Merger Mania Markers

By | 2014-05-30T09:52:28+00:00 May 30th, 2014|Global Market Update|

Do mergers signal a market top? Open the business section today and you can’t miss them: acquisition fever seems to jump off the page: Tyson Chicken is bidding for Hillshire Brands; Man group—a UK hedge fund manager—is buying the Boston-based quant firm Numeric; Apple is spending $3 billion for Dr. Dre’s headphone company, Beats. And that’s just today’s paper. Mega-deals are pending in other areas of the market. It’s not just our perception: global mergers and acquisitions activity surged 23% to over $800 billion [...]

Famous For Being Famous

By | 2017-07-17T12:34:17+00:00 May 29th, 2014|Global Market Update|

What makes art great? The Mona Lisa was a relatively obscure portrait in the Louvre until it was stolen in 1911 by an Italian carpenter, who tried to sell it to an art gallery in Florence. The French were outraged, while Italy hailed the thief as a patriot who wanted to bring the painting home. Newspapers around the world put the Mona Lisa on their front page, insuring its global fame. The image came to represent Western culture itself. There’s a certain subjective quality [...]

Financial Werewolves?

By | 2014-05-28T09:52:09+00:00 May 28th, 2014|Global Market Update|

Can a dog turn into a wolf? Jack London had a sense of this when he wrote The Call of the Wild. His main character, the dog Buck, returns to a feral state of nature after he is kidnapped and taken to Alaska. When his adopted master is killed, Buck goes wild, eventually leading a wolf-pack. There are times when people undergo this Jekyll-and-Hyde transformation as well, when they face a novel or uncertain challenge. Their bodies react to the tension, releasing steroids into [...]

Apologies, Aschmologies

By | 2014-05-27T09:51:41+00:00 May 27th, 2014|Global Market Update|

Is saying you’re sorry good for business? Mary Barra, the new CEO of GM, recently apologized to those affected by their recall of over 2 ½ million small cars for faulty ignition switches. But do such apologies have any meaning? Aren’t they just part of a corporate chess game with regulators, customers, and workers? Some researchers sought to understand what it means to express regrets in a business context. They looked at what happens when physicians apologize for medical mistakes. It’s an interesting case [...]

Wordly Wise?

By | 2017-07-17T12:34:18+00:00 May 22nd, 2014|Global Market Update|

Watch your language. That’s what GM’s managers believed. When they settled with the US Government over their bungled ignition-switch recall, they released a lot of internal documents. One was a presentation made in 2008 that explained the recall process to engineers, including how to document faults and engineering issues. Naturally, management wanted its technical people to be careful about what they said. A lot of the advice is common sense, like imagine how folks would react if they saw your comments in the paper [...]

Bad News or Good News?

By | 2014-05-21T09:51:08+00:00 May 21st, 2014|Global Market Update|

Are newspapers doomed? Ever since the first newsfeed appeared on the web, the traditional newspaper’s current business model was threatened. If you picked up a newspaper 50 years ago, it was filled with a lot of non-news items: real-estate listings, grocery store coupons, want-ads. Those money-making inserts were bundled with a journalistic product that focused on a defined geographic region. Distribution was limited by the cost of physically delivering this bundle of paper. Gradually, each area developed into a local monopoly, usually with only [...]

Mega-Merger Madness

By | 2014-05-20T09:44:56+00:00 May 20th, 2014|Global Market Update|

“Is that your final answer?” That was the question that Regis Philbin would ask contestants on “Who Wants to be a Millionaire?” And it’s the question AstraZenica put to Pfizer in the latest pharmaceutical mega-merger. So far, AstraZenica doesn’t like Pfizer’s answer. They want more money. Mega-mergers are a funny business. Two giant organizations seek to combine operations and bring efficiencies and synergies to their businesses. Efficiencies can often come from combining accounting, finance, and other administrative functions, although that’s not so simple with [...]

On Capital and Fairness

By | 2014-05-19T10:57:51+00:00 May 19th, 2014|Global Market Update|

“That’s not fair!” That’s our instinctive reaction when we see people without skill, talent, or hard work get ahead, seemingly at the expense of everyone else. It’s why we root for the gritty underdog in sports contests. And it’s why Thomas Piketty’s recent critique of growing inequality in our economy strikes a chord. Piketty looked the real net worth of 65-74 year olds in 1990 and 2010 (from a Fed survey) and found that it had grown by 2.8% per year over these three [...]

Game of Phones

By | 2014-05-16T09:49:59+00:00 May 16th, 2014|Global Market Update|

Will the phone wars ever stop? Comcast plans to buy Time-Warner Cable. Vodaphone sold its Verizon Wireless holdings and bought a German cable company. AT&T is close to purchasing DirecTV; Sprint may buy T-Mobil. Tens of billions of dollars are sloshing around. What’s going on? Increasingly, people expect to watch streaming video wherever and whenever they want on whatever device they have. Providing wireless, cable, landline, and internet in one package reduces billing costs, and increased size means better negotiating power with phone-makers, government [...]

Returning to Risk (Part 4)

By | 2014-05-15T09:36:22+00:00 May 15th, 2014|Global Market Update|

Why is risk so important? Risk-management is at the center of rational investing. It’s what keeps people up at night when markets are booming, and what allows them to sleep soundly during panics and depressions. It’s what allows your money to work for you, so that later in life you don’t need to. But risk-management puts a glaze over people’s eyes. Tell them you work in risk-management and they’ll quickly change the subject. Google the phrase and you’ll get links to wiki articles about [...]