I am presenting at this MIT enterprise forum in NYC tonight.

The panel will focus on successful financial technology companies in NYC.  The audience will be MIT alumni, current and aspiring entrepreneurs and former Wall St. employees.  The event begins at 6:00 (networking and registration) and the panel runs from 6:30 to 7:30.  There is an optional networking session from 7:30 to 8:00.

MITEF:

Category: Media, Venture Capital

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

7 Responses to “MIT: Rebuilding Wall Street in a Down Market”

  1. Bob A says:

    wish I could make it but it’s .. kinda far

  2. karen says:

    Give us a little warning next time : ) I’m sure it will be great. My claim to fame is an MIT uncle… my sons are Haas and Sarah Lawrence (next fall.)

  3. Paul Wilkinson says:

    Hope to hear a report on this. How complicated could it be to make asset backed securities transparent enough to support an efficient market? It took 15,000 data tags to apply technology to U.S. GAAP disclosure, and ABS are a heck of a lot less complex than public companies. Even CDO cubed can’t be that much more complicated than the underlying facts used to create them. Those facts must be a lot fewer than 15,000.

  4. JohnnyVee says:

    Financial engineering–sounds great!

  5. Steve Barry says:

    Bad news today so far…Disney…Panansonic to cut 15K jobs…Costco “substantial warning”…Time Warner massive impairment.

    I really don’t know how stocks haven’t collapsed…the rise since November has been on low volume. It is either wall street bonus money or the PPT…no consumers can possibly be putting money into stocks.

  6. constantnormal says:

    Ah, Steve Barry, you must be a lot younger than I thought, not to have noticed the short-term buoyancy that layoffs bring to companies’ stocks.

    In my mind it works like this …

    Spreadsheet-toting fundies notice that when Company X lays off a boatload of people, their costs decline and the earnings (even on reduced revenues) jump. It is not until the second wave of revenue reductions that they notice a trend is in progress. Everyone always thinks that a massive wave of layoffs is signaling a bottom, and so they buy in rather than wait for some signs of business improvement, which can take weeks or months, to begin, even if the employment adjustment HAS “right-sized” the company and made it more efficient.

    And then there is the curious phenomenon of a lack of places to put money these days … an awful lot of it is hiding out in money markets, CDs, and short-term Treasuries, but the yields in those places are simply miserable, so some leaks into the equities markets.

    And finally, we have the once-ginormous mutual fund industry, chock full of IRA, 401-K and 403-B money, with the plan participants conditioned to “buy for the long haul” and the various plans offering few or no options other than funds that invest in the stock market. Plus there is doubtless a groundswell of IRA money that enters the markets during the last quarter of a calendar year and the first quarter, with the vast majority going into stock funds. Again, people buying for “the long haul”.

    I suspect this is where a lot of the buying on the news of layoffs and in general, buying support during dismal times comes from. There is a steady stream of buy-side money entering the markets via these retirement funds, and nearly all of it goes into stocks. Even taking into account the small amount that Americans invest in these things, if you assume 1% of all the payroll moeny goes into stocks on a consistent basis, that becomes a formidable amount of money, especially in liquidity-starved times like these.

    Curiously, eventually these massive layoffs should have an impact here, as the people being cut off from their income will be forced to withdraw funds as their unemployment benefits fail to meet their daily living expenses, and they raid their retirement assets, eating the seed corn, as it were.

    But prolly much of the trading activity comes from fund managers rearranging the deck chairs on the Titanic, moving money around within the constraints of the rules their funds must obey. Consider that most mutual fund managers are prohibited from doing anything rational like going 100% cash, or even 50% cash — so it is up to the customers to sell equity funds and move them into money markets, and nearly all of them never notice that it is time to re-allocate to all-cash until the money is 3/4 gone. There are powerful (albeit irrational) motivations for people to continue to own stocks, even during times like these.

    And of course, we have that marvelous quote from Keynes (whose quotes were better than either his economics or investing acumen):
    “Markets can remain irrational longer than you can remain solvent”

    Or my own statement of the Third Law of Econodynamics:
    “Perversity tends toward a maximum”

    I think that we will see, at a minimum, a re-testing of the lows, probably sometime between April and August. Until then, the Third Law reigns supreme.

  7. psm2000 says:

    I talked to someone today who re-balances his portfolio only once a year. I asked him where his funds stood and he told me about 30 to 40% down. He was not phased by that at all as if it is OK and natural for this to happen. So obviously, he is drinking the “buy and hold” Kool Aid.

    I have an MBA in Finance and a CPA. I learned all about Efficient Markets and for a while believed it. What the models do not take into account is the sheer “Gordon Gecko” greed unless in last 10 years or so they have changed these models.

    @BR I will be interested in reading what you presented (and others). I am in data analysis/mining and Business Intelligence (an oxymoron these days) and it will be I am interesting in finding what people are doing in Finance field.