“Even the most rational approach to ethics is defenseless if there isn’t the will to do what is right,” Alexander Solzhenitsyn said. This quote came to mind after reading about widening investigations into insider trading in the U.S. and U.K. governments. Read more
Richard Hokenson discusses the investment implications of global demographic trends and the investment opportunities these trends represent for Africa. Read more
The world population has surpassed 7 billion people. As inhabitants of Earth first, and investors second, should we be concerned? According to economist and demographer Richard Hokenson the answer is no. Instead, we should be concerned that the world population is projected to shrink as it ages — and as a result the global labor force will soon be declining. Read more
Unless you have been living under a rock, you must be aware that Facebook, the “darling” of social media, is about to go public. But before investors slake their thirst for Facebook shares, market participants should consider three questions. Read more
Many institutions involved in the financial skullduggery that caused the 2008 crisis had adopted codes of ethics long before the housing bubble burst. Even Enron had espoused lofty ideals in it’s official code. So why aren’t codes effective in deterring unethical behavior? Read more
Unfortunately, stories of unethical behavior by both individuals and financial institutions continue to dominate the business news headlines. Insider trading and the integrity of asset managers’ performance reports have been major themes over the past few months. Read more
The famed hockey player Wayne Gretzky once said, “A good hockey player plays where the puck is. A great hockey player plays where the puck is going to be.” Frontier markets — especially those in Africa — are where alpha is going to be. Read more
There is a plethora of research that has documented a number of “irregularities” in self-reported hedge fund returns. These studies have found that some hedge funds reported smoothed returns, reported disproportionately more small positive returns than negative returns, and reported higher returns in December. Read more
The recent scandal that led Swiss National Bank chairman Philipp Hildebrand to resign highlights the difference between what is legal and what is ethical. The law tells us what we “can and cannot do,” whereas ethics tells us what we “should and should not do.” Read more
A recent survey suggests that some investment advisers may be recommending alternative investment strategies that neither they nor their clients fully understand. In order to regain the confidence and trust of clients and the public at large, investment professionals must commit to doing a better job of understanding — and communicating — the features, characteristics, and risks of these complex strategies. Read more
Who says that one bad apple doesn’t spoil the whole bunch? Just ask FrontPoint Partners who saw its assets under management decline with breathtaking speed—dropping by $6 billion in eight months—after one of the firm’s portfolio managers was caught in … Read more
A few months ago, I wrote about how Groupon had been using a non-GAAP accounting metric, “adjusted consolidated segment operating income” (CSOI), to explain its past performance — a practice the online coupon company has since given up. Well, Groupon’s questionable … Read more
Do you remember the episode of Seinfeld titled “The Bizarro Jerry”? In this episode, which was based on Bizarro Superman, everything is backwards, i.e., up is down, down is up, in is out, out is in. Well, financial institutions have … Read more
As Albert Einstein famously said, “Insanity is doing the same thing over and over and expecting a different result.” This quote comes to mind in the wake of the drama that has unfolded at UBS, where 31-year-old trader Kweku Adoboli … Read more
The Wall Street Journal has published a number of articles about Groupon, the ecommerce internet company that is planning to go public. A July 28th article focused on Groupon’s use of a “non GAAP” accounting metric — adjusted consolidated segment … Read more
As the Roman epic poet Virgil wrote in the Aeneid, “Fortune favors the brave.” For investors who live by this creed, complex credit assets and structured investments — once the scourge of global financial markets — are beginning to regain some … Read more
When it comes to fixed income, Canada is the cleanest shirt in the hamper. The reason, says Ed Devlin, executive vice president and head of Canadian portfolio management at Pacific Investment Management Company, is that Canada engages in less “financial … Read more