We talked about IPOs a few weeks ago in my FIN101 class. I cited several examples that illustrate purchasing at the opening (and even the IPO) price tends to be a losing proposition for at least the first year or so. It looks like Square is heading in the same direction. As one student eloquently put it “wait until the hype passes” if you really believe a company has a good business.
-Dr. Moore
http://www.usatoday.com/story/tech/2015/11/06/square-sets-ipo-price/75284228/
I still do not have a Facebook account. This isn’t the reason why. However, FB’s IPO shenanigans were discussed in class this week as well as differential share voting rights. This article shows that the FB stock-related shenanigans continue.
Now, how can I be one of those non-employee board members that decide to pay themselves $500,000 without any formal shareholder process?
http://m.themalaymailonline.com/money/article/facebooks-zuckerberg-chided-by-judge-over-board-pay
I am not going to make any comments on this other than: I dare you to read the commentary at the bottom of the article’s page.
Keeping it fresh! In class I gave an example of how stock options are an imperfect tool to align managerial interest with shareholder interests. Then bam! Here is an article suggesting stock-based bonuses do not work in the sense that 1-, 3-, and 5- year returns are statistically the same with or without the bonuses.
However, knowing how we do it in academia, it is a matter of time before another article finds a significant improvement with bonuses so we can arrive at the good ‘ol “results are mixed.” One day, when I am extremely bored, I would like to study just what and who within a firm have a significant impact on stock returns (positive or negative). Is it top-level management? The chief scientist? The CFO? Patents? Alas, it is the journey not the answer…
A story that warms my heart: A story about “sport coding.” It reminds me of the first computer my father bought for me when I was 8 years old: an IBM PC with 64k of ram.
Yep, this is a read for the need-inclined. Who else cares to read about the sport of writing computer code? Enjoy.
This is an interesting read about mobile ad-blocking capability in iOS 9. From a finance perspective, this could cut off Google’s main revenue stream (advertising) while adding to Apple’s revenue stream (publishers will have to charge, and when something is charged on the iPhone Apple gets a cut via the App Store plus more iPhone sales). This is a brilliant move if it holds up to lawsuits. However, Apple has $150 billion in cash, short term investments, and long-term investments as of September 2014. They can “lawyer-up” with anybody.
It is also interesting how the article breaks down the cost of an iPhone to the per-day rate of $0.35 more per day than a [hypothetical] half-price Android. The article asserts the extra cost is justified if you are using your device 4+ hours per day. Perhaps. This $0.35/day is in the context of “even though iPhone’s are expensive, poor people can and should buy them.” Well, I don’t know what is best for someone else. I don’t have cable and I know unemployed people that do (and iPhones). On the same note, Warren Buffett makes more money than me but drives a car older than mine. 🙂
I started to send this article as an attached PDF so you would not be hit with the de-facto advertising of the conference and other articles on the page. But with all the talk of lawsuits I decided to just send the link. I don’t have $150B in the bank.
https://www.linkedin.com/pulse/apples-brilliant-assault-advertising-google-jason-calacanis
First Volkswagen and their “clean” diesel, now this Chinese restauranteur in San Francisco. Greed is an equal opportunity snare.
An example of why some regulation is needed. Let’s see if it turns out to be true that VW designed and implemented software to defeat emissions tests. Why would they do this? The car will post better fuel economy if you remove the emissions restrictions. Then they can sell more cars. However, just how bad is the air once it is filled with pollutants as a result?
This is an old (2011) article but worth the read:
There’s no question students and graduates face huge student loan debt. Unfortunately, due to federal law passed in 2005, you can not discharge student loan debt in bankruptcy.
So when the law protects financial institutions (at your expense) they will engage in risky practices. If federal law prohibits a student from defaulting on a student loan a bank will give out more student loans! This should sound familiar. If I can sell my home mortgages to the government (or risky hedge funds), I’ll give out more home loans! If I know I am too big to fail, I’ll just keep on making risky loans.
On a practical front, what can students do? Tuition costs are soaring but incomes are not. I humbly admit I don’t have “the answer.” However, I can think of a few suggestions:
1. Try to minimize your borrowing. To do so you may want to read my Cadence of Finance presentation. In there I talk about minimizing high margin exposure.
2. On the lines of minimizing high margin exposure, avoid doing business with the 5 big lenders mentioned in the article above. I have long recommended that people bank with credit unions instead of big banks. Again, see my Cadence of Finance presentation.
3. Not everyone is going to be a nuclear engineer. But the data is clear that higher education is associated with higher income. Choose a major that balances your abilities, interests, and income potential. Payscale.com has a nice page with recent data on earnings by degree (be sure to scroll down). Don’t panic if your interest and abilities land you in the lower income majors. But don’t borrow like you are going to graduate with a Petroleum Engineering degree with Petroleum Engineer income!
4. Pay attention to what politicians are suggesting they will do to address this looming problem. If they currently support bankruptcy protection for other forms of debt but not student loans then you have some information.
5. Whatever your do, don’t rely on the government to bail you out. Alone, you are not “too big too fail.” Do what you can to avoid needing a bail out. Perhaps collectively students with large loans are “too big too fail.” But what will it take to get them “collected” into a uniform position against the system?
Food for thought everyone!
I don’t have a Facebook, Twitter, Instagram, nor any other social media account. I have long thought social media takes away from true social interaction. Talking on the phone, meeting in person, and sharing experiences are replaced with 160 character tweets, terse text messages, and Instagram posts of where I am but you are not. With social media comes less social interaction and, according to the study cited in the article, depression. A strange irony indeed.
Go talk to someone today. Use complete sentences. Have dialogue. Be merry.
http://m.livescience.com/52148-social-media-teen-sleep-anxiety.html
Efficient Minds™ 