the finance industry / wall street

http://www.dailymail.co.uk/news/article-2397527/Bank-America-Merrill-Lynch-intern-Moritz-Erhardt-dead-working-long-hours.html

There was one intern who was so terrified of being seen to be leaving the office that if he didn't have work to do he would do 'practice' work until late into the night and come in at the weekends just to show his dedication.

http://www.standard.co.uk/business/inside-the-world-of-londons-247-interns-6430507.html

http://www.upworthy.com/there-is-something-so-satisfying-about-watching-the-daily-show-nail-this-outrageous-hypocrisy-6

Suppose stop and frisk was used in NYC on certain streets to stop other types of crime

OK someone explain a thing to me that I have never understood. Today's MSFT/NOK deal is a perfect example. Microsoft is paying $7B for the handset unit of Nokia. Nokia's market cap goes up by about 5.6 billion, and Microsoft's market cap goes down by about 12.7 billion.

How can this be? Let's say I own a house outright. It's worth $300,000 and I sell it to you for $300,000. Isn't the net change to my net worth "0" and the net change to your net worth "0"? Yet by giving $7B in cash for a business, Microsoft's net worth goes down by $12 billion. Even if that business were WORTHLESS, hasn't Microsoft only lost $7B? Or is it the fact that the business is expected to incur future losses that will cost Microsoft the equivalent of a present value of an extra $5 billion on top of the $7 billion they paid?

market cap is based on share price x number of outstanding shares, no? did msft's stock go down?

right, market cap = share price x # of shares outstanding. Microsoft's stock went down, Nokia's went up.

investor's be investin'

maybe it would be better to think that your mortgagee has downvalued the house because someone has just dumped three hundred tons of turd in the garden and the house has a history of having turds dumped on it in the last decade

But do I understand correctly that *the market* believes Microsoft has just paid $7B for something that is actually worth negative $12B?

That's the way i would look at it. who knows how the market values stocks!

But the weird thing, then, is that Nokia has just received $7B cash AND gotten rid of a thing worth negative $12B, but its market cap is only up $5B. Shouldn't it be up $19B? Market be CRAY!

well the thing isn't necessarily worth negative 12B in nokia's hands, synergies etc.

i mean if you could accurately predict market cap that would mean you could accurately predict stock prices which is like, the holy grail of holy grails

they don't need to think about it in direct monetary terms. it could just be a feeling that this signals microsoft is making bad decisions in general, and they don't trust its 'mobile strategy' or the like

xp shouldn't it be worth more in Microsoft's hands than in Nokia's? Anyway, it's not really a matter of "predicting" market cap so much as valuing companies at present.

if msft bought the twinkie line for $1 m i would expect their market cap to decrease by much more than 1 million, what does msft know about running a bakery

valuing a company and translating that into a stock price is one of the fundamentals of secondary capital markets and nobody has a good read on it, i thought

Well Nokia phones run windows so there are *some* synergies. I mean that's the point of the deal, to attempt to create another competitor in the smartphone market -- Microsoft's full muscle and cash behind the phone line instead of just providing the OS while Nokia struggles.

sure, but investors could look at the performance of other msft portables (i.e. their tablet line) and think, this is just putting lipstick on a pig

investors could think msft is throwing good money after bad. idk

Markets are brainless. This fact is obscured because that participants in a market all have brains. However, those brains are not wired together in a way that can emulate a real brain. Instead, the connections between participants are contingent, minimal and often ephemeral. This greatly limits the amount of common information a market can assemble and act upon, so that market behavior is less coordinated and sophisticated than, for example, a cockroach's behavior. Because a cockroach at least has a brain.

i think its almost always the case that when companies purchase other companies the stock of the purchaser goes down and the stock of the purchasee goes up

ive always assumed that its because the purchasing company is overpaying for stock of the purchased company, taking on a big risk, threatening profits, etc

http://www.slate.com/articles/news_and_politics/explainer/2005/06/when_one_company_buys_another_.html

i think its almost always the case that when companies purchase other companies the stock of the purchaser goes down and the stock of the purchasee goes up

― max, Tuesday, September 3, 2013 9:07 PM Bookmark Flag Post Permalink

I don't know what the majority of cases are like, but I have certainly seen deals where this is not true. But I think you're correct that there's a sense of certainty (company A just got a bunch of cash, the most certain thing of all) versus uncertainty (company B just bought a business that it may or may not be able to run well, that may or may not have a good future for various unknown reasons, etc.).

http://www.washingtonpost.com/blogs/wonkblog/wp/2013/09/14/what-we-get-wrong-when-we-talk-about-the-financial-crisis/

Even if Lehman Brothers had collapsed without anyone knowing, we still would have had mass foreclosures devastating neighborhoods and underwater mortgages driving the Great Recession. There still was an entire Wall Street pipeline designed to deceive both borrowers and investors. There still was a derivatives market designed to distort the price of risk while also creating instruments designed to fail.

http://dealbook.nytimes.com/2013/09/19/jpmorgan-chase-agrees-to-pay-920-million-in-fines-over-trading-loss/?hp

http://dealbook.nytimes.com/2013/09/17/s-p-bond-deals-are-on-the-rise-since-it-relaxed-rating-criteria/

upshot: S&P overrates bonds --> overrated bonds fuck up the economy --> S&P pulls back on overrating bonds --> S&P realizes it isn't making as much money as it did when it overrated bonds --> S&P starts overrating bonds again

nationalize s&p, fitch and moody's obv

yeah I keep trying to think of reasons not to do that, but I can't

you could just remove all references to ratings agencies from regulation too

would that somehow stop pension funds from relying on them?

well probably yeah actually. mainly people care about ratings because there are regulatory reasons where you are only allowed to hold things with certain ratings (if you are a pension fund or etc) or if you hold things with lower ratings then you need more cash on hand to cover them (if you are a bank or etc)

the problem isn't "this arbitrary stupid system of assigning letters to products as though it reflects their risk of default when it is based on measuring something else entirely, and then enforcing investment based on it is in the hands profiteers" it is that this is a stupid arbitrary system to begin with.

which is subject to arbitrage, gaming, and stupidity regardless.

did anyone do this yet?

http://www.talkingpointsmemo.com/livewire/aig-exec-public-outrage-over-bonuses-just-as-bad-as-lynchings-in-the-south

no

xp But the alternative is for each institutional investor from CalPERS to the tiniest municipal firefighter pension to independently evaluate the risk of every offering, and that just doesn't seem like an improvement on the current system.

so many lobotomized ppl work in cable "news"

http://www.salon.com/2013/09/27/pareene_i_could_do_just_as_well_at_ignoring_the_london_whale/

"what's a fact?!"

Pareene didn't do such a great job there tbh

I mean really the morons he's arguing with are right on the big picture in spite of saying a lot of wrong things. From the point of view of shareholders, Dimon is great. Pareene isn't really making a coherent case for Dimon to be fired, he's just saying JPMorgan bad.

Salmon salvages it a bit (although I really don't think the restaurant analogy was a "great point" -- it struck me as kind of mickey mouse)
http://blogs.reuters.com/felix-salmon/2013/09/29/the-jp-morgan-apologists-of-cnbc/

i'm sad that Joey Ramone wrote one of his last songs about that c**t.

felix salmon?

the discussion is fantastic. the "stick to the facts" stuff is killing me. really captures krugman's quips about "very serious people".

pareene did a good job considering they let him say like 8 words imo. also he was p cute

the more i think of it the more i feel this was a bit jon stewart on fox with the 'am i taking crazy pills' sort of vibe.

otoh if he was more polished and did this more often i worry he'd get 'good' and just be another irritating shouty talking head

As I left the trading floor, I immediately took a wrong turn and was reoriented toward the exit by a friendly, silver-haired gentleman in a very nice suit. “What were you talking about?” he asked, recognizing a wayward CNBC guest. “JPMorgan,” I said. “I was sort of the liberal punching bag.”

His expression became briefly chillier, but as we left the building together he smiled. “The fines? Well, guess we’ll just have to raise fees!” And then he walked off and I got on the subway.

http://www.salon.com/2013/09/30/how_i_botched_it_on_cnbc/