Sunday, May 29, 2005

Nike says just do it yourself - Yahoo! News

For those of you who were at the Paul Astorino presentation, here is the personalized shoe program that he spoke about in class.

Nike says just do it yourself - Yahoo! News: "he world's largest athletic shoemaker has relaunched a Web site where shoppers design their own shoes, choosing everything from the color of the famous Nike swoosh to personalizing the tongue with a word or phrase."

Saturday, May 28, 2005

Want to go for a bike ride? Or donate to a good cause?

I have registered to ride in the MS 150 series. It is a two day 150 mile (actually 169 mile in this case, but who is counting ;) ) bicylce ride to raise money for the MS society.

It is a good cause so if you would like to learn more about the ride (or a ride near you--it is a national series that I HIGHLY recommend!!!---or if you want to donate to them, why not do it through this link. :)

thanks in advance!!


Friday, May 27, 2005

Personal Finance Advice from Free Money Finance

I am excited about this-- A new finance web site by a football fan and a serious cyclist. It is a total given that I am going to link to it and mention it. What makes this even better is that the site is really good!

It is Free Money Finance.
Free Money Finance

It is not an academic finance site, but it is excellent for those of you looking for solid information about your personal finances.

The advice is dead-on! I especially suggest you all read the Best Financial Advice series.

A quick taste:

From Lesson 2:
"“Spend less than you earn. Successful financial planning really stems from that simple statement. If you retain a portion of your current income, youĂ‚'ll soon ask yourself a question: what should you do with that money? And that question is the beginning of wealth creation."

Great stuff!!! In fact I am going to cross post this on the FinanceClass blog as well.

Thursday, May 19, 2005

Congratulations Graduates!!!

Hi everyone...

I want to apologize for being so late on this. I usually give a "graduation speech" the last day of classes, but with the case presentations in 610 and the Business First Interview for 422, it never happened.


I do want to congratulate you all and to wish you the best of luck in the future and to ask you to stay in touch.

Also here is much of what I would have said, had I had time ;) this is from the fall of 2004.

Congratulations. You have made it. Ok, so maybe it is not graduation time yet, but you are getting there. And minimally you have made it through all but the final from this class.

So I started out with the intent to write about what finance teaches us about life in general. But then I decided to open it up even further. So this entry is what have we learned in the business classes and how can that be incorporated into our every day lives? Consider it your first graduation address.

Accounting: In accounting classes we learned the importance of having checks and balances. We learned how to read a balance sheet and that every event has positive and negative aspects (i.e. you debit some accounts, while crediting others).

Statistics: From Stats classes we learn that few things in life are certain. Therefore, the best we can do is to “play the percentages.” We also learn to make informed decisions.

Economics: Arguably economics is the most all encompassing of any of the classes we have taken. Indeed Finance is just applied economics. So to list everything we learned would take a long time, but a few of the key things we learned: Specialization makes society better off. Free trade makes both sides better off. People maximize their own utility. Things at the margin matter!

Management: Management classes tend to fall into one of two camps. One stresses the interpersonal skills necessary to be a manager. The other camp is more number based—the so-called management science. We learn much from each. From the former we are reminded that leaders are important and that how we interact matters. From the latter, we learn to be efficient, to look for ways to continually improve, and that by basing decisions on quantifiable things we can do things much better.

Marketing: We learned that it is not just what you know, but how you come across. We learned that reputation matters and that psychology is important.

Business Information Systems: In BIS we learned that you have to be technologically competent. We learned that systems are only as good as what you put into them and that systems are only as good as their weakest link.

Finance: Finance is in many ways the key holding all of this together. Finance, in the terminology of economists, finance helps to aggregate all that we have learned in other classes. But finance is even more than that. In finance, we learned
  1. that compounding is very powerful. Let it work for you and not against you. This means to save early, save often, and save regularly.
  2. that taxes and transaction costs matter. Therefore take advantage of tax advantaged investment accounts and watch excessive fees and trading costs.
  3. that markets are pretty efficient (although maybe not perfectly so). This means that there is no free lunch so when things sound too good to be true, be skeptical.
  4. that too much debt is a bad thing. Financial distress does not just happen to firms. Be careful about borrowing. Used correctly, debt is a great tool. Used incorrectly, it leads to many problems.
  5. that governance matters. Just like by structuring contracts differently can influence a firms’ market value, so too our own governance influences our returns.
  6. that luck sometimes is good and sometimes bad. Plan for the worse, but hope for the best!
  7. that investment is important. So invest in your assets—all of your assets. Your assets include your investments (stocks, bonds, mutual funds, etc), tangible assets (real estate, baseball cards, car, etc), and intangible (reputation, goodwill, your friends, your health, your mind). What does this mean? It means that while you care for your bank balance, your real property, don’t forget your friends, your family, your health, and your reputation. Sure it may not always be fun—(driving to see a sick friend never is), but do it anyways! (see next item)
  8. to think long term. Not only is most of a stock’s value derived from long term growth, so too is our value. The Enrons, the Worldcoms, and others forgot this. Sure you may have to pass up some things you want, but in the long run you will be glad you did! (indeed, drug addicts have some of the lowest discount rates known: they discount the future for short-term gains.)
  9. Both diversification and specialization have their places. On one hand specialization allows us to be very good at something. However, in a constantly changing world, too much specialization can be very risky. Moreover, too much of anything will lead to staleness (and often is bad for your health too). So have varied interests, be willing to learn new things, and never stop learning.
  10. that there are many ways increase utility. Money is not the only thing that makes people happy. People are REMMs and care about all things. More money is good, but so too are more free time, a better standard of living, and a clean conscience. How you draw your indifference curves is a personal decision.

    To these, I would also add the importance of
  • staying confident—many of you sell yourselves short. Both collectively and individually. I am not sure if it is a function of going to a small school, or not. But you should not sell yourself short!!! IF YOU WANT IT TO BE, the education you get here is every bit as good as you could get at any school in the world. Too many of you use “it is too hard” or “no one else is doing it” or “I can’t do it” as an excuse. You can do it. You just have to want to do it!
  • never get too worried about money. Yes, it is money. Yes, it matters, but only to a degree. I’ve seen too many people destroy themselves (physically and mentally) over money. Do not let it happen to you. This may mean some advanced planning and might mean you do not have the fanciest car, or the largest TV. But who cares? Along these lines, the best definition of wealth I have ever heard is Wealth = monetary wealth / wants.
  • staying active. Both physically and mentally. It is way too easy to stop. Don’t stop! Learn something new every day. Read, risten, take classes. Do some physical activity every day. Run, bike, walk, you name it! But to quote Nike, JUST DO IT! You will be glad in the long run!
  • having fun! Life is too short to not have fun! Find hobbies that you like doing. But also at work. Remember: Work should be enjoyable, not something you have to do!!! as Anthony Annuziado said in our class: find a job you love and you'll never have to work a day in yout life!

    See, I told you finance was everything :) Good luck and keep in touch!!! jim

Wednesday, May 18, 2005

Too Stressed To Think?

See why I always say to relax for tests...I am vindicated :)

Too Stressed To Think?: "Chronic stress can be harmful - to your health and also to your brain, according to researchers at the Douglas Hospital Research Center. Their findings, published in a recent issue of Psychoneuroendocrinology, show increased stress hormones lead to memory impairment in the elderly and learning difficulties in young adults."

Monday, May 09, 2005

422 exam

Against my better judgement, I will allow print-offs of the powerpoint notes.

That said, I would warn you, that the test will be challenging and Iwould anticipate that you may not have enough time to read over all of the notes during the exam ;)

The test is cumulative. I am not done making it yet, but anticipate several in depth problems.

Good luck!

Tuesday, May 03, 2005

Review Class and test info

An OPTIONAL review class will be offered from 2 to 3:15ish on Thursday. Murphy Aud C.

The test for Monday's 610 class will be at 6pm on Monday in MURPHY AUD C.
The test for Thursday's 610 class will be at 6pm TUESDAY in Murphy AUD C.

For the 610 exams (including the Five Week version), you are allowed a cheat sheet (front and back--8.5 by 11 inches). You can (if you so desire) also bring present and Future value tables.

The test for Fin 422 will also be offered at 6pm Tuesday in Murphy Aud C---It is open book.

For those of you taking it in the auds, Be sure to spread out as far as possible . Given what happened last time, I want no one in near proximity of anyone else. Use all rows and expect me to move you again (nothing personal, but I am not going through that again!)

Also for the extra credit I have only recieved a few questions, you have until Wed afternoon to email me your questions. You will have a minimum of 1% added to your exam for each MC that makes the test. (note that is about 3 points).

Good luck!

Sunday, May 01, 2005

More job tips from the WSJ

CollegeJournal | Search Strategies: "The essence of good networking is the giving part, not the getting, and it takes time for someone who has just started to network to put enough deposits in the friendship bank to be able to make withdrawals. What have you done for the people you have called that would make them want to help you? Presumably, you want to be recommended for a job, referred to a hiring manager or be told of openings. I don't know about you, but I wouldn't give a referral or recommendation to anyone I didn't know well, especially someone who called me out of the blue. That's because I'm on the line if a person I refer doesn't work out. I wouldn't put my reputation at risk for just anyone.

Job hunters who network only because they need a job are the worst kind of networkers, says Ms. Nierenberg. She calls them 'hit-and-run networkers.'

'People who say they tried networking and it isn't working make me laugh, because they expect something overnight,' she says. 'But it's a process of relationship building, becoming an advocate for other people and creating trust"

St. Bonaventure University WNY Stock Index

The site is not done yet, but wanted people to see it before the press does

It is the project for Fin422. I will let people know again (and put it on the FP blog) when it is complete.

St. Bonaventure University Finance WNY STock Index

please let me (or any of the contacts listed below) of any comments or errors that you see. Thanks!

Tofu call options? Why not!

I had a student IM me about derivatives, I both sort of liked my response (yeah I am biased!) and also wanted to comply with Reg FD. So here you go: for derivatives, they are not easy to grasp...think of options like coupons for a product...when is the coupon valuable?

Consider the various variables that might affect the value of the coupon:
  • time to expiration--the longer, the more valuable
  • price on coupon--the lower, the more valuable
  • price of the product you are buying (technically, the difference between the coupon price and the market price)--the higher, the more valuable
  • the price variation of the product--the higher the variation, the more valuable the coupon

This last one (variation--or in finance-speak volatility) needs more development...

Suppose I give you two coupons each having a three month life. One is to buy tofu at 2.39 at any point in the next three months, the second coupon is to buy a gallon of gas at $2.39.

terminology: the tofu and gas are the underlying assets.

Q. Supposing you buy both gas and tofu equally often--(I do!)--which coupon is more valuable?

A. The gas coupon. Why? Since the price of gas is very volatile whereas tofu's price is very stable.

Think about it, I never remember seeing tofu selling for more than $2.39, whereas there is a pretty good chance that at some point over the next three months Gas will sell for more than $2.39.

What our option pricing models (for example Black Scholes) do is to calculate the valuation of the "coupon", really a call option--giving you the right, but not the obligation" to buy the underlying asset at an agreed price (the price on the coupon or the STRIKE price).

I hope this helps! I know it is a sort of stupid example, but I am a big believer is understanding things intuitively, and coupons are something we all have experience with, so ???