Can Rally Run Without Revenue? - WSJ.com:
"In the short-term, earnings prospects may remain favorable for the market. Aggressive expense control and modest inventory restocking could boost third-quarter numbers, while the fourth quarter has easy comparisons against an awful 2008 that will give the appearance of healthy profit increases."
Instead of comparing current numbers against the previous year numberss, why not show one-year, two-year, three-year etc comparisons?
Monday, August 31, 2009
Saturday, August 29, 2009
Is Performance Measurement Dying?
Fiduciary Duty Hits the Street -- Sort Of - WSJ.com:
"The changes could transform the brokerage industry by changing the way products are sold and marketed and even how brokers are paid. Requiring brokers to operate under the existing fiduciary standard could force them to recommend more investments that are less costly and more tax-efficient."
As a performance measurement professional, I can't help worrying this is going to lead to cuts in the support functions at financial firms. One such support function is performance measurement and presentation.
As a fledgling specialty, performance measurment can adapt as it can easily be folded into those areas which it supports i.e. marketing. The difficulty will come meshing the proclivites of those who currently enjoy performance calculations with those who enjoy marketing.
As holder of the CIPM designation and an individual with experience in sales and non-profit work, I can attest that the selling/service industry and attribution analysis/heavy spreadsheet work do not necessarily attract the same type of person.
"The changes could transform the brokerage industry by changing the way products are sold and marketed and even how brokers are paid. Requiring brokers to operate under the existing fiduciary standard could force them to recommend more investments that are less costly and more tax-efficient."
As a performance measurement professional, I can't help worrying this is going to lead to cuts in the support functions at financial firms. One such support function is performance measurement and presentation.
As a fledgling specialty, performance measurment can adapt as it can easily be folded into those areas which it supports i.e. marketing. The difficulty will come meshing the proclivites of those who currently enjoy performance calculations with those who enjoy marketing.
As holder of the CIPM designation and an individual with experience in sales and non-profit work, I can attest that the selling/service industry and attribution analysis/heavy spreadsheet work do not necessarily attract the same type of person.
Thursday, August 27, 2009
Cash For Clunkers: Changing Benchmarks
'Clunkers' Lifts Foreign Cars - WSJ.com: "Transportation Secretary Ray LaHood said the program was 'wildly successful' at bringing 'moribund' car showrooms back to life."
I was under the impression that the cash for "clunkers" program was intended to help the automakers, specifically the US-based ones (GM, Ford and Chrysler). Secretary LaHood says otherwise.
It was the after-the-fact results that demonstrated the cash for clunkers program was an auto dealer bailout, and, judging from the Top 10 models sold, one for foreign car dealers.
What this does show is the importance of designating a benchmark before the results are in. Investment managers committed the GIPS know this. One can't simply get to month's end, see your performance results, then find a benchmark that works.
I was under the impression that the cash for "clunkers" program was intended to help the automakers, specifically the US-based ones (GM, Ford and Chrysler). Secretary LaHood says otherwise.
It was the after-the-fact results that demonstrated the cash for clunkers program was an auto dealer bailout, and, judging from the Top 10 models sold, one for foreign car dealers.
The top 10 models purchased under the government's 'cash for clunkers' rebate
program:
1. Toyota Corolla
2. Honda Civic
3. Toyota Camry
4. Ford Focus FWD
5. Hyundai Elantra
6. Nissan Versa
7. Toyota Prius
8. Honda Accord
9. Honda Fit
10. Ford Escape FWD
What this does show is the importance of designating a benchmark before the results are in. Investment managers committed the GIPS know this. One can't simply get to month's end, see your performance results, then find a benchmark that works.
Monday, August 24, 2009
Code of Ethics
Goldman Sachs Trading Tips Reward Big Clients - WSJ.com:
"Mr. Canaday says analysts are told that any comment at a meeting that could result in a change in a rating, earnings estimate or stock-price target "must be published and disseminated broadly to all clients." He adds, however, that it is rare that tips arising from the meetings reach that threshold. He says ratings changes after the meetings also are rare."
As someone who has been involved with the professional designations available from the CFA Institute for the past seven years or so, I can't help thinking about the ethical codes those granted the right to use the designations must abide by. What the WSJ article describes sounds like front running, which would violate said code.
I am curious how the CFA Institute views Goldman Sachs practice as described in the front page article.
"Mr. Canaday says analysts are told that any comment at a meeting that could result in a change in a rating, earnings estimate or stock-price target "must be published and disseminated broadly to all clients." He adds, however, that it is rare that tips arising from the meetings reach that threshold. He says ratings changes after the meetings also are rare."
As someone who has been involved with the professional designations available from the CFA Institute for the past seven years or so, I can't help thinking about the ethical codes those granted the right to use the designations must abide by. What the WSJ article describes sounds like front running, which would violate said code.
I am curious how the CFA Institute views Goldman Sachs practice as described in the front page article.
Saturday, August 22, 2009
Importance of Benchmarks
Outplacement Firms Struggle to Do Job - WSJ.com:
"Chet Shubert, 53, arranged outplacement as a human-resource executive at Wyeth Pharmaceuticals and National Starch & Chemical Co. Last year, it was his turn, when he was laid off following a merger. He says he was offered several months of outplacement at Right's Management's Philadelphia office. In his first group meeting, he was surprised when a staff member said the firm didn't track how many clients get jobs."
This front page article is a lesson in the importance of benchmarks (or control groups for the more scientifically-inclined). Without them, there is no way to measure whether any outplacement firm is better than the other.
While benchmarking seems obvious to the investment management industry now, there was a time in our lifetime when benchmarks weren't considered vital either. Then came modern portfolio theory to usher in their importance.
Now proper benchmarking of investment products is a requirement for GIPS and a given in best practices.
"Chet Shubert, 53, arranged outplacement as a human-resource executive at Wyeth Pharmaceuticals and National Starch & Chemical Co. Last year, it was his turn, when he was laid off following a merger. He says he was offered several months of outplacement at Right's Management's Philadelphia office. In his first group meeting, he was surprised when a staff member said the firm didn't track how many clients get jobs."
This front page article is a lesson in the importance of benchmarks (or control groups for the more scientifically-inclined). Without them, there is no way to measure whether any outplacement firm is better than the other.
While benchmarking seems obvious to the investment management industry now, there was a time in our lifetime when benchmarks weren't considered vital either. Then came modern portfolio theory to usher in their importance.
Now proper benchmarking of investment products is a requirement for GIPS and a given in best practices.
Thursday, August 20, 2009
Simple Prose On Seasonal Adjustments
WHAT THE GOVERNMENT REALLY SAID ABOUT US HOUSING - New York Post:
"A seasonally-adjusted house is one that exists only in the government's fertile statistical imagination.
And that imagination is spewing out a whole lot of deceptive economic numbers because normal seasonal adjustments are being thrown off by the abnormal nature of the current economy."
Seasonal adjustments assume what happened before happens again. A black swan would make these adjustments gibberish.
Mr. Crudele provides an easy to understand dismantling of the new residential starts figure.
"A seasonally-adjusted house is one that exists only in the government's fertile statistical imagination.
And that imagination is spewing out a whole lot of deceptive economic numbers because normal seasonal adjustments are being thrown off by the abnormal nature of the current economy."
Seasonal adjustments assume what happened before happens again. A black swan would make these adjustments gibberish.
Mr. Crudele provides an easy to understand dismantling of the new residential starts figure.
Sometimes Exactitude Is Meaningless
New jobless claims rise unexpectedly to 576K - Yahoo! News:
"The number of people remaining on the benefit rolls dropped by 2,000 to 6.24 million."
With rounding, the "6.24 million" figure could range from 6,244,000 to 6,235,000 - of course rounded to the nearest thousand. I wonder whether reporting the 2,000 drop was an editiorial decision or oversight.
Seems insignificant with the rounding or too exact to be true.
"The number of people remaining on the benefit rolls dropped by 2,000 to 6.24 million."
With rounding, the "6.24 million" figure could range from 6,244,000 to 6,235,000 - of course rounded to the nearest thousand. I wonder whether reporting the 2,000 drop was an editiorial decision or oversight.
Seems insignificant with the rounding or too exact to be true.
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