Archive for December 2011

How to Loose $1.2 Billion – Without Excuses

I was today reading a Financial Times article about the collapse of MF Global, a global broker dealer. If you did not know the story, here’s a short history:
On October 31st MF Global reviewed that the company lost $1.2 billion from various trades going the wrong direction. The problem was that no warning was issued in advance, making the sudden collapse a shock.
What is interesting is that Mr. Corzine, MF’s previous chief executive, maintains that “I simply do not know where the money is”. Apparently, multiple separation of trading rules were breached and the money in these trades disappeared…
Mr. Corzine’s testimony of today in front House Committee on Agriculture will be enlightning (if he decides to say anything, given his wish to prevail on the 5th amendment). However, it also highlights some equally unbelievable possibilities:
– either the trades (especially the millisecond electronic trades that now most of the brokers undertake) are uncontrollable sometimes (which we testified twice this year with the flash crashes)
– either the money were hidden by the company and the personnel is not willing to disclose,
– either some other (equally unbelievable) possibility.
I am very curious to hear what the characters involved have to say about this and how the story will unfold. Until then, I still hold my belief that at such scale it is possible that something went terribly wrong… or terribly well for somebody else.

Kindle versus the IPad 2 Tablet – Who Wins?

As an owner of a smartphone, Kindle or a tablet (namely the famous IPad2), people often ask me which one of these devices is mostly useful. The answer is always easy – it depends. It depends on your needs, expectations and lifestyle. It is hard nowadays to resist the temptation of buying an IPad or a tablet PC. There are so many things you can do… yet not so many more compared with what you can do with other gadgets. For me, IPad is an expensive mini-PC – easy to use, fantastic for browsing, emails and small games, but still an expensive gadget. Yet, it is wonderful for several purposes. For example, for reading. You can install hundreds of reading applications and buy books online, all of them looking wonderful in IPad’s screen. You can even install the Kindle app
For me, IPad 2 has a major drawback – it is hard to read books on it. For magazines, the Ipad is the ultimate platform if you want colorful and portable information. But if it is normal reading for normal things that you are looking for, Ipad 2 fades in front of Kindle.
Kindle is ideal for a bookworm with lots of traveling. The display does not emit any radiation, which means that you can read without your eyes getting very tired quickly. For me, a guy wearing glasses, Kindle is a bless – I can have the benefits of a tablet and the qualities of the paper reading in a small, portable device. And kindle is much cheaper than an Ipad – less than half of it.
But this is not all of it. Amazon has a great service called subscriptions – you can retrieve tens of magazines and journals on your kindle and read them over your coffee or in your launch break. Call me a fan, yes, yet the synchronizing of kindle for the magazines or the purchased books is simple and works flawlessly. Read more

Book Review – “Multinational Financial Management” (International Student Version) by Alan Shapiro

If you are a financial manager aspiring to an international career – or only if you want to understand the implications of the cross-border expansion of the companies, “Multinational Financial Management” must have a place in your book shelf. I’ve met in my life quite a few finance managers with international responsibilities – and not all of them understood exactly what were they doing. A key theme of this book is that most of the successful companies operate in an international environment and ignoring this can be at your (company’s) peril. In this complex and dynamic environment, financial management plays an essential role. The difference between one company or another lies no longer in the quality of the products or in the customer image. Strong competitive advantages come nowadays from having a differently configured supply chain (e.g. manufacturing in China) or from taking advantage of exchange rates or complex financial derivatives. There are nowadays production companies that can make more profits from exchange rate differences than from the production itself – see the case of some Swiss companies who saw a huge swing in their profits on the increase of the CHF versus other currencies.
“Multinational Financial Management” is written with a practical perspective in mind. You can find inside its covers basically all the topics related to a company’s corporate finance function – with an international twist. So don’t be surprised that most of the topics are well know from your BA in Finance – because they actually are. In here it is the practicalities that count. The focus goes to the more important topics, where the value is added for the companies – taxation differentials, appraising foreign investment projects or repatriating your profits with minimal costs. Even the presentation of the book mentions that it is a natural extension of the first course in the financial management. It is therefore too general sometimes – or maybe destined for a bachelor’s degree in finance rather than for an MBA. Read more