Open Access. Powered by Scholars. Published by Universities.®

Finance and Financial Management Commons™

Open Access. Powered by Scholars. Published by Universities.®

Butler University

Discipline
Keyword
Publication Year
Publication
Publication Type

Articles 151 - 180 of 207

Full-Text Articles in Finance and Financial Management

Facebook Ipo Lockup Expiration, Steven D. Dolvin Aug 2012

Facebook Ipo Lockup Expiration, Steven D. Dolvin

All Chapters

When a firm undertakes an IPO, insiders (owners and venture capitalists, among others) agree to retain their shares (i.e., lockup) for a period of time, typically six months. When the lockup period expires, it is customary to see a large block of shares flood the market, having an adverse effect on the stock's price. Facebook just hit its lockup expiration. See article here, NY Times.

Go to article

High Frequency Trading, Steven D. Dolvin Aug 2012

High Frequency Trading, Steven D. Dolvin

All Chapters

With recent events such as the Flash Crash and the trading glitch at Knight Capital, high frequency trading has come under increased scrutiny. So, what exactly is high frequency trading and flash orders? Essentially, these traders attempt to exploit differences in bid/ask prices and capture any spread that exists. Check out this video for an illustrated discussion.

Go to article

Will Lightning Strike Twice?, Steven D. Dolvin Aug 2012

Will Lightning Strike Twice?, Steven D. Dolvin

All Chapters

Just before the real estate crisis really hit, the Fed said that the issue was "contained." As we know, this was not correct. Recently, Bernanke said that the $1 Trillion in asset backed student loans won't cause a crisis. Hopefully he is right this time. See article here, Kansas City Star.

Go to article

Target Date Funds, Steven D. Dolvin Aug 2012

Target Date Funds, Steven D. Dolvin

All Chapters

Target date funds (or lifecycle funds) have simplified the investment process for many people. However, they are not without their own potential problems and differences. This article (CNN Money) gives a good overview of the main issues.

Go to article

Etfs Vs. Etns, Steven D. Dolvin Jul 2012

Etfs Vs. Etns, Steven D. Dolvin

All Chapters

While ETFs are essentially market-traded products that are similar to mutual funds, ETNs are actually more like a variable rate fixed income product that is "guaranteed" by the issuer. This difference adds a significant element of counterparty risk. Further, most ETNs are treated like partnerships, which means that taxes on gains (and losses) are treated differently, with recognition required each year (Statement K-1) rather than simply at sale. See a brief article here, USA Today.

Go to article

Control Yourself!, Steven D. Dolvin Jul 2012

Control Yourself!, Steven D. Dolvin

All Chapters

Sometimes we are our own worst enemies. Research shows that our brains are wired to trade stocks actively, and this often works against us. Even professional managers (such as mutual funds) have a hard time generating consistent outperformance. So, the best managers may be those that understand the psychology of investing and are able to control themselves. See the article here, Wall Street Journal. A good book on the topic is Psychology of Investing, by John Nofsinger.

Go to article

Contrarian Indicator - Short Sales?, Steven D. Dolvin Jul 2012

Contrarian Indicator - Short Sales?, Steven D. Dolvin

All Chapters

Short positions spiked recently, eclipsing the recent peak in 2011. After the previous peak, stock prices stages a five-month rally. Hopefully it will be the same this time. See article here, Bloomberg.

Go to article

Negative Bond Yields, Steven D. Dolvin Jul 2012

Negative Bond Yields, Steven D. Dolvin

All Chapters

During the Crash of 2008, a "flight to quality" drove yields to unprecedented low levels. In fact, many Treasuries were being issued with negative yields, meaning investors were paying the government to safely hold their money. Recently, with the crisis in Europe, German bonds have exhibited similar negative yields.

Go to article

Selling Fear = Making Money, Steven D. Dolvin Jul 2012

Selling Fear = Making Money, Steven D. Dolvin

All Chapters

Buying put options is commonly understood to provide a measure of insurance against price declines. As such, the cost of options is strongly correlated to the amount of fear in the market. It might be prudent in these cases to make the opposite trade -- selling put options. The seller (or writer) collects the premium, which during times of fear is very large. The risk is a significant decline in prices. See the article here, Forbes.

Go to article

Don Quixote -- Investment Guru??, Steven D. Dolvin Jul 2012

Don Quixote -- Investment Guru??, Steven D. Dolvin

All Chapters

Don Quixote is a well-known literary figure, most commonly remembered for seeing the world through his own lens. He fights windmills thinking they are giants and slaughters a flock of sheep because they look like a mighty army. As investors do we make similar mistakes--seeing an asset the way we want to instead of the way it actually is? See article here, CFA Magazine.

Go to article

Improving Alpha, Steven D. Dolvin Jul 2012

Improving Alpha, Steven D. Dolvin

All Chapters

Alpha is a measure of risk-adjusted performance. Positive alpha means an investment manager has generated returns in excess of what should have been earned given the level of risk taken. However, what if two funds have the same alpha--are they equally good? Well, tracking error helps to distinguish which fund might be better, as a lower tracking error might mean less risk and a more significant alpha. (See article here, Wall Street Journal.) The Information Ratio divides alpha by tracking error to provide a more comparable performance metric.

Go to article

Even The Best Investors Can't Time The Market, Steven D. Dolvin Jul 2012

Even The Best Investors Can't Time The Market, Steven D. Dolvin

All Chapters

Warren Buffett is considered to be one of the greatest investors ever; however, even he is not perfect. In fact, his company (Berkshire Hathaway) is named after one of his failed investments. More recently, his timing on the purchase of GM stock has not worked so well. Fortunately, his holding period is generally very long, thus it could turn out to be a favorable investment over the long-term. See article here, Bloomberg.

Go to article

Municipal Bond Risk, Steven D. Dolvin Jun 2012

Municipal Bond Risk, Steven D. Dolvin

All Chapters

While municipals generally carry lower yields due to their tax benefits, beware that they are more risky than comparable Treasury securities. Municipals can default since, unlike the federal government, they do not have the ability to print money. The most recent (and largest ever) city to declare bankruptcy is Stockton, CA. See the article here, Fox News.

Go to article

Actively Managed Etfs, Steven D. Dolvin Jun 2012

Actively Managed Etfs, Steven D. Dolvin

All Chapters

ETFs were originally designed as alternatives to index funds, but ones that could be actively traded like stocks -- meaning continuous trading and the ability to short and margin. As ETFs have developed, however, they are now moving into active (as opposed) to passive management. This may increase costs, but it provides another avenue for potential investors. See the article here, Index Universe.

Go to article

Mutual Fund Oversight, Steven D. Dolvin Jun 2012

Mutual Fund Oversight, Steven D. Dolvin

All Chapters

Like corporations, mutual funds have board of directors. However, they often exhibit much less oversight and control. Thus, there is debate whether they actually provide any value or simply serve as figureheads. See article here, Smart Money.

Go to article

Reputational Capital, Steven D. Dolvin Jun 2012

Reputational Capital, Steven D. Dolvin

All Chapters

Ratings agencies are supposed to provide an independent view on a firm's (or country's) financial outlook. However, their involvement in the subprime crisis (i.e., their AAA rating on defunct MBS securities) revealed that the rating agencies are often more reactive than proactive. Thus, they seem to have lost much of their respect and influence. See article here, Breakout.

Go to article

Step On The Gas, Steven D. Dolvin Jun 2012

Step On The Gas, Steven D. Dolvin

All Chapters

With the economy hitting a "speed bump," market participants increasingly believe the Fed will "step on the gas" to get it going again. Similar thoughts seem to exist in regards to potential action by the Chinese central bank. As a result, markets around the world were up. See the articles here (xinhuanet) and

Go to article

It Pays To Be Young, Steven D. Dolvin Jun 2012

It Pays To Be Young, Steven D. Dolvin

All Chapters

The model is changing, as wealth management firms may need to increasingly hire younger advisors.

Go to article

Is Diversification Dead?, Steven D. Dolvin Jun 2012

Is Diversification Dead?, Steven D. Dolvin

All Chapters

Diversification (primarily based on asset correlation) is a key component of Modern Portfolio Theory (MPT). However, the recent financial crisis illustrated an increase in correlation across asset categories. Thus, many debate whether diversification still helps. Even with increasing correlations, diversification still provides benefit (possibly just not as much). However, the more relevant issue is that increasing correlation across the typical asset categories suggests that diversification is now more critical across "non-typical" categories -- such as commodities, hedge funds, and private equity funds. .

Go to article

"Dumb Money" Pushing Treasuries, Steven D. Dolvin Jun 2012

"Dumb Money" Pushing Treasuries, Steven D. Dolvin

All Chapters

Demand for Treasury bonds pushes prices up and yields lower. Given that Treasury yields are at all-time lows, the implication is that demand for these securities has increased. Many attribute this to buying by the Fed, but this demand is really being driven by retail investors. For contrarian investors, this would be an indicator to sell Treasuries, as retail investors are often referred to as "dumb money." See the article here, CNBC.

Go to article

Health Or Money?, Steven D. Dolvin Jun 2012

Health Or Money?, Steven D. Dolvin

All Chapters

When asked whether they would have health or money, most people would probably choose money. However, a recent study shows that investors actually trust their investment advisors more than their doctors. So, does this imply they care more about their money than their health?????? See the article here, Investment News.

Go to article

Leading Or Lagging, Steven D. Dolvin Jun 2012

Leading Or Lagging, Steven D. Dolvin

All Chapters

Economists and investors often look to the index of leading indicators to predict the economic future. One measure included in this index is unemployment. However, some debate whether this is more of a lagging indicator since high unemployment hinders spending. In either case, recent news related to initial jobless claims has been positive. See the article here, Reuters.

Go to article

The Ecb Is Not The Fed, Steven D. Dolvin Jun 2012

The Ecb Is Not The Fed, Steven D. Dolvin

All Chapters

Although both the ECB and Federal Reserve are central banks, they are much different in their approach to managing their respective economies. The Fed's mandate includes both promoting growth and controlling inflation, while the ECB is really only designed to mitigate inflation. Thus, the ECB is not equipped to act in a speedy fashion as the Fed did in response to our financial crisis. (See the article here, Wall Street Journal.)

Go to article

Alternative Investments For The Masses, Steven D. Dolvin Jun 2012

Alternative Investments For The Masses, Steven D. Dolvin

All Chapters

Historically, hedge funds and private equity funds have only been available to qualified (i.e., rich) investors. However, new ETFs offer the opportunity for smaller investors to join the party. Check out the new AlphaClone ETF, which will be offered on the International Securities Exchange.

Go to article

Expect Low Interest Rates To Continue, Steven D. Dolvin May 2012

Expect Low Interest Rates To Continue, Steven D. Dolvin

All Chapters

As the "flight to quality" continues, interest rates will likely remain low for the nations considered to be the most stable (such as the U.S. and Germany). This is a simple supply and demand relationship, as interest rates represent the price of money. (See the article here, the Wall Street Journal.)

Go to article

Manipulating Earnings, Steven D. Dolvin May 2012

Manipulating Earnings, Steven D. Dolvin

All Chapters

To cover recent losses associated with CDS trading (see earlier post), JP Morgan sold securities in which they had an unrecognized gain. While this move will make their earnings look less negative, the trades will actually hurt firm value as they will trigger taxable gains and reduce future earning power. Thus, for long-term investors, metrics such as cash flow may be better measures then earnings, which tend to be more short-term in nature, as well as more easy to manipulate. (See article here, Reuters.)

Go to article

Cds Trades Continue, Steven D. Dolvin May 2012

Cds Trades Continue, Steven D. Dolvin

All Chapters

JP Morgan recently announced a $2 billion loss, which renewed criticisms that originally surfaced during the credit crisis. While final details are still to come, initial reports suggest that much of the loss is attributable to the sale of Credit Default Swap (CDS) contracts. Similar exposures helped lead to the downfall of Lehman Bros., Bear Sterns, and AIG following the Crash of 2008. (See the article here, Fox Business.)

Go to article

Hp Cuts Jobs, Stock Price Rises, Steven D. Dolvin May 2012

Hp Cuts Jobs, Stock Price Rises, Steven D. Dolvin

All Chapters

HP announced on May 23 that it will cut 27,000 jobs (see article). In class I asked students what they thought happened to the stock price. Most thought the price would drop since this is a negative indicator. However, the stock price actually rose 2.2% from its prior day close, while the market was flat. The issue is efficiency (and margin). If HP can sell the same amount with fewer employees, earnings will be higher--which translates to higher growth (and therefore market value).

Go to article

Popularity Of Alternative Investments Rises, Steven D. Dolvin May 2012

Popularity Of Alternative Investments Rises, Steven D. Dolvin

All Chapters

Alternative investments were once thought to be the domain of sophisticated, wealthy investors. However, they are gaining popularity among financial advisors (and their clients) as they realize the potential diversification benefits they provide. In particular, hedge funds and private equity funds are becoming increasingly common additions to even mid-market investors. (See article here, Reuters.)

Go to article

Refinancing And Mbs, Steven D. Dolvin May 2012

Refinancing And Mbs, Steven D. Dolvin

All Chapters

With mortgage interest rates at record lows, refinancings continue to rise. This creates prepayment risk for holders of mortgage backed securities. (See article here, at CNBC.)

Go to article

First Prev Next Last