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IBM to buy Redhat.

October 31, 2018 Comments (0)

An interesting deal.  IBM has a strong presence in this area, and of course Redhat is a Raleigh based company.   Details of the deal are here: https://www.marketplace.org/2018/10/29/business/ibm-bets-34-billion-cloud-computing-red-hat-purchase. A back of the envelope analysis suggests that there's about $7bn in merger gains.

GE cuts dividends

October 31, 2018 Comments (0)

Dividend cuts are quite rare and even rarer for a stallwart stock like GE.  But yesterday, GE cut it's dividend to a penny a share. https://www.cnbc.com/2018/10/30/general-electric-earnings-q3-2018.html There wasn't much of a price reaction, the stock had been on a downward trend, but the dividend cut certainly didn't help. A dividend cut signaled that GE is struggling, but I don't think that was news to anyone.  Even an analyst upgrade didn't help the stock...

Do pro-diversity policies lead to greater corporate innovation?

January 11, 2018 Comments (0)

That's the question that we (myself, Roger Mayer of NC State and Jing Zhao at Portland State) recently studied in a paper that's forthcoming in the finance journal: Financial Management. The answer is YES.   We found that firms that promote diversity have more new products, more patents and more influential patents. You can read the paper here: http://onlinelibrary.wiley.com/doi/10.1111/fima.12205/full Here's the summary on the NC State news...

Bitcoin is a fraud says JPM boss

September 13, 2017 Comments (0)

https://www.theguardian.com/technology/2017/sep/13/bitcoin-fraud-jp-morgan-cryptocurrency-drug-dealers The problem with Bitcoin, as I see it, is that it is a commodity and not a currency.   It's largely like gold, except that gold has some use outside of being a means of speculation. While I wouldn't be surprised if Bitcoin remains marginalized, what is more important is the role that blockchain technology will play in finance in the future.

The stupidest thing you can do with your money.

August 1, 2017 Comments (0)

In a recent episode, the Freakanomics podcast talks about why you should index.  It's a great show - check it out: http://freakonomics.com/podcast/stupidest-money/ Interestingly, Anthony Scaramucci is interviewed as being an advocate of active management (he's the guy who ended up being fired by Trump after 10 days).  Scaramucci's arguments for active management don't really make any sense - they are based on the idea that financial advisors and active management are the same...

Why 8.5% is delusional

July 20, 2017 Comments (0)

I am quoted today in an article on Bloomberg.com about the Connecticut pension fund return assumptions.  The article is here:  https://www.bloomberg.com/news/articles/2017-07-20/connecticut-sinks-deeper-in-debt-as-pension-returns-lag-target So why is an 8.5% return assumption delusional? It's pretty simply really.  Assume that your fund is 50% bonds, 50% stocks.  Currently 10-year Treasuries are yielding about 2.3%.  Let's round that up to say 3% to be generous....

Will fee cutting hurt the pension fund?

July 15, 2017 Comments (0)

In an article yesterday in the News and Observer (http://www.newsobserver.com/news/business/article161425553.html), David Ranii explores whether fee cutting by the pension fund might hurt future returns. It's a good article, I was interviewed for it, and I recommend that you read it.  I would, however, like to add a small comment/clarification with regard to my comments within the article. While I strongly support attempts by the pension fund to reduce fees, this has to be done in a...

Folwell reduces fees by $50m

June 14, 2017 Comments (0)

Some good news from the Treasurer's office.  Apparently our new Treasurer has reduced fees by $50 million so far.  He reports that he's on track to hit $200 million by the end of his first term. http://www.newsobserver.com/news/business/article155868344.html This is great news.   I am sure we will be digging into the numbers when the annual report comes out, but for now, this is a great start.

Dow hits 20,000

January 25, 2017 Comments (0)

What does this mean? Ummm. Not much.  https://www.bloomberg.com/news/articles/2017-01-25/-time-to-get-out-as-dow-milestone-a-call-for-caution-pros-say Some will say that you need to get out once a milestone is met.   Trouble is - when do you get back in?   Oh - that's right - before the market goes back up. Of course, 20,000 is no 36,000.  We're still waiting for that one.