• Professor Elam

    Thursday August 25, 2011

    There are laws against insider trading which are supposedly enforced by the SEC via the Justice Dept. Insider trading consists of using information only known to corporate insiders, unknown to the public to profit from forthcoming events. 

    Now consider this series of events.

    Buffet sponsors economic forum for President.

     

    An economic forum right, not a fund raiser?

    Now read the deal Warren got this morning courtesy of Zero Hedge. Warren did a repeat of the Goldman Sachs deal, he got first dibs on cumulative preferred shares plus  warrants on a hefty 700 million shares off B of A at $7.14. The stock of course jumped on the announcement that Buffet had bought into Bankd of America. The stock is up over a point which means Warren could cash out now for a cool billion in one morning. 

    As Zero Hedge points out, Bank of America did need the capital and had no way to raise it. 

    Sure under other administrations similar deals happen for favored friends of the administration. But gee, anyone who had been fined for insider trading can see that he just

    did not have friend in the right places. 

     

  • Professor Elam

    Thursday August 25, 2011

     

    The classes using McGraw Hill Connect, 3310, and  3312, MH will not be able to send those until the end of this week, so that may mean Monday, oh well, this is the second or third time in a row this has happened, an obvious violation of Total Quality Management Principles. OH well..

     

    Not to worry, we will need to get through the first week or two until all this great high tech stuff gets to working. Happily I have lots of experience in the days of the Big Chief Tablet and a pencil….

  • Professor Elam

    Thursday Aug 25, 2011

    This article written by the CEO of an investment firm in Arkansas lists five suggestions for reigning in out of control regulations. Notice the last is that SARBOX has been a deterrent to companies going public, indeed many may increasingly go private just to escape costly compliance. 

    I find most of these suggestions band aids which do not address the problem. Dropping one regulation to pass another, Mark Warner's proposal, is the classic treat the symptom not the problem. 

    Agencies simply should not have  the power to arbitrarily pass costly regulations with no hearings much less any consequences to the agency writing the regs. 

    We are entering a severe bear market, see http://www.themarketperspective.com. This bear market will be and is driven by negative social mood. This and the last post are proof positive, voters want another political party, business is withdrawing as fast as it can from this over regulated environment. Business is afraid to hire or expand, what will be regulated next?  

    All of this has serious ramifications for a college student. Business pulls back, job offerings narrow. I note that more and more authors cannot see a viable leader anywhere in the world, do you?  This is all part of the bear market in negative social mood. People are unhappy with leaders, just look at Libya. Russians are the least satisfied of all Europeans with their lot in life. No wonder the population of Russia is shrinking, no one wants to bring  a life into that world, period. Protestors are on the march around the world, and the bear market is just getting underway again.

    Not of course that Putin cares; his goal is to project Russian power across East Europe. And so it goes. 

  • Professor Elam

    Thursday August 25, 2011

    I have written a weekly newspaper column since 1998. I noticed in today's WSJ Pat Caddell and Doug Schoen, both former Presidential pollsters, are noticing the rising preference for a party that is perceived to serve the public rather than itself. I visited this topic in this recent column

     

    High Noon for Political Parties?

    Harry Brown, twice the Libertarian Party candidate for President, observed that if either party were to disappear it would be the Republicans. Let’s take a look at the history of parties in the US.

    The Constitution does not make any provision for political parties. But campaigns require organization. The first two parties were the Democrat-Republican party that evolved form the Anti-Federalist Party and the Federalist Party.  The Federalists were led by Alexander Hamilton who was actually killed in a duel with Aaron Burr; perhaps dueling would bring an end to the continual squabbling we have today! The Federalists disappeared.   Anyway, The Democrat Republican Party split into the Democrats led by Andy Jackson and Martin Van Buren. The other wing became the Whig Party. The Whigs did not survive the slavery issue. Indeed their inability to re-nominate their own President, Millard Fillmore in 1852, caused the party to collapse by 1856. Now, hold that thought. A party that had elected a President disappeared in one electoral term!  The new Republican Party emerged to elect Lincoln in 1860.

    Republicans would dominate the national scene from 1860 to 1932 as the North won the Civil War. Democrats would pass Jim Crow laws impeding social advancement for Blacks as well as voting rights. And so the South became the Solid Democrat South.

    It took form 1800 to 1860 for the first party shift to take place, three generations. It took from 1860 to 1932, 72 years for the next shift. Hoover was a Republican and was blamed for the 1929 Market Crash. FDR took over and was elected four times, leading to a constitutional amendment that would limit Presidents to two terms. Again the big shift took three twenty year periods. It appears that after three generations family voting patterns finally are subject to change. We have seen this with the Kennedys, fifty years after JFK was elected, the Ted Kennedy Senate seat went to a Republican, there was not enough memory of JFK among younger voters to sway the vote.

    Since 1932 the Democrats have held the House for all but a couple of House terms, until 1994. Republicans finally regained the House in 1994, only to lose it by 2006. Such a short term suggests the Republicans have fallen out of synch with the historic pattern.

    Our point then is that political parties are born and seemingly die at the three generation mark. It is now some 80 years or four generations since 1932. We have seen the Party in the  White House change from 1992 to 2000 to 2008. At present the current resident is below 50% in virtually all ratings categories. But he can take solace  that Congress rates much lower than he does!

    Other third party efforts have been notable failures. The Bull Moose Party in 1912,  the Dixiecrats of 1948, Independents George Wallace in 1966,  John Anderson in 1980, Ross Perot in 1992 and 1996, all failed in their efforts.  But, the TEA Party is not an organized party per se. It is an idea, something much more difficult to stop, just as Gorbachev about that.

    Republicans have lost the White House with a series of RINO (Republican In Name Only) candidates said to be not much different from their Democrat rivals. That would include Gerald Ford (whose memoir was not printed until after his death, how’s that for the courage of your convictions?), Bush I, Bob Dole, and Bush II.  Mitt Romney has now assumed that same mantel.

    Bush and his consigliere Karl Rove supported Senator Kay Bailey Hutchison in a poorly conceived race for Texas Governor against former ally  Rick Perry.  Kay, who had never lost a race, was trounced.  Needless to say there is no love lost on Perry’s part, and the slings and arrows have already begun.

    Our point is that some 80 years or four generations have passed since the baton was handed to the Democrats. In the last 20 years, the two parties have jockeyed for leadership, trading Congress and the White House back and forth.

    Big changes have happened at crucial turns in social mood. The US breaks with  England in 1776, a Civil War is fought in 1861, the Depression begins in 1931, and now, debt and a lead from behind strategy have many questioning America’s future.

    Could the Rockefeller, Ford, Bush, Dole Republicans be headed for the same dust heap as the Whigs of 1852?  Michelle Bachman and Rick Perry are said to lack the requisite, proper syntax for Presidential candidates.  That’s because revolutions are not begun by those at the table.  Revolution is a messy thing, it results from the bold rather than the polished, just ask Fidel Castro about that. We suspect that the election of 2012 will determine whether the Republicans become Whigs, or a force once again. 

     

  • Professor Elam

    Thursday Aug 25, 2011

    Prof Sam Rock and I just wrote a paper on college tuition debt. I referenced this seven days ago in this space, A Bubble in Higher Ed, noting the Texas State Comptroller made it her cover story in the latest Fiscal Notes. 

    This is another reason to consider certifications available at the BBA level, more on this in class. Check out the link to certifications in the left sidebar!

  • Professor Elam

    Thursday Aug 25, 2011

    As I pointed out in class yesterday, most recruiters decide in the first five minutes whether they will spend any more time with the person. So, what are you going to say to create a positive impression in your 2.5 minutes?

    I have lots of links on this site. Again when I ask what students read I usually get a sea of blank stares. Business students should immerse themselves in the world of business and global finance. 

    So this week's question, which got a round of blank looks, what event is happening in Jackson Hole, WY this week?  I really was surprised not a single person knew in the first two classes. Alternatively what was announced in Jackson Hole, WY last year at this time?

    Screen shot 2011-08-25 at 6.07.54 AM Good thing this was not the first question in your job interview, eh?

    No I am not posting a link here, look it up!

  • Professor Elam

    Thursday August 25, 2011

    Yesterday in class I asked if anyone read Fast Company magazine, no one did. The latest issue

    (www.fastcompany.com) features an article on how Ralph's son David is moving the successful RL brand into the digital world. 

    An example includes Ralph Lauren Magazine. This online publication is clearly aimed at wealthy customers. Which reminds me the WSJ version of their publication for the well to do will be out this weekend. 

    While most of my shopping is decidedly downscale from RL, I do believe that a business school which embraced the idea of Design would do their students a real favor. The companies with a design emphasis are clear winners, BMW, Porsche, Braun,  Ralph Lauren, Virgin Atlantic, or Apple. One you see one of their products you immediately know its origin, it's not just another run of the mill, sorta kinda like everyone else. and each of these companies is fabulously successful as a result. 

    Bruce Howard will be speaking to the classes this semester. One of his networking ideas is developing your own brand, in fact he put me onto Fast Company magazine. 

    Richard Branson of Virgin Atlantic actually operates from a Caribbean island. Whoops, lightning 

    hit his house destroying it in a fire.  Branson is joining Paul Allen in offering the first commercial space travel, you are familiar with Space Ship One, right?

  • Professor Elam

    Tuesday Aug 23, 2011

     

    It looks like all the high tech stuff will not be hooked up the first day of class. I thought we would do something different, The first assignment is to read ?Emerson's essay, 1841, on self reliance. And one might read Steve Pressfield's  tHe War of Art. And then I ran across this August 20, 2011 reflection from Kirk Tuck's Visual Science Lab. Take a read, reflect, that's what college is supposed to be. 

    http://visualsciencelab.blogspot.com/

    One of my acquaintances was telling me about a documentary he recently saw of a very good photographer who is still working, collected and revered, deep into his eighties.  After a while the interviewer asked him if the "revolution" in cameras, which had made it easier for "everyman" to take good photographs, had profoundly and irrevocably changed photography for the worse for professionals.  The older photographer laughed and said, "No more than pencils and paper changed the game for writers.  You still have to do the work.  You still have to have the talent.  You still have to be creative.  That's never changed." 

    And I loved that sentiment.  It's the same as the man who buys the same bike as Lance Armstrong, hoping to ride at the same level with a few hours of practice over the weekend.  Or the person who takes up the violin and buys a Stradivarius in hopes that it will take the place of talent.

    I love to hear those stories but it always brings me back to the idea of talent.  I believe that it's innate and easy or that you can work hard and try to get close to what the talented people can do with the flick of a wrist and a quick squint through the viewfinder.  And I'm one of those without a drop of native talent for visualizing. (Back to that!!!)

    So, I was kicking on a kickboard in the pool today and I was talking to Jane about creating art.  During our quick conversation she helped me with a new perspective.  The idea was that everyone, either through hard work or native talent, or both can be an artist.  We can all do it.  We may come to it in different ways but we all have the potential to creatively express our own vision.  But the bottom line is that most people allow themselves to get boxed into conventional lives and don't have the courage to try and live outside the box.  Or to create outside homogenized parameters.  They fear the trade off of possible having to deal with defeat, censure and failure time and again.  And having to "eat only what you kill" by the skill of your brain.  And only that creative side of your brain.  So they choose security and assurance instead of a life in art.  And by dint of just showing up and doing the process you are providing a set of ingredients that trumps talent.  You've shown up.  You've done the work. You've battled the demons that tell you that you'll never make it.  The ones that tease you with the idea that the money will always elude you even in the face of evidence to the contrary.  And the people at large respond to the fact that you've conquered that fear and done something they really fear to do.  To step into the box of creating for themselves and making it work, without instructions.  Or a safety net.  Real skin in the real game.

    It sounded lofty as we talked about it and kicked through the cool water as the white hot sun peeked over the tree line and sent a laser beam of energy glancing off the lane lines and bouncing off the lenses of our goggles.  And for a few hundred yards I was convinced that I was an artist because I'd had the courage to step off the farm and go into the woods in search of images only I could make.  The hell with the wolves….

    But by the end of workout, as I got on my bike and headed back home, I realized that I'd already slid back to that place that says,  "Yes, this could be an art.  But it's also a business and we have to please the client…"  So you can see that I slide from dilemma to dilemma and realization to realization.  It's an examination of life that I'm sure we all mull everyday.  And in the end we die with it unanswered.  Because there really isn't a right answer or a definitive calculus that defines what we SHOULD be doing and what we SHOULD value.  But we never stop looking.  And we never stop longing.

  • Professor Elam

    Monday Aug 22, 2011

    nsider.

    Lots of land

    No income tax

    Right to Work Law

    The DFW Airport, right in the center of the country, short flights to both coasts, and the Central Time Zone. I never realized just how important Central Time Zone was until I traded bonds and had to wire money. Being on one coast or the other is a real problem time wise if you need to deal with the other coast. 

    Houston, San Antonio, Dallas medical centers

    Port of Houston

    Three huge MSAs fairly close together, DFW, Houston, SA Austin

    No  snow

    Work Ethic

     

  • Professor Elam

    Monday Aug 22, 2011

    Deloitte is apparently replicating the old Arthur Andersen idea of a 'college campus'

    AA bought an actual college campus in Chicago as a training center. Deloitte is  building in Westlake TX for the same reason. 

    There are many reasons for the success of Texas which have nothing to do with who is governor, co