Monday, June 18, 2007
Notice
My blog has not been updated in the last couple of weeks. There is a number of reasons for that, mainly the fact of being overseas for most of this time. However, this should change now.
Wednesday, April 25, 2007
The letter C...
Standing for: "consolidation". This word is very important in the banking sector nowadays, as it has became a more and more global industry. Banks branch internationally and they face stiffer and stiffer competition both in their respective and domestic markets.
The European banks are in an unfortunate situation that they are being exposed to competition of US and Japanese based banks, from the biggest bank in the world - CitiGroup's CitiBank, through other banking giants from these two countries.
The European way to fight back was and still is consolidation - fewer bigger banks have a greater chance of successfully competing with oversea rivals. Companies such as Deutsche Bank, Banco Santander, Royal Bank of Scotland have been pursuing this strategy. If a bank is not strong enough to overtake its competitors, than becoming and attractive acquisition target, and in turn achieving a big payoff for its stockholders becomes essential.
ABN Amro, one of the three biggest banks in the Netherlands is a well capitalized, efficient financial institution operating business units on 5 different continents (For more information see: ABN Amro reports http://www.abnamro.com/com/about/reports.jsp ). There has been some attention in the media about the possibility of ABN acquiring some other European bank. As it turned out however ABN was an acquisition target itself.
The British Barclay's Bank offered 90 billion $ for taking over ABN, but another bid emerged suddenly. Fortis Bank NV, Banco Santander and Royal Bank of Scotland are trying to conduct a hostile take-over of ABN, worth over 100 billion $. The extraordinary thing here is not only the rarity of hostile take over in the banking industry, but the value of the deal making it the biggest in the banking industry history (More on that: http://online.wsj.com/article/SB117748527305881826.html?mod=home_whats_news_us ).
Because of the magnitude of the deal and the power of the involved parties this is turning out to be very interesting. One thing that is pretty certain - ABN stockholders will receive a handsome payoff and one of the parties involved will leave the table empty handed.
***
DJIA does it again!
The Dow has done it again. The Dow Jones Industrial Average has surpassed the 13,000 point mark, achieving a new all time high (See: http://online.wsj.com/article/SB117750071157281919.html?mod=home_whats_news_us ).
The European banks are in an unfortunate situation that they are being exposed to competition of US and Japanese based banks, from the biggest bank in the world - CitiGroup's CitiBank, through other banking giants from these two countries.
The European way to fight back was and still is consolidation - fewer bigger banks have a greater chance of successfully competing with oversea rivals. Companies such as Deutsche Bank, Banco Santander, Royal Bank of Scotland have been pursuing this strategy. If a bank is not strong enough to overtake its competitors, than becoming and attractive acquisition target, and in turn achieving a big payoff for its stockholders becomes essential.
ABN Amro, one of the three biggest banks in the Netherlands is a well capitalized, efficient financial institution operating business units on 5 different continents (For more information see: ABN Amro reports http://www.abnamro.com/com/about/reports.jsp ). There has been some attention in the media about the possibility of ABN acquiring some other European bank. As it turned out however ABN was an acquisition target itself.
The British Barclay's Bank offered 90 billion $ for taking over ABN, but another bid emerged suddenly. Fortis Bank NV, Banco Santander and Royal Bank of Scotland are trying to conduct a hostile take-over of ABN, worth over 100 billion $. The extraordinary thing here is not only the rarity of hostile take over in the banking industry, but the value of the deal making it the biggest in the banking industry history (More on that: http://online.wsj.com/article/SB117748527305881826.html?mod=home_whats_news_us ).
Because of the magnitude of the deal and the power of the involved parties this is turning out to be very interesting. One thing that is pretty certain - ABN stockholders will receive a handsome payoff and one of the parties involved will leave the table empty handed.
***
DJIA does it again!
The Dow has done it again. The Dow Jones Industrial Average has surpassed the 13,000 point mark, achieving a new all time high (See: http://online.wsj.com/article/SB117750071157281919.html?mod=home_whats_news_us ).
More on that in the upcoming posts...
Thursday, April 12, 2007
Employee rights & responsibilities...
The modern society assigns a number of roles to people. A very important one is the role of an employee. Work constitutes a significant part of the adult life of most humans. It is natural that certain rights and responsibilities come with it.
I would like to comment on a part of Prof. Joseph DesJardins’* book “An Introduction to Business Ethics”. Chapters 5 and 6 of this work analyze employee rights and responsibilities respectively. The focus is on the ethical, not the legal/contractual framework.
Employee rights
First the author discusses the concept of a right to work and its meaning and extent. Later on, the ideas of employment at will and due rights are being contrasted against each other. The chapter also asks about the extent of employee participation rights.
In my opinion an employee does not have the right to get job he or she would like to obtain, but only those that correspond their skills and abilities. Whereas the inequality of power and means makes a good case for justifying the concept of due rights, it does just the contrary for the idea of participation. Corporations are not democratic institutions and they need hierarchy to be economically viable. An employee cannot expect same decision-making rights as the agent appointed by the owner of the corporation.
I acknowledge that in an optimal situation an employee gets both extrinsic (salary, benefits etc.) and intrinsic (job satisfaction, sense of fulfillment etc.) compensation from his or hers employment. It is clear to me that in exchange for that, employees should adhere to certain employer rules, which might sacrifice some of the employee privacy. The corporations have a goal to achieve a profit and an implicit obligation to act for the good of their employees. If this means screening for people abusing illegal substances or alcohol it just serves the greater good of all employees and the business entity itself.
Employee responsibilities
DesJardins opens this chapter covering employee responsibilities with a case study about Enron, which discusses the behavior of various Enron agents’ right before and during the fall of the energy-trading giant.
The principles of the agent theory are discussed subsequently. Employees are defined as agent hired by the principal (employer) to fulfill certain of the principal goals. The author makes a crucial distinction between regular employees and managers. It is pointed out that the manager’s expertise and the resulting information asymmetry in favor of the agent may result in abusing of the trust of the employer and lead to the question what is the extent of employee responsibilities.
Furthermore, the role and responsibilities of certain established professions which are holding particular social importance, or even the gatekeeper function, are discussed. Joseph DesJardins also writes about managerial responsibility and the conflicts of interests between managers’ goals and organizational goals are presented next. The author does a very good job in contrasting the Enron executives selling of their shares versus the employees that they have deliberately misinformed. That leads to the section employee loyalty, which presents a view point that employees should not have the moral obligation to be loyal to the company. This made me ask myself the question – if the employees do not have such a responsibility, does this mean, the company does not need to be loyal towards its employees and how does it affect the agents’ rights’?
The chapter is concluded with questions about responsibilities of employees towards outside parties. Such issues as honesty, whistleblowing and insider trading are mentioned.
The conclusion I have reached after analyzing the mentioned above readings is that employees have certain moral obligations towards their employers, as well as certain rights. If the organization is hurting the employee’s autonomy or dignity by deceit or any other kind of abuse, the right of the employee to be treated ethically overrides the possible loyalty. Another aspect of these responsibilities is that agent may feel compelled to have responsibilities towards third parties, or the society as a whole and in certain cases they might be more important than the employee responsibilities towards their principals.
I do not agree with Prof. DesJardins at certain points in his book, but it provides an inresting material for analysis. Sometimes I feel that the ethical aspect of an issue such as employee rights/responsibilities is overlooked…
I would like to comment on a part of Prof. Joseph DesJardins’* book “An Introduction to Business Ethics”. Chapters 5 and 6 of this work analyze employee rights and responsibilities respectively. The focus is on the ethical, not the legal/contractual framework.
Employee rights
First the author discusses the concept of a right to work and its meaning and extent. Later on, the ideas of employment at will and due rights are being contrasted against each other. The chapter also asks about the extent of employee participation rights.
In my opinion an employee does not have the right to get job he or she would like to obtain, but only those that correspond their skills and abilities. Whereas the inequality of power and means makes a good case for justifying the concept of due rights, it does just the contrary for the idea of participation. Corporations are not democratic institutions and they need hierarchy to be economically viable. An employee cannot expect same decision-making rights as the agent appointed by the owner of the corporation.
I acknowledge that in an optimal situation an employee gets both extrinsic (salary, benefits etc.) and intrinsic (job satisfaction, sense of fulfillment etc.) compensation from his or hers employment. It is clear to me that in exchange for that, employees should adhere to certain employer rules, which might sacrifice some of the employee privacy. The corporations have a goal to achieve a profit and an implicit obligation to act for the good of their employees. If this means screening for people abusing illegal substances or alcohol it just serves the greater good of all employees and the business entity itself.
Employee responsibilities
DesJardins opens this chapter covering employee responsibilities with a case study about Enron, which discusses the behavior of various Enron agents’ right before and during the fall of the energy-trading giant.
The principles of the agent theory are discussed subsequently. Employees are defined as agent hired by the principal (employer) to fulfill certain of the principal goals. The author makes a crucial distinction between regular employees and managers. It is pointed out that the manager’s expertise and the resulting information asymmetry in favor of the agent may result in abusing of the trust of the employer and lead to the question what is the extent of employee responsibilities.
Furthermore, the role and responsibilities of certain established professions which are holding particular social importance, or even the gatekeeper function, are discussed. Joseph DesJardins also writes about managerial responsibility and the conflicts of interests between managers’ goals and organizational goals are presented next. The author does a very good job in contrasting the Enron executives selling of their shares versus the employees that they have deliberately misinformed. That leads to the section employee loyalty, which presents a view point that employees should not have the moral obligation to be loyal to the company. This made me ask myself the question – if the employees do not have such a responsibility, does this mean, the company does not need to be loyal towards its employees and how does it affect the agents’ rights’?
The chapter is concluded with questions about responsibilities of employees towards outside parties. Such issues as honesty, whistleblowing and insider trading are mentioned.
The conclusion I have reached after analyzing the mentioned above readings is that employees have certain moral obligations towards their employers, as well as certain rights. If the organization is hurting the employee’s autonomy or dignity by deceit or any other kind of abuse, the right of the employee to be treated ethically overrides the possible loyalty. Another aspect of these responsibilities is that agent may feel compelled to have responsibilities towards third parties, or the society as a whole and in certain cases they might be more important than the employee responsibilities towards their principals.
I do not agree with Prof. DesJardins at certain points in his book, but it provides an inresting material for analysis. Sometimes I feel that the ethical aspect of an issue such as employee rights/responsibilities is overlooked…
* - Joseph DesJardins An Introduction To Business Ethics, McGraw Hill, second edition, 2006
Monday, March 26, 2007
Do you want to earn big? You have got to think small...
Why is small better?
Small stocks are being viewed as an attractive investment. An article in the Wall Street Journal discussing this trend starts in the following way: "International investors are starting to think smaller. They should have started earlier" (From: http://online.wsj.com/article/SB117486630727948482-search.html?KEYWORDS=karmin&COLLECTION=wsjie/6month).
However there are some major concerns present in the common perception of small stocks. Small capitalization securities tend to be more volatile and hence more risky. Less data is provided for such companies, due both to the fact that smaller companies cannot produce a given level of financial data, as well as, because they seem to be out the focus of most analysts. Do the given above reasons determine that small stocks are not as valuable as an investment option? Not necessarily...
TINSTAAFL... or is there?
The acronym above means, "There is no such thing as a free lunch", and is widely used in economics and finance literature. In finance, this statement applies to the fact that an investor has to bear additional risk in order to achieve a higher return rate.
Surprisingly, small stocks seem to defy this rule and provide "a free lunch" on a regular basis. Historically, small stocks have brought higher returns than big stocks. The Wall Street Journal states: "Small and midsize stocks in Europe, Japan and other corners of the developed world have offered some of the best earnings growth anywhere in recent years. These stocks returned 25% a year, on average, for the five years through December, according to Morgan Stanley Capital International. Like U.S. small-capitalization stocks, small-cap foreign stocks outperformed large-cap foreign stocks for each of the past six years. Up 7% year-to-date, foreign small stocks are ahead again this year." (From: http://online.wsj.com/article/SB117486630727948482-search.html?KEYWORDS=karmin&COLLECTION=wsjie/6month). Analyzing any kind of historical market data should lead to the same conclusion.
This characteristic might be explained by a greater risk present while investing in small caps. However, financial research and empirical evidence seems to prove that, as Robert Strong, CFA puts it, small stocks provide a higher risk adjusted rate of return. Additionally, this outcome seems to be persistent. (See: Strong, R., Portfolio Construction, Management & Protection, 4 edition, Thompson Southwestern, 2006, p.249.). This is commonly known as: "small firm effect - The tendency for firms with low levels of capitalization to perform better than finance theory suggests they should". (From: http://websites.swlearning.com/cgi-wadsworth/course_products_wp.pl?fid=M20b&product_isbn_issn=0324232586&discipline_number=414 ). Known financial researchers, Prof. Eugene Fama and Prof. Kenneth French have researched the topic in detail, one should turn to their work for further information about it.
International diversification allows achieving a level of risk, which is approximately the half of the risk borne in a well-diversified domestic stock portfolio. Well established capital markets in Europe and Japan exhibit a similar form of market efficiency as the US markets, furthermore they do know carry excess volatility of emerging markets. Investing in small caps in developed international markets seems to be a very attractive option, carrying moderate risk and a premium risk adjusted rate of return on average, when compared with the large caps. That just brings an annoying thought that the US investors should have thought about foreign small caps earlier...
Small stocks are being viewed as an attractive investment. An article in the Wall Street Journal discussing this trend starts in the following way: "International investors are starting to think smaller. They should have started earlier" (From: http://online.wsj.com/article/SB117486630727948482-search.html?KEYWORDS=karmin&COLLECTION=wsjie/6month).
However there are some major concerns present in the common perception of small stocks. Small capitalization securities tend to be more volatile and hence more risky. Less data is provided for such companies, due both to the fact that smaller companies cannot produce a given level of financial data, as well as, because they seem to be out the focus of most analysts. Do the given above reasons determine that small stocks are not as valuable as an investment option? Not necessarily...
TINSTAAFL... or is there?
The acronym above means, "There is no such thing as a free lunch", and is widely used in economics and finance literature. In finance, this statement applies to the fact that an investor has to bear additional risk in order to achieve a higher return rate.
Surprisingly, small stocks seem to defy this rule and provide "a free lunch" on a regular basis. Historically, small stocks have brought higher returns than big stocks. The Wall Street Journal states: "Small and midsize stocks in Europe, Japan and other corners of the developed world have offered some of the best earnings growth anywhere in recent years. These stocks returned 25% a year, on average, for the five years through December, according to Morgan Stanley Capital International. Like U.S. small-capitalization stocks, small-cap foreign stocks outperformed large-cap foreign stocks for each of the past six years. Up 7% year-to-date, foreign small stocks are ahead again this year." (From: http://online.wsj.com/article/SB117486630727948482-search.html?KEYWORDS=karmin&COLLECTION=wsjie/6month). Analyzing any kind of historical market data should lead to the same conclusion.
This characteristic might be explained by a greater risk present while investing in small caps. However, financial research and empirical evidence seems to prove that, as Robert Strong, CFA puts it, small stocks provide a higher risk adjusted rate of return. Additionally, this outcome seems to be persistent. (See: Strong, R., Portfolio Construction, Management & Protection, 4 edition, Thompson Southwestern, 2006, p.249.). This is commonly known as: "small firm effect - The tendency for firms with low levels of capitalization to perform better than finance theory suggests they should". (From: http://websites.swlearning.com/cgi-wadsworth/course_products_wp.pl?fid=M20b&product_isbn_issn=0324232586&discipline_number=414 ). Known financial researchers, Prof. Eugene Fama and Prof. Kenneth French have researched the topic in detail, one should turn to their work for further information about it.
International diversification allows achieving a level of risk, which is approximately the half of the risk borne in a well-diversified domestic stock portfolio. Well established capital markets in Europe and Japan exhibit a similar form of market efficiency as the US markets, furthermore they do know carry excess volatility of emerging markets. Investing in small caps in developed international markets seems to be a very attractive option, carrying moderate risk and a premium risk adjusted rate of return on average, when compared with the large caps. That just brings an annoying thought that the US investors should have thought about foreign small caps earlier...
Wednesday, March 14, 2007
Digi-sue-them
The age that we are living in does not cease to amaze me. It is not about the gadgets and useful electronic devices we own. The completely new information and entertainment channels are the major achievement. Bloggers culture springs, giving a voice to virtually anyone and sites like YouTube, AOL videos, as well as similar ones supply the internet users with millions of funny, scary or just interesting clips, both long and short.
Google Inc. recognized the potential of YouTube and decides to make a move before any of the competitors did, acquiring the site for a whooping 1.7 billion $ last year. The popularity of YouTube was and still is its greatest asset, the downside of the page was that everybody could have uploaded anything desired. This means - copyrighted material was available on YouTube and intellectual property rights were violated.
The question that has risen is - how are issues like that going to be handled in the digital internet hooked society of today and tomorrow? Viacom is the owner of some of the copyrighted material viewable on YouTube. This entity's answer was a 1 billion $ lawsuit against Google Inc. Viacom's press release read, among other: "YouTube is a significant, for-profit organization that has built a lucrative business out of exploiting the devotion of fans to others' creative works in order to enrich itself and its corporate parent Google. Their business model, which is based on building traffic and selling advertising off of unlicensed content, is clearly illegal and is in obvious conflict with copyright laws", as well as: "There is no question that YouTube and Google are continuing to take the fruit of our efforts without permission and destroying enormous value in the process. This is value that rightfully belongs to the writers, directors and talent who create it and companies like Viacom that have invested to make possible this innovation and creativity" (For the whole statement see: http://online.wsj.com/article/SB117379240271535457.html?mod=home_whats_news_us ).
In my opinion, this case bears a lot of similarity to the Napster issue. The fundamental question is: can a for-profit organization earn money advertising while offering free entertainment to internet users? There is only one catch here: the content is copyrighted, so an organization earns money using someone else’s work! On the other hand: "Google supporters say YouTube's actions simply reflect the evolution of what an Internet company does and that protections intended for Web hosts in general should apply." (From: http://online.wsj.com/article/SB117379140954435400.html?mod=home_whats_news_us ).
The fundamental difference between Napster and YouTube is the scale of the problem - there are far more YouTube users, than there were Napster users.
The lawsuit was filed after failed licensing negotiations between Google Inc. and Viacom. Viacom asked Google to remove the copyrighted content, which was apparently not done. Viacom vs. YouTube is the biggest problem, but it is not the only problem concerning copyrights of digital entertainment content. TimeWarner has similar worries about its content on YouTube, but it is willing reach a compromise with Google. Universal Music Group vs. MySpace is yet another pending big case worth mentioning (For more on all those cases, see: http://online.wsj.com/article/SB117379140954435400.html?mod=home_whats_news_us ).
The outcome of this case holds great significance. It is possible, that the way this case is resolved might set the benchmark for future issues of similar nature.
Google Inc. recognized the potential of YouTube and decides to make a move before any of the competitors did, acquiring the site for a whooping 1.7 billion $ last year. The popularity of YouTube was and still is its greatest asset, the downside of the page was that everybody could have uploaded anything desired. This means - copyrighted material was available on YouTube and intellectual property rights were violated.
The question that has risen is - how are issues like that going to be handled in the digital internet hooked society of today and tomorrow? Viacom is the owner of some of the copyrighted material viewable on YouTube. This entity's answer was a 1 billion $ lawsuit against Google Inc. Viacom's press release read, among other: "YouTube is a significant, for-profit organization that has built a lucrative business out of exploiting the devotion of fans to others' creative works in order to enrich itself and its corporate parent Google. Their business model, which is based on building traffic and selling advertising off of unlicensed content, is clearly illegal and is in obvious conflict with copyright laws", as well as: "There is no question that YouTube and Google are continuing to take the fruit of our efforts without permission and destroying enormous value in the process. This is value that rightfully belongs to the writers, directors and talent who create it and companies like Viacom that have invested to make possible this innovation and creativity" (For the whole statement see: http://online.wsj.com/article/SB117379240271535457.html?mod=home_whats_news_us ).
In my opinion, this case bears a lot of similarity to the Napster issue. The fundamental question is: can a for-profit organization earn money advertising while offering free entertainment to internet users? There is only one catch here: the content is copyrighted, so an organization earns money using someone else’s work! On the other hand: "Google supporters say YouTube's actions simply reflect the evolution of what an Internet company does and that protections intended for Web hosts in general should apply." (From: http://online.wsj.com/article/SB117379140954435400.html?mod=home_whats_news_us ).
The fundamental difference between Napster and YouTube is the scale of the problem - there are far more YouTube users, than there were Napster users.
The lawsuit was filed after failed licensing negotiations between Google Inc. and Viacom. Viacom asked Google to remove the copyrighted content, which was apparently not done. Viacom vs. YouTube is the biggest problem, but it is not the only problem concerning copyrights of digital entertainment content. TimeWarner has similar worries about its content on YouTube, but it is willing reach a compromise with Google. Universal Music Group vs. MySpace is yet another pending big case worth mentioning (For more on all those cases, see: http://online.wsj.com/article/SB117379140954435400.html?mod=home_whats_news_us ).
The outcome of this case holds great significance. It is possible, that the way this case is resolved might set the benchmark for future issues of similar nature.
Thursday, March 1, 2007
Bleak seasons coming, or just a passing shower?
This week we have once again witnessed that the world is one global market place, and stock markets cannot be viewed in isolation. Tuesday's 9% plunge of the Chinese Shanghai index sent stocks in the US and Europe falling. Dow Jones reacted with a 400 points drop, erasing last week's record high, S&P 500 and NASDAQ also noted substantial losses. (More on that: http://online.wsj.com/article/SB117260706682921020.html and: http://blogs.wsj.com/marketbeat/2007/02/27/china-no-its-not-just-china/ ). The situation is even more serious due to the fact that Far Eastern markets, Chinese in particular have been an attractive place for US and European based capital lately. However, many have probably forgotten that this market carries high volatility along with the attractive returns.
Alan Greenspan also contributed to investors insecurity as the word recession was among the ones he used while speaking to investors in Hong Kong (More on the possible effects of this speech: http://www.ft.com/cms/s/2ad62eba-c6d1-11db-8f4f-000b5df10621.html ). Mr. Greenspan's words were interpreted as a prediction of a recession in this year. The former FED's boss's expert status added weight to the claim and certainly did not help the stock markets, which reacted severely to mixed economic data (See: http://online.wsj.com/article/SB117249340786119234.html ).
Another possible reason contributing to the drop is a apparent change in investors attitudes, which seem to change towards putting capital into less risky investments than before. (The Wall Street Journal reports on that: http://online.wsj.com/article/SB117271330926722830.html?mod=home_whats_news_us ).
Just a Shower, or the eye of the Storm?
All in all, the question rises: was this just a single event, or are encountering a bearish period? US Federal Reserve Chairman Mr. Ben Bernake came to the rescue first on Wednesday, when he confirmed his previous US economy outlook for "moderate growth" and referred to the financial markets as being "closely monitored" and "working well" (See: http://online.wsj.com/article/SB117267441551822115.html ). After that, Mr. Greenspan has down-played the tone of his previous utterance (More on that: http://online.wsj.com/article/SB117272314862823068.html ).
The US market reacted well to those news and even though they did not rise, they stopped the rapid losses, as of now all the major US indices have only very marginal losses (See: http://online.wsj.com/article/SB117275252509823347.html?mod=home_whats_news_us ). The fall in the Treasury bills price may indicate that the investors a willing to bear some risk again.
The long term question remains - are the stock market players going to be more risk averse after this weeks events? Regardless of that - if the moderate growth economic outlook holds for now, investors should be able to record gains on their securities in an intermediate time span.
Alan Greenspan also contributed to investors insecurity as the word recession was among the ones he used while speaking to investors in Hong Kong (More on the possible effects of this speech: http://www.ft.com/cms/s/2ad62eba-c6d1-11db-8f4f-000b5df10621.html ). Mr. Greenspan's words were interpreted as a prediction of a recession in this year. The former FED's boss's expert status added weight to the claim and certainly did not help the stock markets, which reacted severely to mixed economic data (See: http://online.wsj.com/article/SB117249340786119234.html ).
Another possible reason contributing to the drop is a apparent change in investors attitudes, which seem to change towards putting capital into less risky investments than before. (The Wall Street Journal reports on that: http://online.wsj.com/article/SB117271330926722830.html?mod=home_whats_news_us ).
Just a Shower, or the eye of the Storm?
All in all, the question rises: was this just a single event, or are encountering a bearish period? US Federal Reserve Chairman Mr. Ben Bernake came to the rescue first on Wednesday, when he confirmed his previous US economy outlook for "moderate growth" and referred to the financial markets as being "closely monitored" and "working well" (See: http://online.wsj.com/article/SB117267441551822115.html ). After that, Mr. Greenspan has down-played the tone of his previous utterance (More on that: http://online.wsj.com/article/SB117272314862823068.html ).
The US market reacted well to those news and even though they did not rise, they stopped the rapid losses, as of now all the major US indices have only very marginal losses (See: http://online.wsj.com/article/SB117275252509823347.html?mod=home_whats_news_us ). The fall in the Treasury bills price may indicate that the investors a willing to bear some risk again.
The long term question remains - are the stock market players going to be more risk averse after this weeks events? Regardless of that - if the moderate growth economic outlook holds for now, investors should be able to record gains on their securities in an intermediate time span.
Monday, February 19, 2007
Follow up
Over a month passed since the time I have created this blog and life has written new lines to some of the stories present in my previous posts.
Business ethics
Last week's Wall Street Journal presented a couple of interesting stories, which add to the post about unethical behavior of business professionals (http://janbartczak.blogspot.com/2007/01/when-will-they-learn.html).
Siemens seems to be in a lot of trouble as bribery allegations might overlap with a German-Russian big-time telecommunications scandal, deepening the company's problems. The case is even more severe, as the issue is clearly not only unethical, but also unlawful behavior.
An example of handling a similar issue completely differently was given with KPMG and its CEO, who decided to admit to the organizations unlawful practices and tried to eliminate such behavior. These actions apparently saved the company, which faced a threat similar to the one that destroyed Arthur Andersen a couple of years ago.
Securities market
In the post “What does the market hold for the future?” (http://janbartczak.blogspot.com/2007/01/what-does-market-hold-for-future.html), I have discussed the possible effect of various factors on the stock market.
Some time followed since then and a couple of things are clearer now. The stock market is obviously affected by the fluctuations of oil prices, and moves in such industries as the Technology Sector (which particularly holds for NASDAQ).
Through this month the Dow Jones Industrial Average showed strength, as it climbed over 12,700 points, and set yet another record in the high 700’s. It is interesting to see now, how the major indices will react to such factors as lower automobile demand, changes in real estate prices and oil price fluctuations.
Business ethics
Last week's Wall Street Journal presented a couple of interesting stories, which add to the post about unethical behavior of business professionals (http://janbartczak.blogspot.com/2007/01/when-will-they-learn.html).
Siemens seems to be in a lot of trouble as bribery allegations might overlap with a German-Russian big-time telecommunications scandal, deepening the company's problems. The case is even more severe, as the issue is clearly not only unethical, but also unlawful behavior.
An example of handling a similar issue completely differently was given with KPMG and its CEO, who decided to admit to the organizations unlawful practices and tried to eliminate such behavior. These actions apparently saved the company, which faced a threat similar to the one that destroyed Arthur Andersen a couple of years ago.
Securities market
In the post “What does the market hold for the future?” (http://janbartczak.blogspot.com/2007/01/what-does-market-hold-for-future.html), I have discussed the possible effect of various factors on the stock market.
Some time followed since then and a couple of things are clearer now. The stock market is obviously affected by the fluctuations of oil prices, and moves in such industries as the Technology Sector (which particularly holds for NASDAQ).
Through this month the Dow Jones Industrial Average showed strength, as it climbed over 12,700 points, and set yet another record in the high 700’s. It is interesting to see now, how the major indices will react to such factors as lower automobile demand, changes in real estate prices and oil price fluctuations.
Subscribe to:
Posts (Atom)