NBN Interview with JC de Swaan: Seeking Virtue in Finance

JC de Swaan does not shy from a challenge. In his new book, Seeking Virtue in Finance: Contributing to Society in a Conflicted Industry (Cambridge University Press, 2020), de Swaan, argues that it is possible to work in finance and not fall prey to the worst ethical ills of a profit maximizing industry. A lecturer at Princeton and partner in at Wall Street hedge fund, de Swaan spent years chronicling examples of virtuous behavior in finance. He distills his research into four “pillars” of ethical behavior for financial professionals. They include 1. Customers first, 2. Social wealth creation 3. Humanistic leadership  and 4. Engaged …

Continue Reading

Are vanishing dividends a good idea? Hardly.

Exercising business ownership through the stock market is hard enough. The pressure to be a stock speculator is overwhelming. And it just got a little harder. A Bloomberg Opinion column from October 20, entitled, “Those Vanishing Stock Dividends Should Stay That Way,” took up the case of a junk rated (BB), highly cyclical mining company that cancelled its miniscule dividend in March of this year. The piece trumpeted that the stock’s share price rallied sharply off the bottom of the market that month. The author wrote that “shareholders appeared to send the message that they would prefer [the company] put …

Continue Reading

A thoughtful dissent from the ruling investing orthodoxy…..

Aswath Damodaran’s recent Musing on Markets blogpost (from Sept 21) offers a thoughtful dissent from the ruling orthodoxy on ESG investing. He highlights how the current “hype” (his word) leaves critical analytical questions “unanswered or answered sloppily.” For example, he asks,  “Do companies perform better because they are socially conscious (good) companies, or do companies that are doing well find it easier to do good?” If the latter, “researchers will find that ESG and performance move together, but it is not ESG that is causing good performance, but good performance which is allowing companies to be socially good.” He points …

Continue Reading

NBN Finance Interview with Tom Levenson: Money for Nothing

Modern finance isn’t really all that modern. Three centuries ago, Great Britain’s need for money to fight its wars, the appearance of joint stock companies, and the emerging quantification of all aspects of life converged to create new notions and forms of money and investments. And then there was a spectacular bubble in 1720. The South Sea stock rose and fell quickly, but the financing structures remained and last to this day in evolved form. In his new book Money for Nothing: The Scientists, Fraudsters, and Corrupt Politicians Who Reinvented Money, Panicked a Nation, and Made the World Rich (Random House, …

Continue Reading

Same problem–global warming–but very different answers.

Is there a consensus on the best response to global warming? Not even close. Left and right both bring their own tools, math, and, most notably, agendas–climate related and non-climate related–to their policy prescriptions. From the economic right, Bjorn Lomborg offers economic growth to increase adaptation to a warming planet, as well as market-based innovation to mitigate carbon generation. From the left, Robert Pollin (and his co-author Noam Chomsky) put forth an Eco-Socialist New Green Deal. Listen to the NBN interview with the former here, and with the latter here.

Continue Reading

NBN Interview with Robert Pollin: Climate Crisis and the Global Green New Deal

Economist Robert Pollin has teamed up with Noam Chomsky to produce a manifesto for the New Green Deal in Climate Crisis and the Global Green New Deal: The Political Economy of Saving the Planet (Verso). Their plan attempts to keep the planet from heating up too much while simultaneously redressing the economic wrongs that they blame substantially on unfettered capitalism. Not everyone will agree that eco-socialism is the answer to global warming, but all participants in the debate will want to understand the wide range of policy proposals that are being brought to the table. Listen to the NBN interview here.

Continue Reading

NBN Interview with Joshua Greenberg: Bank Notes and Shinplasters

What is money? Really, what is money? It turns out that the answer is not so simple. During the course of the 20th century, most of us have gotten used to the notion of a single medium of exchange based on Federal Reserve notes which we call dollars. They look the same, feel the same, and have the same use everywhere in the country. We are so comfortable with that medium of exchange that we are now increasingly doing away with the paper and accepting a digital version of said money. The convenience of having a single and stable currency …

Continue Reading

May you live in interesting times….

The stock of an upstart but very successful EV company is currently trading at 144 times the average of 2020, 2021, and 2022 forecast consensus earnings. That’s an earnings yield of 0.7%. In contrast, an older telecommunications company that has focused in recent years on its “network” is trading at 12 times the average of forward earnings. Its earnings yield on forward consensus earnings is 8.3%.  Few if any investors are doing the math of cashflows and discount rates when considering the former company, but it is still permissible and interesting to think about such things. Maybe theories of value …

Continue Reading

Heretical views!

Managing a portfolio based on cashflows? Heresy! Well, maybe not. Others are also making arguments similar to mine in Getting Back to Business. See Jim Garland’s 2019 CFA Institute Research Foundation Brief, introduced by Laurence Siegel. Thanks to Will Goetzmann for the link here .      

Continue Reading