Thursday, July 14, 2016

Presentation Tips for Young (and Not so Young) Minds

I'm in Korea teaching a summer course at SKKU in Korea. Today students are presenting their company valuations about a companies from all over the world.

As presentations varied, here are some general tips I have from observing quite a few presentations in these years(and trying to improve my own!)

1) Don't read from a script. Try to make your presentation as natural as you can.

2) Practice! Presenting is never easy, but the more you doubt the better you become.

3) Don't try to copy other people's presentation styles. Find your own!

4) When presenting numbers, don't use more than two (maybe even not more than  one) decimal! It makes things easier to read and no one really think that discount rate of 9.3245% is better than 9.3%.

5) Look at the audience as you present. This is a great way to engage with everyone and keep them focused on your talk and relaxed. Remember not to look at the same person too much.

6) Don't make your audience tired by spending too much time talking about details/numbers. You will often lose your audience if you start talking too much about calculations, although sometimes in academia people want to see those!

Thursday, June 16, 2016

Equity Lending, Short Sales & Limits to Arbitrage

Wow. Can't believe it's been almost a year since my last post. Need to be more disciplined and write more often to please my 4 readers!

Anyway, this week JBS's Insight has written a story talking about my "Ownership Structure, Limits to Arbitrage and Stock Returns: Evidence from Equity Lending Market"paper (joint work with my amazing co-authors Melissa Porras Prado (Nova SBE) and Jason Sturgess (DePaul)).

Here is the main summary:

“Stocks with lower, more concentrated, short-term, and less passive ownership exhibit lower lending supply, higher costs of shorting, and higher arbitrage risk,” concludes the study of nearly 5,000 US stocks over a four-year period (2006-2010) – forthcoming in the Review of Financial Studies.

In simple terms: suppose that someone told you that a glass is 50 per cent full. While this is relevant information, it also matters whether the glass contains water, milk or wine, its temperature and expiry date. The article examines a wide list of institutional ownership characteristics, and shows that stocks with lower, more concentrated, short-term, and less passive institutional ownership exhibit lower lending supply, higher costs of shorting, and higher arbitrage risk.

Overall, it means that arbitrageurs will face higher costs to trade and more uncertainty when trying to exploit market inefficiencies, which in turn results in both less efficient prices and delays in incorporating pessimistic investors’ opinions.

To download the paper, just click here.

Friday, August 7, 2015

Fighting the shorts

Today, I saw this article on the FT about short sellers and how companies try to prevent them from hitting share prices is very related to my academic work.

The video is on the long side, but it explains what short sellers do, how they make money, and what companies do to fight short sellers.

This part spells outs the main motivating story in my paper with Melissa Prado and Jason Sturgess:
"Coincidentally, large investors in the company chose to withdraw some stock from the pool available to borrow, leaving short sellers wary they would be forced to close positions and brokers working to find stock to lend. The share price swiftly rebounded."

Tuesday, July 28, 2015

New Paper - Conglomerate Discount and Short Sales

An outstanding puzzle in Finance is why conglomerates are traded at a discount relative to focused firms. While some academics say that the discount doesn't even exist, we (hopefully!) bring a new angle to this discussion.

We show that conglomerates have less dispersion of opinions than focused firms and face relatively fewer short sales constraints. These two effects partially explains why we observe a discount, being due to trading frictions.

The first version of a paper (together with Adam Reed and Ed van Wesep) is on SSRN:

Any comments will be appreciated! 

Monday, July 13, 2015

Greece and Reality

So Greece accepted all conditions from the creditors. Is that a surprise to anyone other than the dreamers from the left that think money grows in trees? The EU made many mistakes and could have avoided lots of pain to everyone involved, but dealing with deluded politicians on the Greek side caused even greater harm. while is totally democratic that Greek citizens might not want the deal they offer,citizens from other countries can also democratically chose not to throw away money to a country that doesn't want to implement the painful reformss that are needed. As usual in life, there is no free lunch.

Monday, July 6, 2015

US Housing Market Value

I read this post with an interesting animated gif looking at US residential property values within each county in the US. Note how most of the value is concentrated in California and the Northeast. From what I read, this is an example of a cartogram. Cool.

It starts with a standard map where yellow means relatively cheap residential area, while the more red, the higher the value.

This is the static picture (with labels):

Monday, June 29, 2015

The Iron Price

People should realize that Brazil's 02-08 growth was in spite of Lula and PT. The current recession is because of him and his party.

Brazil is now paying  the price of PT's cronysm and their outdated economic ideas.

It is sad to say but it will take a long time to get out of this mess.

Friday, May 22, 2015

Don't Be a Jerk

Very nice (and long) article.  I liked this passage above all:

"To summarize: being a jerk is likely to fail you, at least in the long run, if it brings no spillover benefits to the group; if your professional transactions involve people you’ll have to deal with over and over again; if you stumble even once; and finally, if you lack the powerful charismatic aura of a Steve Jobs. (It’s also marginally more likely to fail you, several studies suggest, if you’re a woman.) Which is to say: being a jerk will fail most people most of the time."

There you go. Don't be a jerk!

Friday, May 15, 2015

Shame on you Brazil

Really embarrassed to be a Brazilian these days.

So many economic mistakes were made and we are now paying dearly for them. It will be a while until we get back on track...

Friday, April 3, 2015

Me and Dior and I

Today I went to the movies with myself to watch the Dior and I movie, which I highly recommend everyone to see. I usually enjoy these documentaries regardless of whether it's the editing that convey all of the magic.

Nonetheless, I particularly liked it for two reasons:

i) It's always amazing to see geniuses working and the ups and downs of creative processes. You can almost see the sparkle in Ralf Simons' eyes when he has a good idea and the feeling of elation once he sees his creations finally being shown to the world.

ii) At the same time, you can clearly see the pressure he goes through to deliver on his first collection and the tight deadline he's working on.

All this made me think about the process of writing an academic paper. While no movie director could ever make the process of a research paper even remotely interesting, the sudden realization of a good idea or a good outcome of your statistical tests are amazing. The small pleasures that makes this profession rewarding. The feeling that you are probably the first person in the world to see those results is great.

Anyway, watch the documentary. It's really good.

Sunday, March 8, 2015

Adam Tooze's "Wages of Destruction" Review and 21st century Hyperpowers

I just read Brad DeLong's post on David Frum's review of the "Wages of Destruction".

Two observations to be made.

i) "Wages of Destruction" is an amazing book. I read it a few years ago and it has the best review of WW2 from an economic point of view I've read.

ii) Frum and De Long's analysis of how the British transitioned from no longer being a hyper power and the parallels to how the US should adjust to the likely emergence of China/India in the next 20-50 years are very interesting.

Sunday, December 14, 2014

Seminar in Brazil

Tomorrow I'll present a fresh paper, joint with Murillo Campello (Cornell) at PUC-RJ. It's so new that the paper hasn't even been uploaded to SSRN yet!

Anyway, here are the details and short (and very tentative) abstract:
  • Local: Sala F200
  • Data: 16/12/2014
  • Horário: 17:00 hrs
The precipitous growth of institutional ownership has changed the makeup of corporate equity ownership and trading activity. Institutions are the also the largest lenders in the equity lending market. Using quasi-experimental methods within a precautionary savings framework, we show that companies save more cash and repurchase more stocks when more stocks are available for shorting.A one-interquartile range (IQR) increase in lendable supply is associated with a 1.3% increase in cash holdings in the subsequent quarter, equivalent to 5.9% of the IQR variation observed for cash holding.

Saturday, October 25, 2014

Last presidential debate (in Portuguese)

Acabo de assistir ao debate. Realmente foi a melhor performance do Aécio e a pior da Dilma. No púlpito ela demosntrava seu total desconforto em estar ali. Em termos de confiança e calma parece que o Aécio era o presidente e ela a que estava correndo atrás.

Pena que a esquerdas não tenham um candidato com o dom da fala e do raciocínio para que o debate sobre o futuro do país fosse mais racional e inteligente. A Dilma claramente não quer fazer campanha e tem aquela cara de asco ao ser contrariada.

Assim como no começo ela só falava "Mais Médicos" e "no que se refere" agora ela só fala de "Pronatec" e "estarrecida". Parece que faz aula com o marketeiro e foca na palavra da semana que, então, passa a usar 400 vezes por hora.

Além das mentiradas (e confusões mentais) de sempre sobre economia, funcionamento do Congresso e vida da poupulação real, ficou claro a falta de propostas para o futuro e a humildade em reconhecer os problemas atuais para que mudanças sejam feitas. Realmente o pior momento foi dizer pra senhora economista fazer um curso técnico no SENAI. Lamentável.

Como as intenções de voto estão muito próximas, conquistar os poucos indecisos pode fazer a diferença no final. Nisso acho que o Áecio deu um banho e creio que arrebatou mais que a Dilma.

Espero que a escolha final sejapelo Aécio.

Monday, October 20, 2014

The life of PhD in pictures

Interesting visualization of a what doing a PhD looks like: 

Tuesday, October 14, 2014

A Call to Economic Rationality in Brazil

In a couple of weeks Brazilians will go to the polls in the last round of voting in the presidential elections.

Two academic colleagues have written an economic manisfesto trying to deconstruct some of the fallacious arguments being used by the government during the campaign. It has been subscribed by many academic including myself.

The opposition hasn't been this close to winning an election since 1998. Let's hope they do for the sake of the country.

You can read it here (it's in Portuguese) and also the list of academics that have undersigned it: