Monday, December 31, 2007

It's Time For Prediction Markets Again

As the elections come closer, people one again start talking more about political prediction markets. In fact, they're well known enough that the the Wall Street Journal will now be featuring regular commentary on what the prediciton markets say about the various political candidates.

The pieces will be written by Wharton's Justin Wolfers. He's one of the sharpest young economists on the scene, and extremely well versed on the topic.

Click here to read his first piece.

1,000 Posts

I didn't realize it, but Financial Rounds just crossed the 1,000 post mark. That's a lot of time spent blogging.

The Sub Prime Crisis (From The Long Johns)

Here's a pretty good comedy piece on the Sub Prime Crisis

The Best line of the piece: "High Grade Structured Credit Enhanced Leveraged Fund!"

Where do I sign?

Saturday, December 29, 2007

Larry The Liquidator

I've started putting together my syllabus for the spring semester. I'll be teaching the advanced corporate finance class. I haven't taught this particular class for a couple of years, so I thought I'd change things around a bit this time. It's about 50/50 between lectures and cases, and this time around I think I'll play this clip from Other People's Money. It's the speech by Larry The Liquidator at the shareholders' meeting, and it's a pretty good representation of the PE/buyout/corporate selloff world's approach to things. It's also one of the best finance clips you'll find in any movie anywhere. .


Friday, December 28, 2007

"Shocking" Economics Facts

I thought this short Youtube clip had some very interesting facts. They illustrate just how amazingly large our economy is relative to that of most countries. Let's just say that I'm glad to be living here.

Back to CFA studies.

Boys Day and Night

The Unknown Daughter is going for a sleepover tonight at her cousin's house (about 80 milkes away in an adjoining state). So, Unknown Wife is using the opportunity to take an overnight herself at her sister's house (she lives near where the sleepover is, and this'll save an additional trip).

That means Unknown Son and I temporarily have the house to ourselves. He gets to watch Pink Panther Cartoons most of the day (he got the 6 Disk complete set for Christmas) while I spend my time going over material for CFA level 2. I teach in a prep program starting in about four weeks, and I'm taking the exam myself this June (assuming I passed level 1), so it's a good opportunity to get a bit ahead.

He's been having intermittent fevers (on one day, off the next) for the last couple of weeks. We know he had pneumonia, and is almost done with his antibiotics. But maybe he caught another virus. Either way, he's content to sit around and watch classic cartoons.

I'll probably watch some too.

Plus, this means I get to watch the buildup tonight to tomorrow night's big UFC fight between Hughes and St. Pierre.

Monday, December 24, 2007

The Law Is An Asset Class

Here's a new asset class - investing in litigation. It's not yet legal in the US, but in other countires, it's possible to fund a lawsuit in exchange for a stake in the proceeds. This seems like a logical progression - there's already divorce settlement financing. This just extends the range of claims on litigation to equity stakes.

My guess is that the investment (if it ever catches on) would have pretty low covariance with most other asset classes, so it could be a good hedging mechanism.

What's next - derivatives on lawsuits?

HT: Marginal Revolution

Trunk Monkeys

I just recently figured out how to put videos on the blog (so I'm slow - sue me). When I was showing it to the Unknown Kids, they both agreed that the Trunk Monkey videos would have to be among the first to be posted. So by popular demand, here's a compilation of the first six installments:

For those who aren't familiar with the Trunk Monkey, it was a series of web videos put together a while back by Suburban Auto Group.

If you're interested, you can buy Trunk Monkey gear at their online store here. For a while (and much to the Unknown Wife's chagrin), we had a Trunk Monkey sticker in the back window of our van). She hated it, but the kids and I were mighty proud...

Sunday, December 23, 2007

A Great Christmas Video

I try to stay away from most political things on this blog. But this Christmas Video from Fred Thompson pretty much hits all the right notes.

Here's Wishing A Merry Christmas To All (and safety to our men and women in uniform) from the Unknown Family.

Saturday, December 22, 2007

All Hail The Mighty Excel For Grading

As a finance guy, I'm pretty good with Microsoft Excel. MOst of my immediate peers use it for grading. But if you do, here are a few functions that you might find useful:

1) The IF function is useful if you have two different weighting schemes. For example, to give the poorly performing students incentives to push hard in studying for the final, I often tell the students that I will grade them using two different weightings on their grades - in one I put greater weight on the exams and quizzes that take place throughout the cours, and in the other I put more weight on the final (I assign them the higher of the two grades).

Use the syntax =IF(Scheme1>=Scheme2, Scheme1, Scheme2) where Scheme1 and Scheme2 reference the cells containg the scores under the two weighting schemes, and you'll get the higher of the two cells.

2) The LARGE function is very helpful when you want to pick N out of K scores (for example, if you calculate the average of quizzes after trhrowing out the lowest N scores). The Syntax LARGE(A1:J1,2), will identify the 2nd highest score out of the 10 elements soted in the array from A1 to J1. To calculate the average of the 8 largest scores in the cells from A1 to J12, I'd use the following syntax:

=(SUM(A1:J1) - LARGE(A1:J1,10) - LARGE(A1:J1,9)) / 8

In other words, I calculate the sum of all ten, then subtract the two lowest scores,and then divide by eight (make sure you keep track of the parentheses).