Financial Modelers' Manifesto

Paul Wilmott and Emanuel Derman have come out with a Financial Modelers' Manifesto.
Financial Modelers' Manifesto document
This Financial Modelers' Manifesto is a great read, especially for investors who sometimes place too much confidence in using model to evaluate financial assets and predict financial outcomes.

Excerpt from the Manifesto:
[

The Modelers' Hippocratic Oath
~ I will remember that I didn't make the world, and it doesn't satisfy my equations.
~ Though I will use models boldly to estimate value, I will not be overly impressed by mathematics.
~ I will never sacrifice reality for elegance without explaining why I have done so.
~ Nor will I give the people who use my model false comfort about its accuracy. Instead, I will make explicit its assumptions and oversights.
~ I understand that my work may have enormous effects on society and the economy, many of them beyond my comprehension.

]

Before this Oath, there is a manifesto.
Among many things,
it talks about :
why CDO’s model went wrong; There is no right model; Examples of a good model (Black-Scholes model of options valuation); limitations of model.. etc..

Great read !

Harvard Business Review 50 management terms for 2008

Came across this "Harvard Business Review 50 management terms for 2008" (in chinese) :
website

This is a great way to learn what the management buzzes are in HBR.
Source of the terms (which month’s HBR) are included.

Power 50 - the world’s most influential people in finance

Power 50 - the world’s most influential people in finance

Institutional Investor Magazine has picked 50 peoples to be world’s most influential people in finance.
link

We will be able to know who-is-who and his/her organization/company that are considered influential in finance.

Among many CEOs, directors, organization heads, there is an economist which is odd-one-out :
Nouriel Roubini : Economics Professor, New York University’s Stern School of Business
Nouriel Roubini is mentioned in one of the my previous post on economists.

real estate - Malaysia National House Buyers Association

Buying property is a big decision. The amount of money involved is large.
There are a lot of pitfalls during the process. We need to be extra careful in every step.

Found this "Malaysia National House Buyers Association".
website

Some useful information:
1. Where to get help: FAQ and Forum Board, contact and advice centre

2. Statistics:
This shows complaint statistics (available from 2000 - 2006).
We will be able to take a glimpse of what can go wrong in property buying, for examples:
(the list is not exhaustive…)

• strata titles,
• management & maintenance,
• late delivery & LAD claims,
• certificate of fitness,
• abandoned projects, (look at abandoned projects)
• shoddy workmanship & defects,
• non-adherence to building plans,
• infrastructure,
• failure to recovery on awards/prosecution of awards – section 16AD,
• compensation delays,
• payments…

3. Buyer watch issues
We can find lots of issues/news on Malaysia’s property/housing.
Many are newspaper articles.

4 Buyers’ group list
We can find existing owners’ association/committee (in the form of Yahoo Groups, blogs, forums) of some housing projects. Useful if you are buying 2nd hand property and wish to find out info or existing problems of that housing estate/project. Useful also if you have problems related to your house and wish to join forces with others in the same housing estate/project.

4. Useful Links
These links are extremely useful. We can find links to many real estate industry participants here. Explore..

5. The Laws/Guidelines
Laws like:

• Building and Common Property (maintenance and management) Act
• Housing Development (Control and Licensing) Act,
• Strata Titles Act,
• Street, Drainage and Building Act,

Court cases are also available here.

6. Experts’ views

Report by China - Britain Busines Council - Opportunities for UK Businesses in China’s Regional Cities

China – Britain Business Council (website) has a research report on "Opportunities for UK Businesses in China’s Regional Cities".
about the report
Registration is needed for the report.
However, the report is available on internet on other site :-)

Report : Opportunities for UK Businesses in China’s Regional Cities
report link

Out of 274 municipalities, 35 regional cities are chosen based on:

• Local sales
• Production to supply domestic markets
• Production to supply export markets
• Research and development activity

Some highlights:

1. Map & Cities (page 8),

2. city attractiveness by business activity (page 11)

3. Sector specific opportunities (page 15) :

• Advanced Engineering
• Energy
• Environment and Climate Change
• Financial and Professional Services
• Infrastructure
• Information Communication Technology
• Life Sciences

4. Key issues and suggested responses (page 21):
Its suggested responses give insights.

Types of key issues: (with many sub – key issues)

• central and local government challenges
• market challenges
• operational challenges
  

Some government campaigns on regional cities development :
2000 Go West Campaign (西部大开发)
2003 Northeast Regeneration Campaign (东北振兴)
2006 Go Inland Campaign (中部崛起)

There are also Case Studies in the report.

Publication date of the report is 26 Sep 2008.
However, the report still provides insights on potentials of the regional cities.

Rise of Nations 大国崛起

There is this documentary series 大国崛起 (Rise of Nations) that I like very much.
It is about how some nations (Portugal, Spain, Neatherland, United Kingdom, France, Germany, Japan, Russia amd United States of America) rise to become great nations.
There are many lessons we can learn from their paths to greatness (also on their decline) and obstacles they face.

website
There are some video clips and texts that are excerpts from the documentary series.

link
Website by Taiwan’s 天下magazine on 大国崛起
Click on the countries. There are some articles that are great read too.

The book 大国崛起 by 唐晋 is a great book to complement this documentary.
It gives a more detailed look on these great nations’ development path to greatness.
I think this is some kind of country analysis too (part of investment analysis) :-)

US Congressional Oversight Panel (COP)’s 2nd report - Accountability for the Troubled Asset Relief Program (TARP)

On 9 January 2009, Congressional Oversight Panel (COP) has commented on replies by Treasury to COP’s queries (45 questions in total) in its 2nd report:
Accountability for the Troubled Asset Relief Program (TARP)
report link

COP highlights 4 specific areas that deserve special attention !
1. Bank accountability: not knowing what the banks are doing with
taxpayer money

2. Transparency and asset evaluation: not enough transparency, especially on asset evaluation

3. Foreclosures: Treasury takes no steps to use any of this money to alleviate the foreclosure crisis

4. Strategy: no information on strategy

The Treasury Department Response Grid in the report is interesting.
Sigh, it seems that Treasury didn’t respond to many of the questions asked.

House Committee on Financial Services - on Bernard Madoff's Ponzi scheme

Found this website of US’s House Committee on Financial Services.
website
This committee oversees all components of the nation's housing and financial services sectors including banking, insurance, real estate, public and assisted housing, and securities.
(refer to "Who we are" for more details)

US House Committee on Financial Services had a meeting to discuss and assess Bernard Madoff’s Ponzi scheme and the need for regulatory reform.

link

Quite a good read. There are testimonies from representatives from SEC, Securities Investor Protection Corporation (SIPC), Bernard Madoff’s investor and some academics.

Some info from the opening statement:
red flags raised by others on Bernard’s investment:
1. outsiders like Mr. Markopolos could not create a model that matched the results of Mr. Madoff’s purported strategy
2. Others published articles as early as 2001 raising questions about Mr. Madoff’s firm.
3. unrealistically steady investment returns
4. auditor the size of a mouse examining a fund the size of an elephant.

agency’s enforcement unit is chronically understaffed:
1. 433 people in the office of compliance and examinations looking at 8,000 advisers two years ago, today it has 400 people looking at 11,000 advisers and thousands of mutual funds:
2. number of investment advisers subject to the Commission’s oversight has doubled since 1997
How will they "restructure the regulatory system for the financial services industry and enhance investor protection" ?

US Congressional Oversight Panel

US Congressional Oversight Panel
website

From the website, it was said that:
The Congressional Oversight Panel was created to
1. oversee the expenditure of Troubled Asset Relief Program (TARP) funds authorized by Congress in the Emergency Economic Stabilization Act of 2008 (EESA).
2. review the "current state of the market and the regulatory system"
3. provide reports to Congress and the American public on the effectiveness of the Treasury Department's management of the Troubled Asset Relief Program (TARP)
4. offer recommendations for regulatory reform.

It was mentioned that "Future reports will be released every 30 days".

The 1st report (10 questions from Congressional Oversight Panel):
PDF file
These are the question list for the previous post. Good read. We can get a glimpse of their "worries" on great power giving to TARP.

US Treasury’s responses to questions of the 1st report of the Congressional Oversight Panel for Economic Stabilization

US Treasury’s responses to questions of the 1st report of the Congressional Oversight Panel for Economic Stabilization
PDF file
The response is dated 30 December 2008.

It’s informative. A summary of actions happening in US’s Economic Stabilization.
Refer to the link for details.

Critical objectives:
1. Stabilize financial markets and reduce systemic risk
2. Support the housing market by avoiding preventable foreclosures and supporting
mortgage finance
3. Protect taxpayers.

Legal Act:
Emergency Economic stabilization Act (EESA)

Parties involved:
Treasury, Federal Reserve,FDIC, OTS, and the OCC; Finance Ministries and major Central Banks around the world

(I put in organizations responsible for the actions.)

Actions to Stabilize Financial Markets
1. Term Asset-Backed Securities Loan Facility (TALF) (by Fed)
2. Term Auction Facility (TAF) (by Fed)
3. Term Securities Lending Facility (TSLF) (by Fed)
4. Primary Dealer Credit Facility (PDCF) (by Fed)
5. Money Market Investor Funding Facility (MMIFF) (by Federal Reserve Bank of New York (FRBNY))
6. Temporary Guarantee Program for Money Market Mutual Funds (by Treasury)
7. Commercial Paper Funding Facility (CPFF) (by Fed)
8. Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility (by Fed)
9. Swap Lines with Foreign Central Banks (by Fed)

Actions to Strengthen U.S. Financial Institutions
1. Temporary Increase in Deposit Insurance (by FDIC)
2. Temporary Liquidity Guarantee Program (TLGP) - Debt Guarantee Program (DGP) and Transaction Account Guarantee Program ; (both by FDIC)
3. Capital Purchase Program (CPP) (by Treasury)
4. Systemically Significant Failing Institutions Program (SSFI) (by Treasury)

Initiatives to Support the U.S. Housing Market
1. FHASecure (by HUD)
2. HOPE NOW (by HOPE NOW Alliance)
3. Stabilizing Fannie Mae and Freddie Mac (by Treasury)
4. Hope for Homeowners (by HUD)
5. Streamlined Loan Modification Program (Treasury joined
with the FHFA, the GSEs, and HOPE NOW)
6. Subprime Fast-Track Loan Modification Framework (Treasury worked with the
American Securitization Forum)

(Sigh)..very much like Great Depression’s time "Alphabet Agencies" organizations under New Deal. The document also mention on progress of Economic Stabilization. This is interesting read too.

Will these actions be able to stabilize US economy ?

EPFR Global – global fund flows and allocations data

Where does the money flow to ? Sometimes I ponder about this question.

EPFR Global provides fund flows and asset allocation data.
EPFR Global website
However, (sigh) this data is not free.

We can still find some useful data from the website’s headlines.
For examples,
look at "Weekly Fund Flows" headlines:
… US and China equity funds favored while pressure on bond funds ease.
…. Some signs of risk appetite as flows into EM equity funds hit a 20-week high.
… Europe Equity and Money Market Funds extend wining runs in early December.

We can also look at "EPFR Daily – fund flow alerts" news flash.
This will be a more updated (daily) news on fund flows.
Anybody is subscribing to the service ?

Note: If you like to invest in different countries, you may wish to take a look on my other posts on countries such as United States of America, China, Singapore and Malaysia.

.

Harvard Business School Leadership Initiative – US business leaders (1)

I came across this book "In their time – the greatest business leaders of the 20th century".
(in Chinese version, its title is 英雄年代)
It is a great book on US business leaders, US business history in 1900s to 1990s.

From this book, I get to know this Harvard Business School – Leadership Initiative.
It is a great repository for US business leadership/history.
Let’s explore.

Timeline
This "timeline" feature is really great.
It shows US’s 6 contextual factors (demographics, technology, social mores, government intervention, labour and global events) in every period of 10 years, starting from 1900s, to 1990s; and some of the great entrepreneurs, managers and leaders.
The "interesting facts" are fun.

Another feature is "leader". It shows American business leaders of 20th century,
can be filtered using last name, industry, company, era
Leaders

Are there databases like this one for business leaders in Europe, Asia etc. ?

There is also another book by the same authors:
Paths to Power : How Insiders and Outsiders Shaped American Business Leadership
I haven't read this book yet.