FinanceProfessor

A class introduction (no numbers) to the Racism topic.  Frankly, I don't think it is great, but for such an important topic it did need an introduction.   

Short version: racism is really bad, but still here, and in this section we will look at the psychology of racism and what we need to do to overcome biases.   

Most work in the field of behavioral finance focuses on the investment side of the fence.  That is unfortunate as managers are people too and they fall prey to many of the same biases that investors do. In this section of the course we will look at how overconfident managers will take bigger risks than more rational managers. 

WHen most people think of behavioral finance, they think of the material we will cover in this section. It is a look at how biases can impact investor returns.  

We will look at bubbles, excessive trading (and risk taking), and the social aspects of investing.

From Marketing to politics., from Healthcare to Education,  from International Development to treating addictions, the things we learned in Behavioral Finance and Economics can be used to help make the world a better place.    

This episode gives a short introduction into the two concepts covered in this part class:

1. The concept of Scarcity as described in Mullainathan and Shafer's great book: Scarcity: The New Science of Having Less and How It Defines Our Lives.  
2. How having too little (or alternatively having too much stress) can impact brain development and rational decision making. 

PS: this may be my favorite part of the class.  I see it constantly in my own life, but also in those of many of the people that BonaResponds helps.  

While this is not a science class, we do need to have an understanding of the various parts of the brain, how we look at the brain, and how what we do (or don't do) can influence the brain and our decisions.  We also look some at addiction as it gives us insights into how the brain works, and also in the context of being "addicted to risk".  

This is an introduction to behavioral biases.  

The short version: thinking is hard.  It can take time and effort.  So we have evolved to come up with shortcuts and biases that do not always help us when it comes to financial decisions (or other kinds of decisions either).

This material is central to the whole course.  So be sure to understand it as you go through the various topics covered. 

A few of the links we will be covering in class are: 

Wikipedia, but very well done: https://en.wikipedia.org/wiki/List_of_cognitive_biases

Daniel Kahneman - Your Mind and Your Mo

Daniel Kahneman - Thinking, Fast and Slow

Daniel Kahneman - Masters in Business

Daniel Kahneman - Thinking, Fast and Slow Animated Book Review

FightMediocrity - Priming, Halo Effect, Hindsight Bias - Thinking, Fast and Slow (Part 3)

Hidden Brain - I’m Right, You’re Wrong

Big Think - Your Brain is so Judgemental

Long Luong - Loss Aversion and The Endowment Effect

Behavioral Finance and Market Behavior

Meir Statman - Interview with Meir Statman: Masters in Business (Audio)

Laurie Santos -  A Monkey Economy as Irrational as Ours

An Introduction to Behavioral Finance and Behavioral Economics at St. Bonaventure University.  It is tailored to MBA 639 but can be listened to by anyone.  

Not sure what happened to the audio quality.  Sounds like I was in a tunnel.  Which I assure you I was not.  But I recorded it twice and it sounded the same.  So, here we go!:

Here are some notes for those who are interested:

My presentation on it:

https://www.dropbox.com/s/tqzxaxzaujtiyrs/Presentation%20for%20Behavioral%20Science%20and%20Teaching%20Paper%20%281%29.pptx?dl=0

What is Behavioral Economics?

https://vimeo.com/38663941

What is Behavioral Finance? 

http://www.ted.com/talks/dan_ariely_asks_are_we_in_control_of_our_own_decisions

Game Theory:

http://www.cdam.lse.ac.uk/Reports/Files/cdam-2001-09.pdf

If you want more, stay tuned!  Or better, sign up for my class :) 

Hostile takeover defenses.  Takeover waves. 

Still no voice, but a little better. 

how to fight acquisitions

Pre-bid defenses:

• Maximize Shareholder value!
• Shark repellents
• Super majority: For a takeover, you need more than 51% of votes
• Fair Price Amendments: any takeover must be for more than some “fair price”
• Staggered Boards: Board members not all up for election at the same time
• Poison Pills (AKA Shareholder rights plans)
• Shop around clause: give you the right to shop around for a better deal
• Dual classes of shares where managers/insiders hold multiple votes per share

Post offer (i.e. you are in play!)

• Asset restructuring

  • selling crown's jewels (divestiture, carve-out, spin-off)

  • one-time dividend (this is also a Financial Restructuring)

• Financial Restructuring

  • Buyback--possibly greenmail

  • Increase debt

  • one-time dividend (this is also an asset restructuring)

• Litigation-sue everyone

• Make it political: take it to the press etc

• Pac-man Defense (make a counter bid on acquirer)

• White Knights- Find someone to come and take you over on more friendly terms.

In an attempt to wrap up MBA 610, I made a list of things on the horizon.  It was a tough list to make.  A few things that were really close: FinTech, raising interest rates, the role of government in markets, and more.  

The list:

1. Income and Wealth inequality

2. The Anti-globalization movement (a blip or a longer term thing?)

3. AI and the coming machines

4. Living longer and slower population growth

5. Health Care Costs

6. Global Warming

7. The bottom billion

8. Big Data and online secrecy

9. Confirmation bias and “us vs them”

10. The changing of Wall Street: Passive and FinTech