Colonial American Paper Money and the Quantity Theory of Money: An Extension -- by Farley Grubb
How Migration Can Change Income Inequality? -- by Assaf Razin, Efraim Sadka
DGCX Crosses 6 Million Contracts
Year-to-date (YTD) trading volumes on the Dubai Gold & Commodities Exchange (DGCX) crossed 6 million contracts in April 2016, growing 45% over the same period last year whilst maintaining a steady Average Daily Open Interest of 109,487 contracts.
read more...Nasdaq Nordic And Baltic Markets Trading Statistics April 2016
Nasdaq (Nasdaq:NDAQ) today publishes monthly trade statistics for the Nordic1 and Baltic2 markets. Below follows a summary of the statistics for April 2016:
read more...EEX: Volume In Power Derivatives Exceeds 400 TWh For The First Time
The monthly volume on EEX’s power derivatives market amounted to 416.3 terawatt hours (TWh) in April 2016 which is an increase of nearly 150% compared to April 2015 (167.1 TWh). Furthermore, this represents a new monthly record that significantly exceeds the previous record of 332.4 TWh traded in January 2016.
read more...Governor Markell Launches Delaware Blockchain Initiative - Reflects Stateâs Commitment To Innovation And Embracing The New Economy
Governor Jack Markell today announced a groundbreaking initiative by the State of Delaware to embrace the emerging blockchain and smart contract technology industry, which can help the public and enterprises lower their transactional costs, speed up and automate manual processes, and reduce fraud.
read more...THE STARTUP CHECKLIST 25 Steps to a Scalable, High-Growth Business
David S. Rose's book THE STARTUP CHECKLIST: 25 Steps to Scalable, High-Growth Business applies the dual perspective of an angel investor and serial entrepreneur to give entrepreneurs the truth about the crucial dos and don’ts they need to take to get a business started and to attract capital. |
Five Dimensions of Employee Engagement
We wanted to use our discussions with managers and a review of the literature to understand how employee attitudes and behaviors affected company performance. This led us to define employee engagement as âa multidimensional construct that comprises all of the different facets of the attitudes and behaviors of employees towards the organization.â7 The five dimensions of employee engagement are: employee satisfaction, employee identification, employee commitment, employee loyalty and employee performance.
Funny Take on Interview Mistakes!
Turnover At Deutsche Börseâs Cash Markets At 110.2 Billion Euros In April
Order book turnover on Xetra, Börse Frankfurt and Tradegate Exchange across all asset classes stood at €110.2 billion in April (April 2015: €137.1 billion).
read more...ESMA Amends MiFID II Standards On Non-Equity Transparency And Position Limits
The European Securities and Markets Authority (ESMA) has issued today two Opinions proposing amendments to its draft Regulatory Technical Standards (RTSs) under the Markets in Financial Instruments Directive (MiFID II) and Regulation (MiFIR). ESMA proposes to revise the RTS on non-equity transparency – which includes requirements in respect of bonds, structured finance products, emission allowances and derivatives – and the RTS on the methodology for the calculation and application of position limits for commodity derivatives. The Opinions were produced in response to proposed amendments by the European Commission to these draft RTSs.
read more...Trading Statistics April 2016 - Eurex Exchange: ADV 6.1 Million Contracts, ISE: ADV 2.3 Million Contracts
In April 2016, the international derivatives markets of Eurex, part of Deutsche Börse Group, recorded an average daily volume of 8.4 million contracts (April 2015: 8.3 million). Of those, 6.1 million were Eurex Exchange contracts (April 2015: 5.9 million), and 2.3 million contracts (April 2015: 2.4 million) were traded at the New York based International Securities Exchange (ISE). The volume traded on the spot and derivatives power markets of the European Energy Exchange (EEX) amounted to 416.3 terawatt hours (TWh). Eurex Repo recorded in all markets in April 2016 an average outstanding volume of 150.8 billion euros.
read more...PEGAS Trading Volumes In April 2016 - PEGAS Volume Doubles Year-On-Year
The pan-European gas trading platform PEGAS registered a total volume of153.7 TWh in April 2016, which represents almost the double of the volume traded over the same period last year (April 2015: 77.0 TWh). The increase was driven by a volume increase on the futures market with 104.2 TWh (April 2015: 30.5 TWh).
read more...The European Federation Of Investors And Financial Services Users: Democratic Oversight Financial Reporting Standards Found Lacking By European Parliament
The Committee on Economic and Monetary Affairs (ECON) of the European Parliament (EP) voted on the text of an own-initiative report evaluating the International Accounting Standards (IAS) and highlighting some of the shortcomings in the standard-setting activities of the International Financial Reporting Standards (IFRS) Foundation and the European Financial Reporting Advisory Group (EFRAG).
read more...MGEX Reports 12th-Highest Monthly Volume Of All-Time
MGEX, a Designated Contract Market (DCM) and Derivatives Clearing Organization (DCO), reports a total volume of 212,021 from the month of April, making it the 12th-best month in the history of the Exchange.
read more...DCF Myth 3: You cannot do a valuation, when there is too much uncertainty!
- Low Interest Rates: In my post on negative interest rates, I pointed to the fact that as interest rates in many of the leading currencies have dropped to historic lows, risk premiums have increased in both stock and bond markets. The expected return on the S&P 500 in early 2008, before the crisis, was 8% and it remains at about that level today, even though the treasury bond rate has dropped from 4% to less than 2%, but the equity risk premium has risen to compensate. Even though the expected return may be the same, the fact that more of it can be attributed to a risk premium will increase the market reaction to news, in both directions, adding to price volatility.
- Globalization: Globalization has not only changed how companies and investors make choices but has also had two consequences for risk. The first is that there seem to be no localized problems any more, with anyone's problem becoming everyone's problem. Thus, political instability in Brazil and too much local government borrowing to build infrastructure in China play out on a global stage, affecting stock prices in the rest of the world. The second is that the center of global economic power is shifting from the US and Europe to Asia, and as it does, Americans and Europeans are starting to bear more of world's economic risk than they used to.
- Media/Online Megaphones: As an early adopted of technology, I am far from being a Luddite but I do think that the speed with which information is transmitted around the world has allowed market risks to go viral. It is not just the talking heads on CNBC, Bloomberg and other financial news channels that are the transmitters of these news but also social media, as Twitter and Facebook become the place where investors go to get breaking investing news.
- Paralysis and Inaction: The most common reaction to uncertainty, in my experience, is inaction. "There is too much uncertainty right now to act" becomes the refrain, with the promise that action will come when more of the facts are know. The consequences are predictable. I have friends who have almost entirely been invested in money market funds for decades now, waiting for that moment of clarity and certainty that never seems to come. I have also talked to investors who seem to view investing when uncertain as a violation of value investing edicts and have found themselves getting pushed into smaller and smaller corners of the market, seeking elusive comfort.
- Denial and Delusion: At the other end of the spectrum, the reaction that other investors have to uncertainty is go into denial, adopting one of two practices. The number crunchers fall back on false precision, where they add more detail to their forecasts and more decimals to their numbers, as a defense against uncertainty. The story tellers fall back on story telling, acting as if they have the power to write the endings to every uncertain narrative, when in fact they have little control over either the players or the outcome.
- Mental Accounting and Rules of Thumb: The brain may be a wondrous organ but it has its own set of tics that undercut investing, when uncertain. As Richard Thaler has so convincingly shown in his work on mental accounting, investors and analysts like to use rules of thumb, often with no basis in fact or reality, when making judgments. Thus, a venture capitalist who is quick to dismiss the use of intrinsic value in a young start-up as too fraught with estimation error, seems to have no qualms about forecasting earnings five years out for the same company and applying a price earnings ratio to those earnings to get an exit value.
- Outsourcing and Passing the Buck: When stumped for answers, we almost invariably turn to others that we view as more knowledgeable or better equipped than we are to come up with solutions. Cynically, you could argue that this allows us to avoid taking responsibility for investment mistakes, which we can now attribute to consultants, text book writers or that person you heard on CNBC.
- Prayer and Divine Intervention: The oldest response to uncertainty is prayer and it has had remarkable staying power. There are large segments of the world where big investment and business decisions are preceded by prayers and divine intervention on your behalf.
If you are a value investor, you will notice that I have not mentioned one of value investors' favorite defenses against uncertainty, which is the margin of safety. Seth Klarman is one of my favorite investment thinkers but I am afraid that the margin of safety, at least as practiced by some in the investing community, has become an empty vessel, an excuse for inaction rather than a guide to action in risky times. I will come back to this measure as well in another post in this series.
Conclusion
YouTube Video
Uncertainty Posts
- DCF Myth 3: You cannot do a valuation, when there is too much uncertainty
- The Margin of Safety: Excuse for Inaction or Tool for Action?
- Facing up to Uncertainty: Probabilities and Simulations
Introductory Post: DCF Valuations: Academic Exercise, Sales Pitch or Investor Tool
- If you have a D(discount rate) and a CF (cash flow), you have a DCF.
- A DCF is an exercise in modeling & number crunching.
- You cannot do a DCF when there is too much uncertainty.
- The most critical input in a DCF is the discount rate and if you donât believe in modern portfolio theory (or beta), you cannot use a DCF.
- If most of your value in a DCF comes from the terminal value, there is something wrong with your DCF.
- A DCF requires too many assumptions and can be manipulated to yield any value you want.
- A DCF cannot value brand name or other intangibles.
- A DCF yields a conservative estimate of value.
- If your DCF value changes significantly over time, there is either something wrong with your valuation.
- A DCF is an academic exercise.
The Arab Federation of Exchanges Annual Conference 2016
The Arab Federation of Exchanges Annual Conference ended on Thursday 28 April, 2016 which was hosted by Amman Stock Exchange (ASE) under the patronage of the Prime Minister H.E Dr. Abdullah Ensour over two days 27&28 April, 2016. More than 400 participants attended the conference from local, regional, and international exchanges, regulatory bodies of the financial markets, brokerage firms, investment fund managers, investment banks, selective high net worth individuals, economic journalists, research firms, corporate/listed companies, rating agencies, technical associations, and banks.
read more...OneChicago Announces Trading Volume For April 2016 - YTD Volume Outpacing 2015 By 38%
OneChicago, LLC (OCX), a securities finance exchange, today announced its April 2016 volume of 799,990, an increase of 41% year-over-year. OneChicago is a CFTC and SEC regulated exchange offering Single Stock Futures (SSF), a Delta One product, on approximately 1,800 equities, including ADRs and ETFs.
read more...OCC Cleared Contract Volume Increased Two Percent In April - Securities Lending Activity Up 46 Percent In April And 44 Percent Year-To-Date - ETF Options Volume Up 13 Percent From 2015
OCC, the world’s largest equity derivatives clearing organization, announced today that cleared contract volume in April was 339,522,257 contracts, up two percent from April 2015 monthly volume of 331,552,965 contracts. Average dailyvolume at OCC is up five percent in 2016 with 17,123,650 contracts. OCC’s stock loan program reported strong volume numbers in April with year-to-date activity up 44 percent.
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