S&P cuts Berkshire Hathaway rating by one notch to 'AA' - Yahoo! Finance: "The lower credit rating on BRK better reflects our view of BRK's dependence on its core insurance operations for most of its dividend income," said Standard &Poor's credit analyst John Iten." How to bond rating agencies work? Here are a few good links: From Wikipedia:  (they have really cool tables showing defaults by

SEC subpoenas ‘political intelligence’ firms in a case of leaked information - The Washington Post: " The latest case emerged April 1 when Height Securities, a Washington-based stock brokerage firm, alerted its clients that the government would soon make a decision favoring private health insurers who participate in a Medicare program. The alert went out 18 minutes before the end of the trading

Futurity.org – Bad deeds can tarnish money’s value: "Our work suggests morality is an important force shaping economic decision-making,” says Jennifer Stellar, a doctoral student in psychology at University of California, Berkeley, and lead author of the study. “Though we often think $50 is $50, these results demonstrate that when money takes on negative moral associations, its value is

In some recent papers, researchers argue that the return from an investment mainly results from exposure to systematic risk factors. Jaeger, L., Wagner, C., “Factor Modelling and Benchmarking of Hedge Funds: Can passive investments in hedge fund strategies deliver?”, Journal of Alternative Investments (Winter 2005) (Photo credit: Wikipedia) First the "what": Investors are redeeming hedge

Finance (Photo credit: Tax Credits) Mercury News interview: Meir Statman, Santa Clara University professor of finance - San Jose Mercury News: "Santa Clara University finance professor Meir Statman believes that American employers should be forced to set up retirement plans for their workers for one simple reason: "People are stupid," he said. Statman, an expert in behavioral finance,

Kill the 30-Year Mortgage - Bloomberg: Bloomberg makes an interesting call for more adjustable mortgages that reduce the boom and bust cycles in real estate:  "New homes are being built at the fastest rate in years and prices are increasing across the country.... What’s wrong with this picture? None of this would be possible without massive government support. Today, the government owns or

KPMG Fires a Senior Partner in an Insider Trading Episode - NYTimes.com: "KPMG said late Monday night it had fired a senior partner in its Los Angeles office after learning that he had provided inside information to an unnamed individual “who then used that information in stock trades involving several West Coast companies.”" It seems that the company involved was Herbalife: Again from NY

Carl Icahn Unleashed: Wall Street's Richest Man Is On The Attack -- Just Ask Michael Dell - Forbes: Forbes has a fascinating article on a fascinating man: Carl Icahn. "He used to make runs at companies via junk bonds and other tools of leverage. Then he figured out how to use other people’s money via a hedge fund structure. Now, though, it’s all Carl–with a net worth that FORBES estimates at

Why Do Firms Pay Stock Dividends: Is it Just a Stock Split? by Xi He, Mingsheng Li, Jing Shi, Garry Twite :: SSRN: Abstract: "This paper examines why firms choose to pay stock dividends. Using a sample of listed Chinese firms, we find that younger, more profitable firms, with lower leverage, high levels of retained earnings, private ownership prior to listing, investing more in fixed

Deregulation of Bank Entry and Bank Failures by Krishnamurthy Subramanian, Ajay Yadav :: SSRN: Short version: after deregulation there are fewer bank failures.  From the paper: "we find that deregulation of bank entry enhances bank stability by lowering instances of bank failures. Consistent with the effects being strongest in environments where the structure of banking markets changed the

To summarize: markets (and earthquakes) are not "normal". Earthquakes and the Mind-Bending Laws of Markets - Bloomberg: "Unfortunately, centuries of science and mathematics tradition, focusing on the normal statistics of things like weights, heights, and test scores, has taught us to see the world incorrectly. It was a telling moment on April 27, 2010, when Goldman Sachs Chief Financial

My MBA 604 class was asking about this, so I figured I would share it with everyone.  It is simple but shows how early payments go primarily to paying off interest.

Weighted average cost of capital (WACC) - YouTube  THANKS Bionic Turtle!!!

California Schools Finance Upgrades by Making the Next Generation Pay - NYTimes.com: This past week I was at a conference where one of the presentations was on these Capital Appreciation Bonds.  Essentially while these look like zero coupon bonds to investors, they take advantage of accounting loopholes that allow the price appreciation to be catergorized at deferred interest. And hence only

How Pervasive is Corporate Fraud? by I.J. Dyck, Adair Morse, Luigi Zingales :: SSRN: Abstract: "We estimate what percentage of firms engage in fraud and the economic cost of fraud. Our estimates are based on detected frauds, and frauds that we infer are started but are not caught. To identify the ‘iceberg’ of undetected fraud we take advantage of an exogenous shock to the incentives for fraud

Swiss vote for tough curbs on executive pay - Europe - Al Jazeera English: Shareholder voting on pay that matters?  This will be interesting to watch.   "Swiss citizens voted to impose some of the world's strictest controls on executive pay, forcing public companies to give shareholders a binding vote on compensation, initial result projections showed. Claude Longchamp, of pollsters Gfs

High Frequency trading has been in the news (and in class) quite a bit lately.  While high frequency trading seems to have peaked, it is still in the news (For example Warren Buffett sort of talked about it, regulators in the US and Germany are looking into it).   So a short "lesson" So from Wikipedia: "High-frequency trading (HFT) is the use of sophisticated technological tools and computer

China's real estate bubble - 60 Minutes - CBS News

Heinz CEO Johnson Would Get $200 Million in Post-Berkshire Exit - Yahoo! Finance: "H.J. Heinz Co. (HNZ) Chief Executive Officer Bill Johnson could receive more than $200 million should he exit after Warren Buffett's Berkshire Hathaway Inc. (BRK/A) and Jorge Paulo Lemann's 3G Capital Inc. buy the ketchup maker. Johnson, 64, would get "Golden Parachute Compensation" including $56 million in

Income Tax rates by Country based on OECD 2005 data. "OECD Tax Database". Organisation for Economic Co-operation and Development . . Retrieved 2007-01-30 . (Photo credit: Wikipedia) To Limit Corporate Tax Avoidance, Tax Investors - Bloomberg: Thoughts?   "International companies have so much discretion in allocating costs and revenues across their dispersed units that the corporate tax