DLD 2012 has started today in Munich and runs until Jan. 24th. In it, people as diverse as Sheryl Sandberg, Arianna Huffington, the Dyson family (Freeman, Esther and George Dyson) and Hiroshi Mikitani (Chairman & CEO of Rakuten) share their views on what matters to them. The themes are also varied – augmented reality, the future of cities, citizen science, epiphanies – and the program is packed with interesting talks and panels.
In the age of multi-disciplinary events, this is one of the best. You can keep track of it live on Livestream.com, check out the event’s blog on Tumblr, its Twitter feed or Facebook page. Enjoy!
Tags: conferences, DLD, independentthinking, multidisciplinary
It would be easy to dismiss anything coming from Citigroup, not exactly the bastion of sound risk management practices. And it does appear like Vikram Pandit’s main suggestion here is, at first glance, simplistic yet hard to implement. That said, this is a time where everyone’s agenda is being tested – the intention here is clearly to try to insert a “market” measure, not necessarily this one, on top of government-imposed ones. Anyway, moves in the right direction are welcome: “We could go a long way to regaining that trust by making the system more transparent, by clearing some of the obscurity that causes people to believe the system is a game rigged against their interests.”
However, on risk management issues, we tend to defer to Taleb (new talk posted inside – H/T Farnam St. Blog). Also inside are links to other recent posts on risk management culture. Read more »
Tags: riskmanagement, Taleb
Today’s post is just an image, a scan of an Isaac Asimov 1971 short note to kids apparently getting a new library somewhere. It’s brilliant. We complement it with our post citing “anti-libraries“.
Asimov and libraries
Tags: antiportfolio, independentthinking, Isaac_Asimov, mentalmodels, multidisciplinary
Researchers have not been able to find a link between banker compensation and short-term performance metrics, the sort of link that might have led to excessive risk-taking. In their words, their finding “refutes the suggestion that incentive structures in banks could be blamed for the crisis”. As we were reading the study’s description, we were alarmed that the professor equated “short-term performance” with the short-term movements in share prices, which is not necessarily how compensation is set in banks.
Then we found a post by the Epicurean Dealmaker that destroys the study precisely on these arguments. As he says after presenting his points, “Perhaps one day some academic will actually make the effort to understand how my industry works before they design a study to explain it”. And as he says, we also yearn for a good study into the subject.
Tags: compensation, globalfinancialcrisis, incentives, independentthinking, management, research
It never ceases to amaze us that people still fall into the same traps. Just as in our September 2011 post “How to spot a fraud“, this Wall Street Journal piece is another story about returns that look too good to be true – but in this case, “too good” means “low volatility”. The point here then isn’t the one of chasing the “hot funds” with the best returns, it is the ages-old trap of equating “risk” with “volatility” and assuming that a low-volatility fund is less risky. Even ignoring the possibility of fraud, it’s a bad move.
Tags: accounting, financial_shenanigans, independentthinking, riskmanagement, volatility
Great thought-provoking article sent by our most loyal reader. The title is “The Dumbest Idea In The World: Maximizing Shareholder Value“. As the reader himself said, the discussion isn’t new – Jack Welch first perfected the earnings management game and then, already retired, famously denounced it (here and here) – but it’s always interesting. The real point of it is the power of incentives. The “too-simple” conclusion would be that “the road to hell is paved with good intentions” – but that would be wrong.
Tags: accounting, conflictofinterest, financial_shenanigans, incentives, management
We saw a link to a Harvard Business School Executive Education video about its Risk Management program for corporate executives. We were initially skeptical because, as Buysiders.com readers are probably well aware by now, we view risk management as a matter of knowledge gathering/sharing and corporate culture. The excerpts inside this post explain our satisfaction with the video. It’s not enough for us to judge whether this course is a great investment for you or your company, but we have attended classes with Bob Kaplan (and others) at Harvard and we certainly got much more than our money’s worth. Read more »
Tags: business, corporatestrategy, independentthinking, riskmanagement
Two recent stories highlight the current moral double standards regarding defaults and indebtedness in general. The first article by James Surowiecki in the New Yorker uses the recent American Airlines umpteenth Chapter 11 filing, which was lauded as a “smart move” to shield the companies from the obligations it was supposed to honor, and contrasts this reaction to the stigma surrounding personal bankruptcies by home owners. We have discussed here before how one can never forget the personal responsibility aspect of the housing bubble – the people who bought houses they couldn’t afford – but Mr. Surowiecki has a point.
The second article in the Financial Times tries to tack the same “double standards” theme onto Germany, given its treatment of the heavily-indebted Eurozone members. It doesn’t work nearly as well, but for argument’s sake – and its use of Goethe quotes from Faust – it’s an interesting read.
Tags: globalfinancialcrisis, hipocrisy, trends
We’d like to thank our over 5,900 unique visitors who have seen over 25,000 pages (unique pageviews) in 2011. We also thank our newsletter subscribers (how do you subscribe? Click on Read More below). Most of all, we thank all of you who have suggested some of the best stories and subjects in 2011 (want to suggest a story? Click here!). For those who have come on board recently, here’s the perennial text that explains Why We Write. In the past 2.5 years of Buysiders, we’re proud to have followed those guidelines. We wish to keep serving you in your quest for knowledge and for useful investment building blocks and mental models.
We wish you all a great 2012, a year full of knowledge gathering and sharing, peace, health and success. We leave you with a few interesting stats about Buysiders.com in 2011 (until Dec. 30th):
Tags: Buysiders
Two Financial Times articles yesterday, taken together, are great reading material and food for thought. The first one is about rethinking innovation and new product development. We have posted here before about open innovation, crowdsourcing and so on, and it’s a subject that’s far from being exhausted. The second article, even larger, is about production processes that are becoming – paradoxically perhaps – more efficient and more flexible. Again a subject we’ve touched on before.
What does it matter for investments? We invest in companies, so we have to think about every aspect of business, including R&D/ new product development and production processes. In the sense that the evolution in these and other business factors may lead to more efficient uses of capital in the companies that take advantage of these trends, the question becomes: how does it NOT matter?
Tags: business, crowdsourcing, innovation, trends
