How Blockchain Is Changing Finance

Harvard Business

After all, how do you cut cost from a business or market whose structure has fundamentally changed? Menlo Park venture capital firm Andreessen Horowitz joined USV in investing in Polychain Capital , a hedge fund that only buys tokens. Done right, ICOs can not only improve the efficiency of raising money, lowering the cost of capital for entrepreneurs and investors, but also democratize participation in global capital markets.

How Blockchain Applications Will Move Beyond Finance

Harvard Business

It’s not surprising that some of the closer-to-market applications of the technology are in the financial sector. See More Videos > See More Videos > The same applies to trade finance and financial assets, where companies such as Digital Asset Holdings (run by JPMorgan veteran Blythe Masters ), Blockstream, and Chain are trying to revolutionize how assets are issued and traded. Currency Financial markets Technology Financial Services Technology Digital Article

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The Marketing Strategy: What You REALLY Need To Know

Strategy Driven

Your business thrives on how effective its marketing strategy is. Marketing is a concept that can almost consume a business that hasn’t got its strategy in order. Most businesses place a vast proportion of their budget towards marketing and its various sub-categories. In terms of your marketing approach, you need to take into account how you are communicating your business brand via your imagery. The next approach to your marketing strategy is to work on the brand.

How Hedge Funds Create Criminals

Harvard Business Review

Hedge funds are playing the role of Wall Street villain again. Then came the November 22, 2010 raids of three hedge fund headquarters by FBI agents who seized documents and confiscated BlackBerries. Now authorities are serving subpoenas on other, larger hedge and mutual funds. These events raise suspicion that many hedge fund traders may have succeeded at beating the market not through careful research and original analysis but by breaking the law.

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What If Google Had a Hedge Fund?

Harvard Business Review

Acutely aware of the competitive edges timely data offers sophisticated investors, the company's ever-entrepreneurial cofounder once proposed that Google launch a hedge fund. Google may not have a hedge fund, but it's unlikely that high IQ hedge funds aren't using Google's data to better manage their own situational awareness and risk. What kind of hedge funds might an Amazon set up (remember, Jeff Bezos actually came from a New York hedge fund)?

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When an Activist Hedge Fund Thinks a Company’s Salaries Are Too High, Who’s Right?

Harvard Business Review

The hedge fund founded and run by billionaire Paul Singer just announced that it now owns 6.2% Its IPO in 1999 was a sensation ; by autumn 2000 its market capitalization topped $65 billion and the ratio of its stock price to the next year’s projected earnings was a staggering 483. Its high-end Internet routers were gaining share on market-leader Cisco, and the sky was the limit. Most activist hedge funds are simply pushing a less extreme version of the same basic idea.

IPO 8

Women, Finance the World You Want

Harvard Business Review

So if you feel uncomfortable as an investor, here are two bullets to pack in your pistol: Investing is about financing dreams. Some of the dreams I finance are close to home. Investing also finances the kind of world we want. Only 5% of venture capitalists, 12% of angel investors, and less than 3% of hedge fund managers are women. To wit, a study by Hedge Fund Research Inc. Finance Gender

P&L 8

The Fastest-Growing Cause for Shareholders Is Sustainability

Harvard Business

Ask someone to name the demands that activist hedge funds make of companies and they’ll likely list corporate governance issues like board changes and executive compensation, or perhaps some form of restructuring. In contrast, fair marketing and advertising of products are very important for companies in these sectors. We also found that subsequent to filing shareholder proposals, targeted firms experienced changes in market valuation. Paul Garbett for HBR.

Calculating the Market Value of Leadership

Harvard Business Review

In recent years, investors have learned that defining the market value of a firm cannot just be based on finances. But recently, these financial outcomes have been found to predict only about 50% of a firm’s market value. Realizing the market value of leadership could also have a significant impact on many organization processes: risk management, governance, social responsibility, reputation, and leadership development.

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The Dark Side of Efficient Markets

Harvard Business Review

It is generally accepted that efficiency represents the optimal, aspirational state for any market. Efficient markets, which feature many buyers and sellers and perfect information flowing between them, determine the “right price” and hence allocate society’s resources optimally. The shadow of an efficient market is increased price volatility — quite the opposite of what we expect from efficient markets. Think about how markets evolve.

3 Emerging Market Risks Companies Should Watch for in 2018

Harvard Business

This means that many emerging market risks get cut from the senior leadership agenda. They did not spend as much time thinking about local events that have implications for their emerging market operations. We identified three emerging market risks that are top multinational leaders should be paying more attention to this year: the election of populists in Brazil and Mexico increasing the cost of doing business. Emerging Markets Require a Risk-Reward Balancing Act.

What Markets Do and Don’t Get About Innovation

Harvard Business Review

In 2007, Clayton Christensen co-founded Rose Park Advisors, a hedge fund devoted to investing in disruptive companies. Disruptive innovation can take several forms, and the market understands some types better than others. But do markets really follow the logic of an academic theory? New market disruptive – a cheaper, more accessible, and worse-performing product that turns non-consumers into customers. Mostly, though, markets get things right.

Does Your Startup Have a Spending Strategy?

Harvard Business

You have to consider salaries, marketing budget, office size, technology services, and on and on. Too often, assumptions about the potential market and its clients can cloud our judgement about expenses. After managing a sleeve of a successful hedge fund in London for five years, and building ample savings, Colin was ready for his own shop. Entrepreneurial finance Budgeting Costs Entrepreneurial management Digital ArticleCatherine Ledner/Getty Images.

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Research: How Investors’ Reading Habits Influence Stock Prices

Harvard Business

A cornerstone of efficient and transparent markets is freely available information. In 2001 professors Gur Huberman and Tomer Regev of Columbia University drew attention to a peculiar sequence of market reactions to news regarding a cancer research breakthrough licensed by biotech firm EntreMed. And reprints of old news continue to spur market reactions. In “When Can the Market Identify Stale News?” Financial markets Digital Article

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5 Leadership Lessons I Learned from A Billionaire Investor: Ray Dalio

Strategy Driven

The name of hedge fund billionaire Raymond Dalio triggers emotions of adoration, admiration, and even dislike. Born in 1949, the American investor, philanthropist, and hedge fund manager is the founder, Co-Chief Investment Officer, and Co-Chairman of Bridgewater Associates, one of the world’s leading hedge funds with a more than $130 billion in assets under management. billion, Dalio started investing at the age of 12 and his life has revolved around finance.

Hedge 50

Startups Could Fundamentally Change the Way Big Investors Operate

Harvard Business

This disconnect is a major problem for the continuing development of efficient capital markets. Given their size and appetite for diversification, these gigantic investors are a significant source of financing for many companies and governments in the developed world, and their investment activities can and do move markets. Financial markets Digital ArticleInnovation has the potential to transform the investment industry.

Should Dual-Class Shares Be Banned?

Harvard Business

Some of the largest companies of recent times by market capitalization, such as Facebook, Alphabet, and Alibaba, carry dual class-shares. Firms with growth opportunities as well as the need for external equity financing often convert to dual-class shares. MSCI’s recent analysis shows that unequal voting stocks outperformed the market over the period from November 2007 to August 2017. Financial markets Business law Policy Digital Article

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Uber Is Finally Realizing HR Isn’t Just for Recruiting

Harvard Business

As Pete Ramstad and I note in Beyond HR , leaders often have far better developed frameworks for the value proposition of the finance function than for HR. Uber apparently lacked oversight about sexual harassment behavior; it seems far less likely that such oversight would be lacking when it comes to finance. That is like setting up a finance organization to do exotic risk hedging before putting in place basic reporting and compliance.

3 Things Driving Entrepreneurial Growth in Africa

Harvard Business

Firms are realizing what microfinance has known for a while: Local self-policing groups, or village headmen who police honor codes, can hedge cash flows in far-flung places. In Kenya six would-be bikers jointly enter Toyota’s Crux Finance scheme, pay down Sh8,000 ($94) each, and start riding for as little as Sh355 ($4.20) a day, often as boda boda taxis. Emerging markets Africa Digital Article

Research: Index Funds Are Fueling Out-of-Whack CEO Pay Packages

Harvard Business

On average, common ownership concentration has almost doubled in the last 20 years in the construction, manufacturing, finance, and services sectors. market capitalization ) and 500 additional public companies. We studied those pay packages in relation to the firm’s performance, rival firms’ performance, measures of market concentration, and common ownership of the industry. Executive compensation Financial markets Competition Financial Services Digital Article

Bill Ackman Is Just Doing God's Work

Harvard Business Review

Everybody has been piling on to hedge fund manager Bill Ackman lately. Or at least the market''s. Ackman''s short-selling campaign against vitamin distributor Herbalife has blown up in his face, with the company''s stock up more than 75% since he unveiled his position last December and some of his most prominent hedge fund competitors profiting from his misery. That''s what activist hedge fund managers like Ackman do. Boards Competition Finance

Can Your Company Survive a Bubble?

Harvard Business Review

The trio (respectively, a finance professor at Cornell, an applied-math Ph.D This is the kind of thing that can drive people outside of quantitative finance a little crazy ; there's no reference to company fundamentals, just "sophisticated volatility estimation techniques combined with the method of reproducing kernel Hilbert spaces." My sense is that any company that finances itself this way is a fraud, so the best advice for executives is probably turn yourselves in.

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Questioning Claims That Are Too Good to Be True

Harvard Business

So when people believe that they have a strong understanding of a subject — say, finance — they tend to overclaim more, asserting that they know concepts that researchers present to them, even when the concepts are made up. After one hedge fund I know had a horrendous quarter, the managers wrote to clients, saying that they were concentrating 70% of the entire fund into only five stocks. A very concentrated portfolio won’t help if the whole market collapses.

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What Happened to Goldman Sachs?

Harvard Business Review

Update: Politico's Ben White did have a brief testimonial from hedge fund manager and Goldman client Whitney Tilson this morning.) For one thing, it means Goldman's most important customers are no longer nonfinancial corporations out to build real-world businesses, but hedge funds, banks, and other financial players who are often out to put one over on Goldman. Customer service Finance Leadership

Hedge 13

How the Carl Icahns of the World Benefit Firms but Not Workers

Harvard Business Review

There are two stories you can tell about finance in America. ” Both stories contain some truth, as a forthcoming study of activist hedge funds demonstrates. The early activists were pension funds, but starting in the 1990’s some hedge funds adopted the strategy. The number of companies targeted by activist hedge funds has increased dramatically since then, to more than 200 in 2013. Financial markets Labor Article

What the Lending Club IPO Means for Business

Harvard Business Review

And, as The Wall Street Journal reports, the Lending Club IPO will likely be followed by public offerings by similar lenders, some even more focused on the small business credit market. According to Mills’ research, “most [peer-to-peer lenders] are large institutional investors such as hedge funds and investment banks.” Finance Small/medium business Technology

How To Make Companies Think Long-Term

Harvard Business Review

Many companies face quarterly or even more immediate pressure from their shareholders (increasingly made up of hedge funds, program traders, and day traders) to deliver short-term performance. For corporations to make the required long-term investments in production, marketing, etc., A huge hedge fund that buys 2% of the shares of the company but holds them for two days is worth less to the corporation than a long-term investor that holds a fraction of 1% of the shares for a decade.

Why the U.S. Needs More Worker-Owned Companies

Harvard Business

And some companies with employee majority-owned stock programs, such as Publix Super Markets and outerwear maker W.L. Third, as a result of strong performances by worker- and employee-owned companies, it is becoming easier for workers to overcome arguably the biggest hurdle to worker buyouts: financing. That’s because a growing number of funders, both social impact funds and traditional institutions, are interested in financing workers’ takeover of a company.

ESOP 36

Should HSBC Stay or Should It Go?

Harvard Business Review

It would hardly make sense, therefore, for a US firm to go and locate its headquarters in China or Brazil, even though these are large, fast-growing markets. The UK hardly seemed like an alternative high-growth market. British clearers were also a license to print money back then, so although growth prospects were limited, they made a good, cash-generating strategic hedge. Finance Global business

What the Great Fama-Shiller Debate Has Taught Us

Harvard Business Review

I think he got the Nobel nod (instead of somebody like Andy Lo , or Mordechai Kurz , or Roman Frydman ) because he was (1) very early to the game, (2) a macroeconomist (the Nobel people generally seem more comfortable with macro than with finance), and (3) most suited to being shoehorned into a narrative of steady scientific progress. The way to test this, Fama said, was in conjunction with a theory of “market equilibrium under uncertainty.” Economy Finance Managing uncertainty

SAC and the Strange Focus on Insider Trading

Harvard Business Review

Five years after a financial crisis that, as best anybody can tell, had almost nothing to do with insider trading by hedge funds, the two biggest post-crisis criminal crackdowns on the financial sector in the U.S. insider trading by hedge funds. against SAC founder and chief Steve Cohen, but on Thursday he charged the hedge fund itself with "insider trading that was substantial, pervasive, and on a scale without known precedent on the hedge fund industry.".

Is Economics Ready for a New Model?

Harvard Business Review

In the sense that financial markets and the economy in general are far more fragile than most mainstream economists contemplated before 2008, there was a bit of unlearning done in the 1990s and early 2000s. The 1987 stock market crash was a scare. So were the currency and debt crises of 1997 and 1998, and the stock market collapse of 2000-2002. Disruptive innovation Economy Finance

Great Leaders Make Decisions | N2Growth Blog

N2Growth Blog

It was Andy Grove the former Chairman and CEO of Intel and Time Magazine’s 1997 Man of the Year who said “You have to take action; you can’t hesitate or hedge your bets.

Blog 257

Do Commodities Speculators Make Things Cost More?

Harvard Business Review

Or is the problem simply that speculators have taken over the market for a crucial commodity? Markets that existed mainly for the convenience of industry have become dominated by exchange-traded funds, hedge funds, and investment banks. So, on balance, having a futures market appears better than not having a futures market. But the new commodities market participants may have made things worse, as Kocieniewski''s aluminum findings seem to show.

Why Bankers Need to Be Put Into Little Boxes

Harvard Business Review

There's a beguiling little moment in the financial-crisis documentary Inside Job where hedge fund billionaire George Soros describes the principles of oil tanker design. Financial markets are like that, Soros goes on. largely represented departures from our traditional community banking model, a model based on lending in the markets where we live and work to people and enterprises whom we know. Compensation Ethics Finance

What If Socially Useful Jobs Were Taxed Less Than Other Jobs?

Harvard Business

The job market does not account for all social value. On the other hand, some sectors involve “zero sum” endeavors, in which profits come at the expense of other market participants. Examples include excessive litigation or financial traders trying to beat the market. Our data shows, for instance, that 18% of multimillionaires work in finance, while only 1% of them are professors and scientists. This fall, college seniors across the U.S.

Hedge 30

Could a Four-Year-Old Do What Carl Icahn Does?

Harvard Business Review

He is no Jim Simons , using his mathematical genius to outsmart the market in (to an outsider) incomprehensible ways. In fact, the random walk and efficient market hypotheses were making their way out of the University of Chicago and MIT just as Icahn was getting his start on Wall Street (he went to work as a stockbroker in 1961, and started his own firm in 1968). Apple Finance Skill vs. luck

Idle Funds are the Devil's Playground

Harvard Business Review

vision of financial world order; as Time magazine reported, he was "bursting with hubris over its booming equity markets and its just-announced 5.6% He cited the International Monetary Fund's 1997 judgment that "Malaysia is a good example of a country where the authorities are well aware of the challenges of managing the pressures that result from high growth and of maintaining a sound financial system amidst substantial capital flows and a booming property market."

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When High-Return Bank Businesses Go Bad

Harvard Business Review

financial institution has pulled back or failed, there has almost always been a European bank or a Japanese bank or some other player willing to take over its trading operations or enter the market in its place. The bank's chief investment office, where the losses occurred, was charged with protecting JP Morgan from financial market volatility by trying to hedge bets made by other parts of the bank. Boards Finance Risk management

Hedge 11

If Crowdfunding is the New Day Trading, Look Out

Harvard Business Review

In an essay earlier this week on the evolution of money and finance, GigaOM founder and venture capitalist Om Malik argued that crowdfunding will be the new day trading, the latest financial innovation to “cut costs and [drive] wider participation in a previously closed and clubby market.” Now startups and hedge funds alike can advertise the fact that they’re raising money, and some day soon you or I might join wealthier citizens in investing in them.

Who Killed the GE Model?

Harvard Business

Unlike a pure holding company or a modern hedge fund, the GE model intended to create value by actively sharing capabilities among its disparate businesses, which, with one important exception, were all rooted in manufacturing. The model was honed by Jack Welch in the 1980s and 1990s, with new portfolio restructuring strategies and a headlong expansion into finance. It was developed by Japan and South Korea in the 1980s and is used widely by emerging markets from Brazil to India.

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High Frequency Trading: Threat or Menace?

Harvard Business Review

There’s a wonderful scene (one of many) in Michael Lewis’s new book, Flash Boys: A Wall Street Revolt , in which John Schwall, then the head of product management at RBC Capital Markets in New York, decides one day in 2011 to figure out how stock trading had evolved into a high-speed, unfair race he thought it had become. Every systemic market injustice arose from some loophole in a regulation created to correct some prior injustice. Ethics Finance Technology

Should Tim Cook Care About a 10% Stock Drop?

Harvard Business Review

In after-hours trading, the company’s share price fell 9% — representing $44 billion in lost market value. 2012) to $385 (last April) — a difference of almost $300 billion in market capitalization — and back up to $555 before this latest earnings report. Even Shiller seems to mostly agree with his teacher Paul Samuelson’s saying that the stock market is “micro efficient but macro inefficient.” This isn’t a failure of markets.