Tuesday, July 28, 2015

Corporate governance: the great debate – Director Magazine

Corporate governance: the great debate – Director Magazine:

"“Corporate governance is fast-changing and organic, and this is about stimulating a debate,” explains Oliver Parry, the IoD’s senior corporate governance adviser. “This report began with us working towards a good governance index of listed companies and evolved into a focus point for debate on the issue.” Companies of all sizes, says Parry, including small businesses, should aspire to good corporate governance"

good article!

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Thursday, July 02, 2015

When CEOs Are Accidentally Overpaid - Bloomberg View

When CEOs Are Accidentally Overpaid - Bloomberg View:

great article focusing on this article by Kelly Shue

 "The difference in pay between different sections was larger than the difference within different sections.  Remember that these sections were randomly created. So Shue's finding means that human networks were a very important determinant of pay levels. She also found that when one executive's industry experienced a boom, the compensation of that executive's former HBS section-mates in totally unrelated industries would go up as well. "

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Tuesday, June 23, 2015

Top-CEO Pay Isn’t Driven By Talent, New Study Says - Real Time Economics - WSJ

Top-CEO Pay Isn’t Driven By Talent, New Study Says - Real Time Economics - WSJ: "“Compensation of CEOs has far outpaced that of very highly paid workers, the top 0.1% of earners,” write Mr. Mishel and Ms. Davis. “There are substantial rents embedded in executive pay, meaning that CEO pay gains are not simply the result of a competitive market for talent,” they say, citing earlier research findings.

Because of this, they conclude, if CEOs “were paid less there would be no loss of productivity or output.”"

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Monday, June 01, 2015

Women On Wall Street: Just A Tiny Portion Of Mutual Fund Managers Are Women

Women On Wall Street: Just A Tiny Portion Of Mutual Fund Managers Are Women:

From International Business Times:

"It’s no secret that the world of finance skews heavily male. But when it comes to mutual funds, the disparity is particularly stark: Women make up just 9 percent of mutual fund managers.

The data, compiled in a recent paper by Morningstar Research Director Laura Pavlenko Lutton, are even worse when you consider funds with female leadership. Only 2 percent of mutual fund assets are managed solely by women."

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Wednesday, May 27, 2015

Malkiel: Smart Beta = Smart Marketing Doesn't Equal Smart Investing

Malkiel: Smart Beta = Smart Marketing Doesn't Equal Smart Investing: "In traditional index funds, stocks are selected and weighted according to each company's market capitalization. Smart-beta strategies weigh a portfolio's stocks on book value, cash flows and dividends, and then tweak portfolios by adding what Malkiel calls “a trick or tilt toward another factor, by weight, by value or by earnings.”

The aim of smart beta is to increase the return without raising volatility. But Malkiel, the former dean of Yale School of Management, pounced on Rob Arnott, founder and chair of Research Affiliates, acclaimed for smart beta plays and his RAFI fundamentals-based indexes, to attack the strategy."

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Tuesday, May 26, 2015

What's Really Driving Income Inequality - Bloomberg View

Phenomenal article!:

What's Really Driving Income Inequality - Bloomberg View: "From 1978 to 2012, effectively all of the increase in wage inequality nationally has been due to increasing disparities from company to company. As the researchers note, “the wage gap between the most highly paid employees within these firms (CEOs and high level executives) and the average employee has increased only by a small amount, refuting oft-made claims that such widening gaps account for a large fraction of rising inequality in the population.” The researchers also found, by the way, that the male-female wage gap within companies has shrunk noticeably."

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Friday, May 08, 2015

An iconic chief executive vs. his company’s internal watchdogs

An iconic chief executive vs. his company’s internal watchdogs: "new details and allegations call into question how Liveris, close to presidents past and present, has been running the $58 billion company. The materials offer an inside look at how one of America’s largest multinational corporations conducts itself, and how its internal watchdogs battled their renowned chief executive over what they considered inappropriate practices and perks."

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At long last, corporate boards step up - Fortune

At long last, corporate boards step up - Fortune: "The latest reminder is a Wall Street Journal report that federal bank regulators are grilling individual directors of major Wall Street firms, sometimes monthly, as well as sitting in on board meetings and even instructing boards to add members with specific qualifications. It’s happening at the biggest firms—JPMorgan Chase, Bank of America, Goldman Sachs—and at smaller banks. While regulators have met with bank boards for years, the current intensity of oversight is unprecedented."

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Wednesday, April 15, 2015

Datawatch: price of an iPhone 6 around the world | FT Data

Datawatch: price of an iPhone 6 around the world | FT Data: "The strengthening of the US dollar has reduced the competitiveness of the US compared to the rest of the world according to an analysis of prices conducted by Deutsche Bank. However it remains the cheapest place to pick up an iPhone. In Brazil an iPhone 6 costs almost twice as much as in the US — in the UK you’ll pay a 23 per cent premium."

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Thursday, December 25, 2014

For investors, it’s a perfect time to go back to the basics - The Washington Post

Great stuff!! Way to go Barry!

For investors, it’s a perfect time to go back to the basics - The Washington Post: " I am going to suggest you take a different route: Focus on 10 basic, simple truths that many investors seemingly ignore. Some of you are unaware of these realities; others understand them intellectually but cannot act on your knowledge. These are the simple things that amateurs and pros alike get wrong.


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Friday, October 10, 2014

Dark pools in the news: looks at Wall Street's secret trading exchanges (Dark Pools)

A look at Dark Pools: http://www.cnn.com/video/data/2.0/video/business/2014/09/26/cnn-orig-what-is-wall-street-dark-pool-paul-lamonica.cnn.html

and from Bloomberg:

"The biggest banks created the venues partly to avoid paying stock exchanges for processing trades between their clients. They’ve attracted scorn this year for allegedly letting the speediest traders feast on slower investors. New York Attorney General Eric Schneiderman accused Barclays Plc of soliciting “predatory” high-frequency traders on its dark pool while hiding their presence from other customers.
The venues accounted for 16.5 percent of all U.S. stock trading in the first eight months of the year, according to data compiled by Rosenblatt Securities Inc." 

And more from Bloomberg:


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Tuesday, September 30, 2014

So what is the CEO to average worker ratio? 511 or 4? Depends on what you report.

CEO Pay Continues to Rise as Typical Workers Are Paid Less | Economic Policy Institute:

NOTE:  This not as an argument against high CEO pay (have made that before), but to show how a study is done influences the reported findings.

We've all seen the headlines of how CEO pay is rising so quickly.

First from the Economic Policy Institute's

Same article:
"The CEO-to-worker compensation ratio was 20-to-1 in 1965 and 29.9-to-1 in 1978, grew to 122.6-to-1 in 1995, peaked at 383.4-to-1 in 2000, and was 295.9-to-1 in 2013...."
"If Facebook, which we exclude from our data due to its outlier high compensation numbers, were included in the sample, average CEO pay was $24.8 million in 2013, and the CEO-to-worker compensation ratio was 510.7-to-1."

295.9 to 510.7 is a pretty big difference.  The authors were justified to not include the outliers, but in dropping outliers we often drop valuable information at best and can influence findings at worse.

But even this, as Mark Perry points out in his May 2014 piece is misleading as the AVERAGE CEO pay (the all important numerator in the ratio) needs an asterisk:  average of what? The average SP 500 firm?  Average largest 200 firms?  or average of all firms?

Why does it mater?  Because when all CEOs are including (think "I am CEO of my own small firm"), the CEO pay is MUCH Much lower.

"According to the US Census Bureau, there are more than 27 million private firms in the US, so the samples of 200-350 firms for CEO pay represent only one of about every 100,000 private firms in the US, or about 1/1000 of 1% of the total firms. And yet the AFL-CIO, AP and others compare the average annual wages of hundreds of millions of full-time employees working at the more than 27 million US companies to the CEO pay of executives at only several hundred companies, which is hardly a fair comparison. 
We can get a more accurate and complete picture of CEO compensation in the US by looking at wage data released recently by the Bureau of Labor Statistics in its annual report on Occupational Employment and Wages for 2013. The BLS report provides “employment and wage estimates by area and by industry for wage and salary workers in 22 major occupational groups, 94 minor occupational groups, 458 broad occupations, and 821 detailed occupations,” including the occupational category “chief executives.” In 2013, the BLS reports that the average pay for America’s 248,760 chief executives was only $178,400."

Perry updated his blog this week with the following:
"Based on those data, the average CEO earned $178,400 last year, the average worker earned $46,440, and the “CEO-to-worker pay ratio” was 3.84:1"

What is the takeaway?  Read carefully!  The details of how a study are more important than headlines reveal.
Related articles

Saturday, September 27, 2014

Active vs. Passive in Global Investing | Financial Planning

Active vs. Passive in Global Investing | Financial Planning:

"The S&P Report, called the SPIVA U.S. Scorecard, which also evaluated the performance of active vs. passive management for domestic funds and for bonds, found that in the international sphere over the past year 70% of global equity funds, 75% of international equity funds, 81% of international small-cap funds and 65% of emerging markets funds underperformed their benchmarks.
As a group, active managers fared even worse over a three- or five-year period, says Todd Rosenbluth, S&P’s director of ETF and mutual fund research."

and more from Bloomberg:

"...making a fund manager into a star is a big risk. If the headline act has a bad year, the media notices. And if the star leaves, they can take assets with them, as bond baron Jeffrey Gundlach did when he left TCW Group and co-founded DoubleLine Capital LP. Up to 30 percent of Pimco's assets could now leave the firm, Sanford Bernstein estimates. After this, "funds may think twice about building the brand around a single individual," adviser Harold Evensky says.The biggest firms, like Blackrock Inc. and Fidelity, now mostly do without big fund manager stars. That helps put the emphasis where it belongs -- on performance."

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Gross Loses Pimco Power Struggle With ‘Stunning’ Exit - Bloomberg

Gross Loses Pimco Power Struggle With ‘Stunning’ Exit - Bloomberg: "The surprise decision by 70-year-old Gross, whose personal wealth is estimated at $2 billion by the Bloomberg Billionaires Index, marks a turning point in one of the most remarkable careers in money management. Gross personally oversaw more money than any investor on the planet, and was synonymous with the firm he co-founded in 1971, until his main fund started to trail peers and his leadership style attracted scrutiny."

Business Insider has an interesting look at outflows at Pimco:

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