Archive for the ‘Wall Street’ Category

Gotcha: Fund managers charging more … for earning you less.

May 29, 2013

Burton Malkiel – one of my thesis advisers at Princeton –  has long touted index funds since individual stock movements are are tough to predict and since index funds outperform most actively managed funds.

He details his case in todays’s WSJ editorial “You’re Paying Too Much for Investment Help”


Here’s the essence of Malkiel’s argument …


Betcha he misses this free throw …

May 31, 2012

Punch line: I had a friend who would bet on anything … in a football game it would be who would win the toss, who would score first, whether the next play would gain more or less than 5 yards.

You get the picture.

Well, he must be salivating.

Cantor Fitzgerald — the NY brokerage outfit — is bringing technology and near real-time action to betting.

I guess derivatives weren’t risky enough for these wise guys …

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Excerpted from the Washington Post

Cantor Fitzgerald, one of the world’s largest brokers of government bonds, is diversifying —  into sports-gambling.

Equipped with technology drawn from Wall Street and a trader’s appetite for risk, Cantor is charging into sports betting in Las Vegas .

With a $150 million investment, the New York-based bond brokerage has taken control of and retooled seven sports books.

Cantor has also produced wireless tablets so gamblers can bet anywhere in the casino or hotel. Eventually, it wants to start an online poker casino, too.

“The idea is that we can bring  technological innovation to the market.’’

Cantor’s bookmaking software, a modified version of what Wall Street traders use, has changed the way sports gamblers bet.

Cantor says its computer servers, driven by the kind of algorithm-rich software that fuels derivatives trading, spew out odds on events at the fastest rate ever.

Before Cantor ran the sports book, people could usually bet only once, before the game began, on the outcome.

Cantor’s technology allows gamblers to place bets during contests on dozens of situations just seconds before they unfold.

During a Los Angeles Lakers-Boston Celtics game, a betting opportunity pops up on the stations.

It offers a $100 payoff on a $220 wager that the Celtics’ Paul Pierce will sink the two foul shots he’s about to take.

Gamblers bet on Pierce by swiping a finger across the screen.

Pierce sinks both.

Cantor’s big bet is that Congress will allow sports wagering to spread across the country … online, of course..

Thanks to SMH for feeding the lead.

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Devalued Currency: According to Goldman Sachs, 40% of its employees are VPs … really?

March 16, 2012

By now, everybody has heard that a GS VP has turned states-evidence on the company, decrying in a NYT op-ed that company executives “callously” talk about “ripping their clients off” in order to make more money for the securities firm and that the firm’s culture is “toxic and destructive.”.

That’s a shocker, isn’t it?  Right up there with accusations that baseball sluggers juice-up.

Also unsurprising is that Goldman is wasting no time in fighting back against a disgruntled ex-employee.

According to the WSJ, GS immediately tried to marginalize   the dude by minimizing his role at the firm.

In a memo to employees, Goldman Chairman and Chief Executive Lloyd Blankfein and President Gary Cohn wrote that Mr. Smith was one “of nearly 12,000 vice presidents” among more than 30,000 employees at the company.

Now, that caught my eye …. 40% of employees are VPs.

Either it’s “all chiefs, no warriors” or within GS, the title is more honorary than substantive … providing clients with the peace of mind that only comes when dealing with “callous” VPs who are “ripping them off”.

Go figure …

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Wall Street Shocker: Dem fundraising stalls among bankers …

July 7, 2010

Punch line: A revolt among big donors on Wall Street is hurting fundraising for the Democrats’ with contributions from the world’s financial capital down 65 percent from two years ago.

Only thing that surprises me is that the Dems have the nads to ask Wall Streeters for dough …

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Excerpted from Washington Post,Democratic campaign committees losing big Wall Street donors, July 6, 2010

The Democratic Senatorial Campaign Committee and the Democratic Congressional Campaign Committee have … raised $49.5 million this election cycle from people giving $1,000 or more at a time, compared with $81.3 million at this point in the last election. T

he drop in support comes from many of the same bankers, hedge fund executives and financial services chief executives who are most upset about the financial regulatory reform bill 

Among the notables tossing shutouts at the Dems:

  • Jamie Dimon, the head of J.P. Morgan Chase, donated $65,000 to the Democratic committees in 2006 and 2008,  This election cycle, he has not contributed at all.
  • Leon Black, a co-founder of the $53 billion New York-based Apollo Global Management a private-equity firm,gave more than $200,000 to Democratic congressional committees over the previous two election cycles but have not given this year.
  • Lloyd Blankfein, chief executive and chairman of Goldman Sachs, has not donated to the Democrats, either, after giving $50,000 in the previous two cycles.

This fundraising free fall from the New York area has left Democrats with diminished resources to defend their House and Senate majorities in November’s midterm elections.

Full article:

Wall Street : Back to the Future ?

April 22, 2010

Below is a quick take on the context of the Goldman bruhaha and financial regulatory reform. 

The “factors that moved Wall Street from the old model to the new” don’t get talked about much …

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IBD: Goldman Case Marks Shift On Wall Street,  04/21/2010

Once upon a time, Wall Street’s leaders saw themselves as arbiters of capital, helping allocate society’s savings to productive uses.

By contrast, Wall Street’s major firms now see themselves as captains of “the market,” navigating it — for themselves and sometimes their clients — for maximum gain.

This is a distinction with a difference.

As arbiters of capital, Wall Street was paid to make judgments. It tutored investors on which stocks to buy, advised companies on which mergers and acquisitions to pursue. It decided which companies deserved capital through the sale (“underwriting”) of new stocks and bonds to investors. Wall Street made money through fees and commissions.

Now the prevailing model is different. Wall Street firms still give advice — and earn fees. But their main business is trading for their own accounts and creating trading opportunities for clients.

About 80% of Goldman’s $12.8 billion in Q1 revenues came from its trading and proprietary investment accounts. The rest represented underwriting, financial advice and management.

Greed and shortsightedness didn’t originate yesterday. Wall Street’s old model bred abuses. Brokers “churned” clients’ accounts to generate commissions. Investment bankers earned fees by rubber-stamping dubious mergers. Underwriters blessed poorly managed firms or companies with no real businesses (remember the dot-com bubble). And there were swindles.

Many factors moved Wall Street from the old model to the new:

  • the end of fixed commissions on trades, which squeezed revenues;
  • computer technology, which made rapid trading and exotic financial instruments possible;
  • the replacement of partnerships with publicly held firms. When partners were individually responsible for a firm’s losses and mistakes, they restrained excessive risk-taking.

These changes won’t be reversed. But if Wall Street can’t control itself, someone else will.

Full article: