Thursday, October 1, 2009

Teaching Duties...

Yesterday I began teaching the 1st year MBAs. The group I'm teaching this year has an even larger mix of nationalities, which really helps when talking about financial markets and what has been happening through the crisis. Everyone can contribute with how it affected their own countries and the measures taken by different governments.

We talked a lot about information asymmetry in markets and how regulation is required to prevent bad behavior to arise. There's been plenty of bad examples: sales teams giving mortgages to people that had no likelihood of repaying their loans, investors putting up their money in investments that promised huge returns with low risk (e.g. Madoff).

The scary bit is that even supposedly "smart" and informed investors made huge bad calls. I'm not really sure whether better regulation would really help these type of investors to avoid making stupid investment decisions.

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