A collection of stories from SmartBrief publications and around the web…
Buffett’s special investing sauce revealed: This paper from Yale University dissects the winning investment strategy that transformed regular ol’ Warren Buffett into the Oracle of Omaha. The paper is fascinating in that it reveals a strategy that isn’t really all that complex. Buffett has utilized leverage of around 1.6-to-1 to purchase undervalued stocks that he then holds through market volatility. The “secret” comes in choosing the right stocks to buy and when. But when you consider Berkshire Hathaway’s portfolio, it’s not like Buffett picks firms unknown to everyone else in the market.
Gensler walks out the saloon doors: Tuesday’s CFTC vote on the Volcker rule reminds me of some old Western movie. Chairman Gary Gensler appears happy to cast one last dramatic vote before exiting through the swinging saloon double-doors.
Tom Ridge might not be running the show at the Department of Homeland Security, but that doesn’t mean the former secretary isn’t up to speed on the threat cyber attacks pose to the U.S. government and private industries.
On the government front, Ridge believes the U.S. changed the landscape when it used Malware to cripple the nuclear program of Iran. Ridge says the move signaled to the world that it was OK to use cyberwarfare as a tool to implement international policy initiatives. That means the gloves are off and all U.S. entities are now fair game, according to Ridge.
Ridge was joined on a panel at CME Group’s annual Global Financial Leadership Conference by Kevin Mandia, a cybersecurity expert who is founder and CEO of Mandiant. Mandia says cyber threats can be placed into three basic categories:
- Nation-states: Governments working to affect policy changes or weaken rivals (U.S., China, Iran, Syria, etc).
As the clock ticks down on his time as chairman of the Commodity Futures Trading Commission, Gary Gensler took time Tuesday to highlight some of the achievements at the CFTC during his time at the helm. Speaking at CME Group’s annual Global Financial Leadership Conference, Gensler shared details on how the CFTC’s efforts in implementing the Dodd-Frank Act have helped increase transparency in the swaps market.
Gensler tipped his hat to the futures market, saying President Obama, Congress and regulators often looked at it as a template when conceptualizing and writing rules for other markets. “For decades, the futures market has worked well,” Gensler said. “Even through the crisis of 2008, it stood the test of time.”
Gensler said the CFTC will soon start publishing aggregate data coming from three swaps data repositories every Wednesday. Whether that data will become market-moving information remains to be seen.
“The public can see the price and volume of each swap transaction as it occurs. (read more…)
Terry Duffy is the Executive Chairman and President of CME Group, which is hosting its annual Global Financial Leadership Conference next week in Naples, Fla. Mr. Duffy chatted with SmartBrief and shared more background on the GFLC.
1. What is the goal of the GFLC? How did it get started?
The Global Financial Leadership Conference is an exclusive event that brings together decision-makers from the world’s leading financial institutions to discuss emerging geopolitical trends, debate critical economic issues and share perspectives on future developments in the financial marketplace. Our goal in developing GFLC was to provide a venue for some of the brightest minds in business, economics, media and politics to have a dialogue about current issues and risk in our global economy. As our record attendance this year demonstrates, we’ve been very successful in doing that. Since our inaugural conference in 2008, GFLC has established itself as the “Davos of Derivatives,” becoming one of the most important events for our industry leaders. (read more…)
Paul E. Purcell, chairman, CEO and president of Robert W. Baird & Co., sees a lot of positive signs in the financial markets industry. U.S. banks are better capitalized than their European counterparts. Individual investors have come back to the bullish stock market. Robust energy markets are leading to the “re-industrialization” of America, he noted Tuesday during a Q&A at the SIFMA Annual Meeting.
“We have the deepest and most efficient capital markets in the world,” he said.
Yet the aftermath of the financial crisis has hurt the industry’s creditability with the public. “We have to clean up our act and get out of the newspapers,” he said. “We need to explain the good work that we do.”
Part of the solution is for financial firms to be “more client-driven, less product-driven,” Purcell said. He worries that high frequency trading has diminished confidence individual investors have in the stock market. He also suggested the industry should continue to increase capital requirements and de-risk. (read more…)