All posts by Text Medic

Investing in Emotional Assets

When Morty discovered my vacation plans this year included Cremona, that put a bee in his bonnet. Did I know it was the home of the famous Stradivarius workshop? Was I going there to check out violins? Yes and no, I said. My preference was to cycle along the Po valley and sip espresso near the Zodiac Tower. “Maybe you should think twice about your visit,” Morty said. “I happen to have it on good authority that beautiful collectibles can be a solid component of your portfolio.” “Please Morty, don’t make wild-eyed guesses about other people’s money,” I said. Especially […]

Interview with William Bernstein: The Paradox of Wealth

I could hear the laughter from down the hall. “Cheeseburger,” cried Morty. Cheeseburger? I saw he was holding a back issue of the Financial Analysts Journal. (It’s no secret that we fall behind on our reading here during the busy months.) “You’ve gotta interview this guy,” declared Morty. “Anyone who can work the word ‘cheeseburger’ into the pages of this esteemed journal… well… he likely has something interesting to say.” William Bernstein did indeed have some very interesting things to say. The interview below is the vegan-friendly edition, though; if you want to see ‘cheeseburger’ in print you’ll have to […]

Risk Ratings 2. “Hundreds of Spreadsheets”

“There were hundreds of different spreadsheet templates floating around,” said Christopher Hansert, Product Manager at Bosch Software Innovations, and the second of two presenters at a GARP webinar on the impact of new capital rules on risk ratings, held June 24, 2014. He presented a case study of an unnamed US commercial bank. Due to an acquisition during the period of regulatory change, he said that the bank had a “heterogeneous set of platforms, models, and inconsistent ratings. They wanted one robust and centralized” risk rating system. Inconsistencies in the risk rating process increased the likelihood of error, Hansert pointed […]

Risk Ratings 1. The Big Choke Points

“The inter-connectedness of the regulatory landscape has increased dramatically,” said Balachander Lakshmanan, Director at Deloitte & Touche LLP. He was the first of two presenters at the June 24, 2014, webinar sponsored by the Global Association of Risk Professionals to discuss the impact of capital rules on risk rating systems. In the wake of the financial crisis, new regulations—Basel, Volcker rule, Comprehensive Capital Analysis and Review (CCAR)—have proliferated. Due to changes in capital rules, new operating models are starting to emerge at banks, said Lakshmanan. There are requests for “spot calculations” or snapshots of a bank at any given time. […]

Fama-French 2. Three is Now Five?

Fama and French, originators of the three-factor model for asset pricing, are working to understand the fourth factor –and a fifth factor, too, said Marlena Lee, PhD, VP of Dimensional Fund Advisors. She should know; she has worked closely with Nobel laureate Gene Fama and was his former teaching assistant at the University of Chicago Booth School of Business. Lee spoke at the CFA Society Toronto on June 19, 2014, about the evolution of asset pricing. Part 1 summarizes her comments on the dimension of profitability. Could there be another component? As early as 1993 Jegadeesh and Titman had proposed […]

Fama-French Model 1. Three is Now Four

Does the Fama-French three-factor model adequately capture all information available in describing stock returns? According to Marlena Lee, PhD, VP of Dimensional Fund Advisors, the three-factor model is lacking one or two important components. Lee visited the Toronto offices of the CFA Society Toronto on the afternoon of June 19, 2014, to speak to over twenty financial experts about the evolution of asset pricing. Lee was a funny and forthcoming lecturer. After her flight from the States up to Toronto, she said the suspicious Canada Border Services officer asked: “This CFA Society… what does ‘CFA’ stand for?” She momentarily blanked: […]

SM 4. A Way Of Sparking Conversations

Over the past six years, Jaime Widder, Sales Manager at Bloomberg LP, has seen an evolution in his clients with respect to the data they seek from social media. “At first, they just wanted to look at social media information on clients. Now, portfolio managers want to know how to list securities and track social velocity.” Widder was the fourth panellist (of four) to address the topic “The Impact of Social Media on the Investment Process” at a CFA Toronto Society gathering held in the gallery of the TMX Broadcast Centre on the evening of May 21, 2014. For clients who […]

SM 3. Keep Pace with Customers

“I work for a company with positive social capital,” said Kavita Joshi, ‎Associate Vice President, Social Media at TD Bank Group. She was the third of four panellists at a CFA Toronto Society gathering titled “The Impact of Social Media on the Investment Process” held in the gallery of the TMX Broadcast Centre on the evening of May 21, 2014. “Social media means we are trying to keep pace, not with our competitors, but with our customers,” Joshi said. “We’ve realized there’s a real shift in terms of responsiveness.” The entry point to social media is around customer service, advised […]

SM 2. Good Insight Into The Social Ecosystem

“Customers, employees, and suppliers are empowered” through social media, said Barbara Gray, CFA, Equity Analyst and Founder of Brady Capital Research, (BCR) and this fosters the growth of firms that behave responsibly to them. Her company actively promotes investment in companies with “positive social capital.” Gray was the second panellist (of four) to address the topic “The Impact of Social Media on the Investment Process” at a CFA Toronto Society gathering held in the gallery of the TMX Broadcast Centre on the evening of May 21, 2014. As an example of negative social capital, she cited a case of Air […]

SM 1. Don’t be afraid to share a joke

When it comes to social media, “a common misconception is that you have to be on all platforms,” said Jennifer Guo, Account Executive, Talent Solutions at LinkedIn. Instead, she advised, “decide which is your priority platform” and stick with that.  Guo was the first of a four-member CFA Toronto Society panel speaking in the gallery of the TMX Broadcast Centre on the evening of May 21, 2014 on the topic “The Impact of Social Media on the Investment Process.” The event, sponsored by the Equity and Derivatives Committee of CFA Toronto, was introduced by Chris Sheridan, Senior VP, Institutional Sales […]