:arial;"><span style="font-size:10;">Now, for some odd reason, some of you seem to think that I have some kind of pathological dislike of Gold……….you obviously haven't known me for long. I have managed to get Gold wrong many times, including back in the mid 1990s when I tried to get bullish about 2 years too early……</span><span style="font-size:10;"><o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;font-family:arial;"><span style="font-size:10;"> </span><span style="font-size:10;"><o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;font-family:arial;"><span style="font-size:10;">
<br /></span></p><p class="MsoNormal" style="text-align: justify;font-family:arial;"><span style="font-size:10;">The issue for you-increasingly trend influenced buyers of Gold - for 2010 is easy. DO you expect real interest rates to rise, or fall? If the answer is rise, then what on earth are you buying it for? </span><span style="font-size:10;"><o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;font-family:arial;"><span style="font-size:10;"> </span><span style="font-size:10;"><o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify; font-weight: bold;font-family:arial;"><span style="font-size:10;">
<br /></span></p><p class="MsoNormal" style="text-align: justify;font-family:arial;"><span style="font-size:10;"><span style="font-weight: bold;">3.</span> <span style="font-weight: bold;">Real interest rates and GDP.</span></span></p><p class="MsoNormal" style="text-align: justify;font-family:arial;">
<br /><span style="font-size:10;"><span style="font-weight: bold;"></span></span><span style="font-size:10;"><o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;font-family:arial;"><span style="font-size:10;"> </span><span style="font-size:10;"><o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;font-family:arial;"><span style="font-size:10;">Now let's expand further into the broader world. In economic theory, at least pre Alan Greenspan and Ben Bernanke, it is believed that the real interest rate should be reasonably similar to the long term growth performance of an economy, or at least the equilibrium real rate. </span><span style="font-size:10;"><o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;font-family:arial;"><span style="font-size:10;"> </span><span style="font-size:10;"><o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;font-family:arial;"><span style="font-size:10;">
<br /></span></p><p class="MsoNormal" style="text-align: justify;font-family:arial;"><span style="font-size:10;">Both the current and previous Fed Chairman would have us, for a long time, believe that there were "special" reasons why US ( nominal and real) interest rates were below where they should , all for reasons that had nothing to do with the US. It used to baffle me for many years why Mr Greenspan would talk so optimistically about the productivity miracle but seemed so relaxed about low real rates. Here's one to ponder? How come, if US rates were so low because of some kind of " savings glut" from other countries, Asia especially, now that the US current account deficit is half what it was, and China's current account surplus is half what is was, real rates aren't higher?</span><span style="font-size:10;"><o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;font-family:arial;"><span style="font-size:10;"> </span><span style="font-size:10;"><o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;font-family:arial;"><span style="font-size:10;">
<br /></span></p><p class="MsoNormal" style="text-align: justify;font-family:arial;"><span style="font-size:10;">Answer also on a postcard please………….</span><span style="font-size:10;"><o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;font-family:arial;"><span style="font-size:10;"> </span><span style="font-size:10;"><o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;font-family:arial;"><span style="font-size:10;">
<br /></span></p><p class="MsoNormal" style="text-align: justify;font-family:arial;"><span style="font-size:10;">My own view is that, in fact, it is quite likely over coming years that aspects of Ben Bernanke's conundrum will pan out, and as people start to realise Chinese growth is both sustainable and profitable ( including the policymakers in Beijing) then Chinese and G7 real interest rates will rise, and this year's huge improvement in global imbalances will continue.</span><span style="font-size:10;"><o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;font-family:arial;"><span style="font-size:10;"> </span><span style="font-size:10;"><o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;font-family:arial;"><span style="font-size:10;">
<br /></span></p><p class="MsoNormal" style="text-align: justify;font-family:arial;"><span style="font-size:10;">But, rather naughtily let me put this one to you, as one very smart investor inadvertently did for me yesterday. Could it be that the decline in US real rates in the past decade had nothing to do with the savings glut etc, but actually reflected increasing belief that there is less domestic growth potential in the US and less creativity taking for a whole generation?</span><span style="font-size:10;"><o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;font-family:arial;"><span style="font-size:10;"> </span><span style="font-size:10;"><o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;font-family:arial;"><span style="font-size:10;">
<br /></span></p><p class="MsoNormal" style="text-align: justify;font-family:arial;"><span style="font-size:10;"><span style="font-weight: bold;">4.</span> <span style="font-weight: bold;">Real interest rates and the ERP.</span></span><span style="font-size:10;"><o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;font-family:arial;"><span style="font-size:10;"> </span><span style="font-size:10;"><o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;font-family:arial;"><span style="font-size:10;">
<br /></span></p><p class="MsoNormal" style="text-align: justify;font-family:arial;"><span style="font-size:10;">Which brings me full circle to markets and the equity risk premia. Whatever the answers above, looking at current valuations and all the constant worries you all have- now including Dubai and Greek CDS again- the fact of the matter is......</span><span style="font-size:10;"><o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;font-family:arial;"><span style="font-size:10;"> </span><span style="font-size:10;"><o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;font-family:arial;"><span style="font-size:10;">
<br /></span></p><p class="MsoNormal" style="text-align: justify;font-family:arial;"><span style="font-size:10;">Even in a low global growth environment, the current equity risk premia is still above the past 25-30 year average, and unless real interest rates suddenly rise a lot , then equities should do fine. ( and by the way, all this debt that everyone worries about won't be as big a problem, as the debt servicing is so low).</span><span style="font-size:10;"><o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;font-family:arial;"><span style="font-size:10;"> </span><span style="font-size:10;"><o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;font-family:arial;"><span style="font-size:10;">
<br /></span></p><p class="MsoNormal" style="text-align: justify;font-family:arial;"><span style="font-size:10;">Now think of a 4pct, BRIC influenced world, then the ERP is ridiculously high, and until the real interest rates rise, equities will remain staggeringly attractive……….</span><span style="font-size:10;"><o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;font-family:arial;"><span style="font-size:10;"> </span><span style="font-size:10;"><o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;font-family:arial;"><span style="font-size:10;"> </span><span style="font-size:10;"><o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;font-family:arial;"><span style="font-size:10;">
<br /></span></p><p class="MsoNormal" style="text-align: justify;font-family:arial;"><span style="font-size:10;"><span style="font-weight: bold;">5.</span> <span style="font-weight: bold;">Where are real interest rates going?</span></span><span style="font-size:10;"><o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;font-family:arial;"><span style="font-size:10;"> </span><span style="font-size:10;"><o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;font-family:arial;"><span style="font-size:10;">
<br /></span></p><p class="MsoNormal" style="text-align: justify;font-family:arial;"><span style="font-size:10;">Which frankly, dear reader, is an even bigger question for 2010 markets, than it was this time last year, when the answer was , in my opinion, easy, they went down, and hence why it was so easy to be bullish "stuff"……….</span><span style="font-size:10;"><o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;font-family:arial;"><span style="font-size:10;"> </span><span style="font-size:10;"><o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;font-family:arial;"><span style="font-size:10;">
<br /></span></p><p class="MsoNormal" style="text-align: justify;font-family:arial;"><span style="font-size:10;">Now even if real interest rates, as eventually they must do unless we are going to be stuck with a permanent depression, then equities will have to deal with that, but so long as it is , in circumstances of the GDP growth consensus being revised up towards, and not too violent, this is not an issue for equities. It will be, however, for $ bears and almost definitely, lovers of the yellow metal…….</span></p><p class="MsoNormal" face="arial" style="text-align: justify;">
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mso-bidi-font-family:"Times New Roman"; mso-bidi-theme-font:minor-bidi;} </style> <![endif]--><span style="font-size: 11pt; font-family: "Calibri","sans-serif";">Jim O’Neill of Goldman Sachs</span>
<br /><span style="font-size:10;"></span><span style="font-size:10;"><o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;font-family:verdana;"><span style=""> </span></p> Wake Forest MBA Finance Networkhttp://www.blogger.com/profile/17519037781968108734noreply@blogger.com0tag:blogger.com,1999:blog-5702340578939696179.post-68492399673653507602009-09-08T21:08:00.000-07:002009-09-08T21:50:45.605-07:00Off the Beaten PathMBA's from top b-schools spend two frenetic, intense years shaping and carving out <strong>an ideal career path.</strong> Those in finance will likely have their eyes on prominent, well-paying positions. Positions, where the deals will be big; the stakes will be high, the risks mind-boggling and the clients large and familiar to those who read the Wall Street Journal.<br /><br />The prize they covet is often a role in equity research, corporate finance, commercial and investment banking, mergers & acquitions, derivatives, fixed-income trading hedge funds, public finance, insurance, private equity, financial analyis, corporate treassury, or investment management. That's a typical, respectable route. Top firms, corporation and banks seek talent and parade to top schools to fill <strong>the prized roles.</strong><br /><strong></strong><br />But what about <strong>non-traditional routes</strong> for the MBA in finance or for the finance professional early in his/her career? Not everybody wants to be or should become an investment banker or hedge-fund trader. Not everybody is interested in the "big deal," "big IPO," or "big trade." What are the opportunities <em>off the beaten path</em>?<br /><br />First, the<strong> traditional route </strong>is not an undesirable path. Students and professionals shouldn't be discouraged from heading into the direction of their interests and passions. MBA's are mature professionals who have thought long and hard about what they want to do.<br /><br />The traditional route has <strong>advantages</strong>. Handsome compensation packages is one. Top firms, funds, or banks (such as Goldman, Blackstone, BoA, or Citigroup) value the MBA and look for people who have extensive knowledge, can handle significant responsibility and can contribute right away.<br /><br />B-schools prepare graduates well for those roles--with tailored courses, varied concentrations and in-depth academic preparation. Opporutnies are broad; career progresion is explicitly defined. Often training programs are at the doorstep. Networking and connecting with alumni are possible just by tapping a shoulder.<br /><br />But what if the <strong>early-career professional</strong> wants something different? What are alternatives, and what can they do to design a different career path?<br /><br /><strong>Non-traditional roles</strong> can encompass almost anything. MBA's and finance professionals occasionally reject what's familiar and venture elsewhere, still using their skills, coursework, experiences and contacts.<br /><br />They bypass investment banking for <strong>community banking</strong> or <strong>microfinance</strong>-preferring to do business with individuals, small businesses, or mom-and-pop enterprises. They have become <strong>financial managers</strong> at museums, art galleries, opera companies or West Coast start-ups.<br /><br />They have assumed senior finance roles in <strong>not-for-profit organizations--</strong>at charities, foundations, social-responsibility and civil-rights groups. They have assumed roles in government as financial managers at municipalities or treasury officials of states. In microfinance, they focus on helping fund one-person shops in emerging markets.<br /><br />Also, off the beaten path may mean exploring less flamboyant or less known roles in traditional banks or firms. That might mean responsibilities in <strong>risk management</strong> (credit risk or market risk), <strong>cash management</strong> (funds transfer, short-term investments), <strong>custody</strong> (securities holding), <strong>securities processing, credit cards</strong>, and <strong>community reinvestment</strong> (CRA). Opportunities abound in these areas, but they aren't always well publicized or well recruited. MBA's thrive in these areas, even when some schools may not teach related courses or professors don't specialize in the same.<br /><br />The financial crisis didn't discourage MBA's from banking and corporate--at least not as much as expected. But it spurred them to be fair to themselves and ponder the non-traditional realm.<br /><br />Amid such opportunities, there are challenges. <strong>Non-traditional employers</strong> may not have histories of recruiting MBA's or deep-rooted relationships with schools. Thus, they may not already have large numbers of MBA's in management and may prefer to groom from within. Or they aren't familiar with the value of MBA hiring or aren't familiar with the process.<br /><br /><strong>Do b-schools prepare MBAs for these roles?</strong> Many seek to do so. They offer courses in non-profit management, introduce students to public finance, public policy and social responsibility, and require finance students to be adept in operations and general management. Some professors specialize in these topics. And schools gladly help students and alumni connect with alumni in these roles.<br /><br /><strong>Are the opportunities real?</strong> Yes, if they are pursed or hunted carefully. They may require the seeker to convince the non-traditional employer to take a chance with finance types, their skills and special experience.<br /><br /><br />Post by : Tracy Williams from CFNWake Forest MBA Finance Networkhttp://www.blogger.com/profile/17519037781968108734noreply@blogger.com0