News > Lifestyle, 4:01

Barron's Weekend Roundup: Making sense of the market correction
Capital Markets
<p>The bull market isn't over yet. The August 24 stock market correction may have shaken some, but U.S. shares will still see gains for 2015, Barron's writes in this week's cover story. Analysts say the S&amp;P 500 will hit 2150 by the end of the year, a more than 10% increase from Friday's close.</p> <p>ETFs dropped sharply on August 24, during the massive market correction. ETFs should offer investors prices close to the underlying stocks, but that Monday ETFs dropped more than the stocks, writes Barron's. Some of the problems seem to stem reflect the flash crash in 2010. Regulators will need to take a look at how to ensure smooth ETF trading in the event of another such market swing.</p> <p>Leah Zell, head of Lizard Investors, says international small-cap value investing is the way to go. Zell tells Barron's that China's slowdown will be felt unevenly. "International small-cap investing is the last refuge of stock-picking," she says. Lizard looks at investments a year or two out, or even three to five years if possible.</p> <p>&nbsp;<br /> Photo: Jim Bowen <br /> &nbsp;</p>
Chinese team to debut on the Rolex Sydney Hobart race
Lifestyle, 4:01
<p>Much like Gianni Agnelli, Ted Turner, Larry Ellison, and several other gazillionaires before them, a group of Chinese businessmen have taken a liking to the world of high-performance sailing and are now set to flex their muscles in the 71st edition of the Cruising Yacht Club of Australia’s Rolex Sydney Hobart Yacht Race.</p> <p>Taking a page off Larry Ellison, the group has hired a Kiwi to help the team take the glorious-looking, Botin &amp; Carkeek-designed Ark323 to victory. But aside from him, Sail Word reports that it’s a wholly Chinese team – a first, they point out – as Serena Cai, the team’s manager, told the magazine:<br /> “Ark323 is a purely Chinese entry; a Chinese owner, crew and administrators. The yacht is representing Noah Sailing Club in Shanghai, but we do have a coach from New Zealand. The boat is owned by Noah’s Group, which is led by Wilson Lee and sponsored by E-commerce company”<br /> Their entry appears to be a source of great pride for Mr. Lee, who told Sail World:<br /> “We made a decision to enter the Rolex Sydney Hobart because of the nature of the prestigious event, the challenge it presents. It is also one of the ultimate platforms to showcase the Chinese team and the Club’s passion to increase a Chinese presence at international yachting events.”<br /> I wish them all the best, though it does appear to be a tough race; Harburg Investments’ Peter Harburg and his champion crew are also in, while Colin Buffin – who may or may not be a senior MD at Candover Partners – has brought along Sydney Hobart vets to help him win the race.<br /> Photo: davekeane</p>
Sequoia, Legend back Baidu’s online education platform
<p>The Chinese internet giant Baidu is about to spin-off its “after school” education platform Zuoyebang, attracting investments from two of the world’s largest venture capital firms.</p> <p>According to TechCrunch, Zuoyebang has just completed a Series A funding round with Sequoia China and Legend Capital, though how much the two invested into the former student Q&amp;A site is currently unclear.</p> <p>It’s probably a lot though. Zuoyebang reportedly boasts 50 million registered users, 3 million of which use it on a daily basis to rifle through the 950 million questions and answers the platform currently has on file. It can also be used within 113 schools around China, a huge plus against Tencent and Alibaba in the current war for control over China’s online education market.</p> <p>This isn’t the first time Baidu spun-off one of its subsidiaries; Baidu Takeout Delivery raised $70 million from the Japanese noodle chain Ajisen Ramen and the Chinese private equity firm The Hina Group earlier this year, while 91 desktop – Baidu’s desktop theme app – was also purged from the mothership in a move widely seen as a promotion of the startup culture.</p> <p>This is what they had to say regarding the spin-offs:<br /> “This strategy aims to promote the independent quality assets, and to foster Baidu’s open ecosystem.”<br /> Photo: 드림포유</p>
Minecraft’s Markus Persson moans about being a billionaire. Yes, really.
Lifestyle, 4:01
<p>For mere mortals the idea of reaching billionaire status by creating a product adored by millions is the stuff dreams are made of. Not for Minecraft creator Markus Persson who sold his insanely popular game platform to Microsoft last year for $2.5 billion - giving him a next worth of $1.3 billion, according to Forbes.</p> <p>He is miserable. For Markus, being in the three comma club is not all that it’s cracked up to be.</p> <p>Channeling the spirit of the term “first world problems”, the self-made swede recently took to twitter for a spate of poor-me postings about how lonely it is at the top.</p> <p>Here are some of his top moans:</p> <p>The problem with getting everything is you run out of reasons to keep trying, and human interaction becomes impossible due to imbalance.<br /> — Markus Persson (@notch) August 29, 2015</p> <p>&nbsp;</p> <p>Found a great girl, but she's afraid of me and my life style and went with a normal person instead.<br /> — Markus Persson (@notch) August 29, 2015</p> <p>&nbsp;<br /> When we sold the company, the biggest effort went into making sure the employees got taken care of, and they all hate me now. — Markus Persson (@notch) August 29, 2015<br /> &nbsp;</p> <p>Needless to say there were a lot replies showing a mixture of sympathy from fans and friends, and bewilderment from others. But my personal favorite is this....<br /> @notch Why are you feeling sorry for yourself? Sell the $75M mansion, stop all the partying. Do what matters to you. Be a real person. — D Webster (@DWebster2008) August 29, 2015</p> <p>Not so much for comment itself but for the reply it got:</p> <p>@DWebster2008 Nah, the mansion has a pool.</p> <p>— Markus Persson (@notch) August 29, 2015</p> <p>Yeah, it is difficult to feel sympathy for a billionaire - really difficult. But then again Persson is not the only example of a brooding billionaire. If it teaches us anything, its that the pursuit of success can often be more enjoyable than lifting up the actual prize.<br /> Photo: MarLeah Cole</p>
Dan Loeb’s books: Recommended reading list
Hedge Funds
<p>Daniel Seth Loeb is the founder of the New York based hedge fund Third Point LLC, which at the end of the third quarter of 2014 reported assets under management of $17.5 billion.</p> <p>The outspoken and prominent value investor founded the hedge fund in 1995 and is currently responsible for the business activities of Third Point. He is also the managing member and chairman of Third Point, LLC.</p> <p>Dan Loeb is known for his explicit public letters regarding the performance and actions of other financial executives. His mocking letters are an entertaining yet the thought-provoking approach of addressing and disapproving a certain serious issue.</p> <p>For more on Dan Loeb, head over to ValueWalk’s Dan Loeb Resource Page, where you can find a detailed rundown of his background, bio, and investment philosophy.<br /> Dan Loeb: Recommended books<br /> Reminiscences of a Stock Operator</p> <p>Edwin Lefevre. Loeb calls the book a classic. The book is the thinly disguised biography of Jesse Livermore, a remarkable character who first started speculating in New England bucket shops at the turn of the century. Livermore, who was banned from these shady operations because of his winning ways, soon moved to Wall Street where he made and lost his fortune several times over. What makes this book so valuable are the observations that Lefèvre records about investing, speculating, and the nature of the market itself.</p> <p>You Can Be a Stock Market Genius</p> <p>Joel Greenblatt. Greenblatt’s book explains how best to invest such as spin-offs, mergers, risk arbitrage, etc. Loeb uses many of the strategies discussed in this book in his own investing strategy. Loeb is now alone in his admiration of the book. Seth Klarman also recommends Greenblatt's book on his list of favorite books as detailed here.</p> <p>Financial Shenanigans</p> <p>Howard Schilit. The author details various tricks that management have used, and will continue to use in the future. They consist of various manipulations of the income statement, and the cash flow statement.</p> <p>The Art of Short Selling</p> <p>Kathryn Staley. A book about finding tricks used by management in financial statements, and using the information to short the company.</p> <p>The Power of Story</p> <p>Jim Loehr. Loeb’s favorite "non-investing" book.  Loeb stated that the book can "change your destiny in business and in life."</p>
Weekend Reads: Star Wars, Tianjin, and brunch with the former ‘King of mining M&A’
Lifestyle, 4:01
<p>From Tianjin conspiracies to the dark side of licensing, here are some great reads for you this weekend:</p> <p>With the release of “Straight to Hell” and “Why I left Goldman Sachs,” is the Michael Lewis classic “Liar’s Poker” still the best trading floor memoir? Gary Sernovitz sure thinks so. The New Yorker</p> <p>Are the top-ranked sell-side analysts all they’re cracked up to be? Yes and no. Social Science Research Network </p> <p>Just three weeks before his glorious Vday parade, President Xi Jinping saw 158 of his countrymen die from the Tianjin Blasts. Were they accidents, or was there something else behind it? The Jamestown Foundation</p> <p>He was JP Morgan’s chairman of global capital markets, and he also killed five people trying to demolish the center of Kano, Nigeria. Meet Ian Hannam, friend to mercenaries, persona non grata to the City, and quite possibly the most interesting man in finance. Financial Times</p> <p>Are the Paul Tudor Jones and the Stanley Druckenmiller’s of the world created in a bull market? No, they cut their teeth in the ridiculous volatility of the 80’s. Here’s a discussion on how to gain a similar edge in this current environment. Medium</p> <p>The upcoming Star Wars movie looks just as awesome as the first three. But what about its merchandise? Here are a few Star Wars products that are as ugly as Jabba crossed with a Sarlacc pit. Gizmodo</p> <p>Can China sustain its current FX policy? All signs have been pointing to no. FT Alphaville<br /> Photo: Marketa</p>
Weekend Scan: Jobs report misses expectations; Lacker still on track to raise rates
Capital Markets
<p>Happy Saturday, folks. While you were sleeping, the U.S. equity markets continued their descent largely thanks to uncertainty over the Fed’s lift-off timing following the non-farm payrolls report. August jobs climbed 173,000, below expectations of a 220,000 rise but Richmond Fed President Jeffrey Lacker was quick to point out that while it didn’t meet expectations, 173,000’s “still a strong number,” and that it isn’t enough to change the picture for monetary policy. The bond market however doesn’t seem to be pricing in that possibility, with short-end yields barely moving from their Thursday levels.</p> <p>Here’s what else you need to know:</p> <p>Chinese pre-crash trading account data inexplicably unavailable. The weekly report published by the China Securities Depository and Clearing Corporation (CSDC) – which details the number of people who opened or closed trading accounts that week – mysteriously ends on May 29, two weeks prior to the Shanghai Composite’s dramatic crash. Whether or not this information was pulled by Beijing, or if the CSDC simply chose to stop publishing these figures, is still unclear. Quartz</p> <p>Mainland banks are going to have a rough year. Ratings agency Fitch says that mainland lenders’ profitability will continue to get screwed in the second half of the year, mostly due to a rise non-performing loans following a sustained deterioration in asset quality. “Weakening asset quality could result in some profit decline in the near term, as banks cannot rely on lowering their provision coverage to generate positive profit growth.” South China Morning Post </p> <p>Egyptian billionaire offers solution to migrants. Naguib Sawiris has offered to purchase an island from Greece or Italy to house hundreds of thousands of migrants that are currently overwhelming Europe. Sawiris says he would give the island independence and provide jobs for the migrants to make it their own country, permanently or temporarily. TIME</p> <p>Good news: there’s more trees than we thought. A new study found 3.04 trillion trees on Earth, 7.5 times the amount thought to exist. On the down side, the number of trees has fallen by 46% since humans arrived on the planet. CNN</p> <p>Top Democrat opposes Iran deal. Sen. Ben Cardin, the top Dem on the Senate Foreign Relations Committee, says he will oppose the nuclear deal with Iran. Cardin’s announcement won’t kill the deal in Congress, but Cardin’s weight does hurt Obama’s efforts. Cardin says he fears the agreement would strengthen Iran in the long run.Politico</p> <p>Indonesia cuts plans for high-speed train. The country has decided to ax what would have been the first high-speed train for the nation, connecting Jakarta and Bandung, because the 93 mile route was deemed too short for a high-speed train. Wall Street Journal<br /> You won’t believe this…<br /> Died: The world’s shortest man. N</p>
Morgan Stanley ranks ‘winning’ and ‘losing’ investment banks in 2015
Capital Markets
<p>Morgan Stanley has published a ‘banking report card’ that sizes up the performance of major investment banks in 2015. Finbuzz has obtained a copy of the report and below is a brief summary.</p> <p>2015 certainly has been no cakewalk for big banks as monetary policy, market corrections, and debt crisis make profitability of some investment banks uncertain.</p> <p>Banking analysts at Morgan Stanley have declared 2015 the year of US banks, as these institutions stand to gain the most wallet share.</p> <p>Things are looking good for Morgan Stanley and Goldman Sachs, who are poised to continue to outperform given the high growth of US capital markets. This year major management and strategy changes are expected at HSBC, Credit Suisse, Barclays, BNP, and Standard Chartered in order to boost their return on equity, which is currently 3-4% lower than US firms.</p> <p>Regional players like Wells Fargo in the US and the Nordic and Baltic Nordea in Europe are both set to increase securities finance because they aren’t as constrained as some of the other big players.</p> <p>This graph shows the equities market share change in the first six months of 2015, compared to the same time period last year. The banks on top, such as Goldman Sachs and Morgan Stanley both performed as ‘winners’ in the first half. Barclays had an abhorrent first two quarters.</p> <p>Goldman Sachs and J.P. Morgan were the overall ‘winners’ in equities sales and trading, whereas UBS and Royal Bank of Scotland were ‘losers’.</p> <p>Morgan Stanley, HSBC, UBS, and Credit Argicole topped the fixed incomes and trading this past year. The report attributes this trend to ECB QE, which has given European banks a boost. This is surprising because the ECB QE and de-pegging of the Swiss franc drove many investors to divert their portfolios away from Europe.</p>
Fiat scion Lapo Elkann shows off his new custom speedboat
Lifestyle, 4:01
<p>Flashy Fiat heir Lapo Elkann has just unveiled his latest toy - a new camouflage speedboat designed by his own design and fabrication venture Garage Italia Customs.</p> <p>According to Forbes, Garage Italia had partnered with Italian craftsmen at Baglietto Yachts to create the speedboat. The vessel - imaginatively named Lap1 - is based on Bagiletto's MV13 design and customized with a digital camouflage body work designed by Italia Independent.</p> <p>The boat was hand-painted in five different shade of paint and matte transparent lacquer in the shade of blue Baglietto-built navy craft are known for. Apparently, this will not be the last collaboration between Baglietto and Garage Italia - watch this space.<br /> Photo: Garage Italia Customs via Instagram</p> <p>&nbsp;</p>
Weekend reading from a Wharton professor
Lifestyle, 4:01
<p>It's the last weekend of summer, the perfect time to wrap up summer reading and get in school-mode. Adam Grant, professor of management and psychology at the Wharton School, shares seven new books to read about work and psychology.</p> <p> "Presence" by Amy Cuddy: Cuddy writes about how we can achieve success by changing how we carry ourselves.<br /> "Unfinished Business" by Anne-Marie Slaughter: The CEO of the New America Foundation talks about how individuals and policy makers can push for more gender equality.<br /> "Superforecasting" by Philip Tetlock and Dan Gardner: This behavior science approach examines how we can better predict major events.<br /> "Friend and Foe" by Adam Galinsky and Maurice Schweitzer: This book breaks down cooperation and competition, from social media to gender differences.<br /> "Leadership BS" by Jeff Pfeffer: Leadership advice is generally as good as dirty dishwater, and the wrong people are in power.<br /> "Rising Strong" by Brene Brown: Looking at the concept of bravery, how can we start our own personal revolutions?<br /> "Broadcasting Happiness" by Michele Gielan: Happiness isn't just about individuals, it's about sharing with others.</p> <p>Photo: Ginny<br /> &nbsp;</p>