RISE at Dayton, Michigan Stocks and Quotes -- Kai's Opinion
Dredge #4 National Historic Site
On The Academic Frontline
A Few More Thoughts from the Michigan Stock Pitch Competition
In my previous blog I mentioned the MII stock pitch competition at the Ross School of Business, and listed the stocks that were pitched. This week a press release went out that you can see here. Here's a quick quote from that article:
But Gelband also made clear that a slew of new startups will be born from the collapse of the old system. He spoke with hope of startups like investment bank boutiques, dealer brokers, electronic marketplaces, and aggregators.
"That's what's going to drive our financial system back to health and create job opportunities in the future," he said. "The marketplace and the regulators will demand better alignment of incentives, better risk management, and a more rational cost structure and size."
"Ross Investment Club Debuts Intercollegiate Stock Competition for Undergrads". Leah Sipher-Mann. April 1, 2009.
Insight From the RISE IX Dayton Investment Conference @ the University of Dayton
So, after the event at Ross, I made my way to the University of Dayton and attended the RISE IX academic student investment conference. Although the market has sucked, an eye-popping 2600 students/professors/investment professionals came to the event this year and participated in a forum that touched upon the economy, markets, corporate governance and global investing. The first day had a series of keynote sessions followed by Q&A from students, followed by workshops for the next two days. Perhaps due to the economic downturn the event was a bit more subdued this year, as the year before they held a closing NASDAQ bell and a fancy dinner in the National Museum of the US Air Force. Needless to say, I'd strongly encourage others to attend the event next year. It's a huge event and big thanks certainly should go towards David Sauer, Bob Froehlich and a plethora of volunteers.
I participated as well, speaking at a session entitled 'Enhancing the Investment Education Experience"; but, I also had a chance to ask some pertinent questions at the sessions. Here are summaries of my questions and the answers:
My Q: Last year quant funds performed poorly. At that point in time, did you alter your strategy, remove/add some quant measures. What worked and what didn't?
A: We have a team of analysts who keep watching the markets and staying top on things.
My opinion: They avoided the question and it made them nervous. I knew they wouldn't answer the question, but I had fun asking it. It is a great question though!
My Q: Academic studies find that for 'faith-based (socially responsible) funds', the returns aren't necessarily better, some 'window-dress', and the higher fees are charged. Although the funds may find 'socially responsible' companies, are they actually 'socially responsible' to the investor? Is it socially responsible for a faith-based fund to walk into a church, tell the congregation to invest with them as they believe the same thing, but then charge more, underperform and window-dress? Isn't it just marketing?"
A: That is a problem in some of the profession, and yes the academic students do find that. Some charge higher fees as they would argue that they are performing a service, but mutual funds are increasing fees as well.
My opinion: They answered the question. It made them uncomfortable, but they answered the question. Thank you.
Someone else asked the Q: "Are there any quick quant methods that can detect some of the fraud?"
A: Look at neural networks and how people inter-relate with one another.
My opinion: They avoided the answer and started pitching neural research they did. It was a good question, but there was an easier answer that they could have given. I told the audience to look at the 'Predicting Material Accounting Misstatements' paper by Dechow, Ge, Larson and Sloan.
My Q: I like Jim Cramer, I also like Jon Stewart. Was the incident good for the business, or bad for the business?
A: Criticism is good, and when people care about what we do and still watch, that is good. But, the public relations department may not like it.
My opinion: Good answer. That’s straight to the point. My respect for CNBC has increased, and I still like Cramer's passion for the markets.
Quotes overheard at the conference
About media:
"Media talks about things better than they are when good and worse than they are when bad"
"Inform and reflect society"
"Blaming media is a scapegoat"
"Financial media doesn't exist to make you money. It makes money for itself from advertising"
Q: Last year, you thought the S&P 500 was undervalued by 15%.
A: This is the problem with coming back (to the conference)... and I'll see you outside after class"
About gold:
"For #$@'s sake, don't get sucked in"
Accounting and valuation:
"Valuation matters less today"
"Valuation is not the catalyst"
About tax havens:
"Hide assets from IRS or wife"
About the Auto Industry:
"I don't know what I think about this"
"Sympathy that we need to preserve American icon"
"Fewer people benefit from bailing auto companies"
"Let bondholders suffer"
"We'll just call them Toyota"
Favorite economic indicator?
"I don't have one, perhaps how the market is doing"
"How angry Rick Santelli is"
When is the USA in trouble?
"When Asians realize it's better to finance in Bangkok than in New Jersey"
About Fraud:
"Absence of evidence is not evidence of absence"
About short sellers:
"Get a bad rap, do a service to investors"
"Neither more or less evil than long"
About regrets and mistakes:
"I regret that I didn’t' take statistics"
"Unthinkable can actually happen"
"Faith in human nature. Didn’t realize how prevalent bad debt was"
"I was not pessimistic enough"
"My worst forecast... aside from 401K investment?"
About the crisis and policies:
"It may seem like dark days... exciting times... the industry is reformatting itself."
"It took 3 decades to understand the depression"
"Programs are done under duress... at 2am... eating pizza"
"Not the perfect policy, but they mean well"
"No natural political ally for what is happening now"
"90% of the market doesn't understand banking"
"Is there such a thing as a non-toxic asset?"
"Like shooting hogs with a shotgun"
"Populist orgy of ridiculous legislation"
"Favorite topic in class, was how to get ahead without working very hard"
"Ethical behavior cannot be enforced through legislation"
"It’s like going to the Rolling Stones and getting Jonas Brothers instead"
"Hot dog style of investing, no idea what goes in it, but it's delicious"
"Is there anything the fed could have done differently? No."
"Annus horribilis."
"Stocks have become historically and hysterically volatile"
"Always agree with your boss who signs your check"
"Behavioral biases are very valuable"
"How do you fix the big fix? You need a big fix to fix it"
"We always seem to be in a bubble"
Just the Bear News
Perhaps in this mess, there is some hope for the future of the industry. Perhaps.
The gold rush, the market rush. I was reminded of "The Spell of the Yukon", written on a house in Dawson City, Yukon.
Was famine or scurvy -- I fought it; I hurled my youth into a grave.
I wanted the gold and I got it -- came out with a fortune last fall.
Yet somehow life's not what I thought it, and somehow the gold isn't all.
Cheers and sisu,
I make a list of 100 stocks that might suck and 40 that might look good.
http://www.earningstorpedo.com
I also have a webpage that links to the trips and photography that I’m involved with
"World Between My Ears"
Dredge #4 National Historic Site
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