Assorted Links

1. You have to read this speech from India’s finance minister Chidambaram. It is given at a CII conference on Mumbai as a whatever International Centre. He simply pours his heart out. Sample this:

“The last time I spoke about Mumbai, and I said, with a very careful choice of words, that I would like Mumbai, the city of Mumbai to have a large degree of autonomy in governing itself because that is how large cities govern themselves. The next morning I read that someone was threatening to cut off my tongue. The point is not what powers Mumbai has, but what kind of governance structure Mumbai will have, in order to effectively provide the services, which Mr Entwistle mentioned. “

2. Law firms mostly have a partnership structure, here we have the first law firm which has listed itself on the exchange.  It is a great development for capital markets, after private equity firms (Blackstone) we have a law firm accessing capital markets. It is an Australian firm and is called Slater & Gordon.

3. A wow article from Austan Goolsbee(Univ of ChicagoProfessor) on why Mr Warren Buffert’s strategy of picking his successor by giving 3-4 top candidates USD 5 billion and picking the best performer after 2 years of fund management. Sample this:

“For all of Mr. Buffett’s reputation as the ultimate nonmutual fund, he may have just fallen into one of the biggest mutual fund traps of all — forgetting how incentives affect fund managers’ behavior.”

Further he adds:

“In a fund doing well but not stellar in the first three quarters of the year, the manager has a clear incentive to take big risks. If the risks pan out, the payoff in the last quarter can raise the fund’s return enough to get it into a top 10 list, say, and attract a huge number of new investors. If the risk doesn’t pay off, the return will be lower but the fees won’t be too much lower than they were before. The study showed that managers responded rather directly to these incentives. The managers heading toward the top of the ranking increased their risk-taking significantly in the last quarter of the year whereas those in the middle played it extra safe. “

4. The significance of Shanghai Stock exchange touching 4444. Read on

Thanks to Ajay Shah for 1, Finance Professor for 2 and Greg Mankiw for 3.

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