Tag: GMF

The morning of May 28, we walked to one of the world’s biggest names–JP Morgan. Here we met a campus recruiter from the HR department, an asset management associate specializing in alternative investment, and four Wash U graduates who currently work in a variety of asset management divisions. They shared with us their personal experience with JP Morgan and their working routine. After our lunch break we met another speaker, Michael Garvey, from JP Morgan asset management department who gave us some thoughts on endowment investment.

That afternoon we went to another famous financial service powerhouse, Jefferies. After a brief case study of Jefferies’ acquisition of a St. Louis historical site (Renaissance Grand Hotel), Mr. Stephen Wood gave us a knowledge-packed overview of the municipal bond markets. The lecture covered municipal bonds’ definition, characteristics, relation with the economic environment, performance compared with treasury bonds, relation with the mutual fund flows, its credit features, and the recent trends in state debts from a global perspective. Stephen was very knowledgeable in the municipal bonds area and provided us a lot technical information about this area, with which we were not previously familiar.

The lecture at Jefferies included a case study of the debt of the State of Illinois, especially in Chicago’s municipal bonds, which we also heard about in our visit to Standard & Poor’s the previous day. We gained a basic understanding of how bonds work, specifically municipal bonds’ position in governments’ obligations, and the way that municipal bonds are sold and traded.

We ended our day with Anthony Scaramucci, founder of SkyBridge, a global alternative investment firm that specializes in funds of hedge funds products. The first point he talked about was to build one’s reputation consistently, always doing the right thing legally and morally. Mr. Scaramucci also shared with us his opinions on the global economy. He thinks that our economy is in a post-traumatic stress disorder after the global crisis. Specific to the US economy, he mentioned that when the Fed couldn’t bring down the short term interest rate below zero, it started to play around with the long term interest rate, buying all the financial assets to lower the long term yield. Also, contrary to people’s expectation, the US housing market has not recovered, and neither has the US economy.

Mr. Scaramucci also spoke about deflation as a phenomenon worse than inflation. First, a dollar of money today will be worth more than a dollar of money tomorrow, which means that people would not spend their money today because they expect prices to be cheaper tomorrow. Second, deflation brings wages down. Firms could let some people go to keep wages affordable, creating unemployment. Third, deflation will make debt go up in real terms.

Guest Bloggers: Jianshi (Dennis) He, Xiaoran (Sharon) Sun, Changchang (Sophie) Wu (GMF 2015)

This is the eighth in a series of 10 blogs chronicling the experiences of 31 Global Master of Finance (GMF) dual degree students during their two week long immersion course in Washington, DC and New York. Each blog will be written by a small subset of students during their experience.

May 30 marked the final day of our amazing week in New York City. Dressed down in our casual attire, the class met on the famed Wall Street to participate in a guided tour through the financial heart of the city. We were privileged to have Mrs. Annaline Dinkelman as our guide for the day. Having worked at Morgan Stanley New York early in her career before becoming a day trader and entrepreneur, she is in many ways intimately connected to the culture and history of Lower Manhattan.

Our first stop was the Museum of American Finance. The class was given the opportunity to learn more about the evolution of the financial industry in the U.S. through the centuries. We saw how stock information was transmitted in the late 1800’s via the Edison telegraph machine all the way to the modern Bloomberg terminal.

Mrs. Dinkelman also briefly educated us on the changes in the currency system since U.S. independence. We were absolutely enthralled by the fascinating story of Alexander Hamilton and his gun duel, and mystified by the history of paper currency.

Next up, we had a walking tour of the financial district. Mrs. Dinkelman brought us to places with immense historical and cultural value. This includes Stone Street (the very first paved road in New York City), the famous charging bull statue (designed and built in 1987 following the crash of the stock market), Bowling Green (the southernmost tip of Manhattan), and the New York Stock Exchange (the oldest building was built in 1903).

Following that, we proceeded to Ground Zero, where the victims of 9/11 are honored. While at the memorial, Mrs. Dinkelman told us two interesting pieces of trivia about the memorial. First, the memorial is designed in a way that people are unable to see the bottom of the pool–to signify that life never ends and must go on. Second, the purpose of the waterfall is to give people a sense of calm and tranquility when they take a moment of silence to honor the victims.

The tour is a fitting closure to our tremendous week in New York. It puts into perspective what we have learned over the course of the past week (and also gave us ample opportunities to indulge the tourist in us). All in all, the week has been tiring, but extremely fulfilling! The memories of the trip will definitely stay with us for a long time to come!

Guest Bloggers: Wei Zhi Martin Sim, Xiao (Amy) Hu, Tuo (David) Xu (GMF 2015)

This is the 10th in a series of 10 blogs chronicling the experiences of 31 Global Master of Finance (GMF) dual degree students during their two week long immersion course in Washington, DC and New York. Each blog will be written by a small subset of students during their experience.

First thing on the morning of Friday, May 29, we encountered something that was brighter than the sun: the stacks of gold bars sitting in the New York Federal Reserve Bank gold reserve vault. The vault is dug so deep that it is sitting on the bedrock of the Earth itself, as the vault and the gold that it contains weighs many tons and needed a strong foundation–and of course for good safety measures.

New York Federal Reserve Building

We learned that not all of the gold that is stored in the vault actually belongs to the U.S., but actually to other foreign institutions and sovereigns. The New York Federal Reserve Bank provides a custodian service to help store and safeguard these gold assets for others for free, and only charges a nominal fee of $1.75 to move/transport a gold bar. The value of each gold bar is primarily determined by the purity of the gold bar, the weight of the gold bar, and obviously the price of gold.

Next, we met with Alexander Heil, Chief Economist at the Port Authority of New York and New Jersey, which is a self-sustaining entity whose main function is to provide transportation services for commercial activities. Revenues are generated from road tolls, train ticket charges, shipping fees, and aviation fees, which are used to offset expenses like employee compensation, contract services, and financing new transportation projects.

To raise capital from debt markets, the Port Authority issues Consolidated Bonds & Notes, which have a first lien on consolidated multiple revenue streams as compared to that of an individual revenue stream. This allows for cross-subsidization among the different revenue streams, as there are some revenue streams which are loss-making, such as train transportation (a.k.a. PATH). This is a political policy decision to operate such revenue streams at a loss, to make it more affordable for the low-middle income demographic.

After a short lunch break, we congregated at the office of Clayton Dubilier & Rice (CD&R) to learn from one of its Partners, Tom Franco. CD&R is a private equity firm, whose competitive advantage is that it only invests in companies which meet their requirements (e.g. being a market leader) and specialize in operational value improvements. The first reason is that only a market leader can better capitalize on economies of scale and have a greater ability of inorganic growth (i.e. the acquisition of smaller companies). The second reason is that CD&R has a committee of operating partners who were previously top management personnel from successful companies (e.g. Unilever, GE, Disney, etc.), who use their accumulated experience in these industries to solve operating problems and guide the management personnel of these acquired portfolio companies.

Last but not least, we had the opportunity to meet with Chris Gunther, Managing Director, and Dr. Rudiger Stucke, Director and Head of Quantitative Research; both are in the Fundraising and Investor Relations division of Warburg Pincus. Warburg Pincus is one of the oldest and largest private equity firms in the industry. Their main specialization is in growth equity in the technology, healthcare, financial services, industrial, and energy industries, preferably in companies which have a predictable and steady cashflow and use the business-to-business (B to B) business model. However, due to its immense size, the changing economic landscape, and emerging markets such as China and India, this is not a strategy that is strictly adhered to.

Guest Bloggers: Jacob Ng, Sijia Song, Yangyan (Susan) Duan (GMF 2015)

This is the ninth in a series of 10 blogs chronicling the experiences of 31 Global Master of Finance (GMF) dual degree students during their two week long immersion course in Washington, DC and New York. Each blog will be written by a small subset of students during their experience.

Images: Flickr Creative Commons, Ken Lund, Federal Reserve Bank of New York, Manhattan; Bullion Vault, gold bar

The morning of May 27, we experienced the “typical” New York City rush hour; it was crazy! We started with a visit to Standard & Poor’s (S&P) headquarters in Manhattan. The speakers kindly talked about what the rating agency does, what credit ratings entail, and elaborated on the process behind rating assessments. They further expanded our knowledge on public finance, how S&P adjusts its rating opinions, and how it reacts when emergency situations occur. Finally, the speakers focused on the changes and lessons learned after the Global Financial Crisis from the perspective of a credit agency. It was a very joyful and meaningful field trip.

In the afternoon, we traveled to Neuberger Berman (NB), a private, employee-owned investment management firm also based in New York. We were honored to spend two hours with Chief Financial Officer William Arnold and a couple of specialists from different departments of the firm. They gave us a brief introduction to NB and how it became an employee-owned firm from a subsidiary of Lehman Brothers. Also, they mentioned the loyalty of the employees, which is a difference-maker compared with other corporations; we were highly impressed. Successively, they shared their opinions on challenges in the industry of mutual funds; talked about their municipal bond portfolios; and the role of active versus passive investment management. We also got some interesting insight on the life of an employee before and after the Lehman collapse, which is not an ordinary story for a student to hear.

To conclude such a productive and enriching day, we ventured through NYC traffic once more (this time by car) in order to meet Bob Eick of Waterfall Asset Management and Nick Verbitsky, film producer and Emmy Award winner. Mr. Eick introduced us to the ins and outs of a credit-focused hedge fund, briefly explained how his fund quantifies risk, and the markets in which it participates – often property sold by banks. The following Q&A allowed us to learn more about Mr. Eick on a personal level and about his view on failure, which according to him, shapes people into better professionals.

Documentary on insider trading was shown on the PBS program Frontline in January 2014.

Finally, we were also exposed to the film/documentary industry thanks to the talk by Mr. Verbitsky and got a chance to view one of his films – “To Catch a Trader” – while also enjoying some pizza and refreshments. The day was incredible and we’re excited about our next learning opportunities in the upcoming days.

Guest Bloggers: Marco Iachini, Xinran (Joy) Chen, Shibo (April) Yu (GMF 2015)

This is the seventh in a series of 10 blogs chronicling the experiences of 31 Global Master of Finance (GMF) dual degree students during their two week long immersion course in Washington, DC and New York. Each blog will be written by a small subset of students during their experience.

Image: NYC Subway, Flickr, Creative Commons, Satish Krishnamurthy

We started class again after Memorial Day  in New York City with Mr. John Rogan, Managing Director at Russell Reynolds Associates. The firm is known to exclusively recruit executive positions for many of the top companies globally, including Coca-Cola and Bank of America.

This is the sixth in a series of 10 blogs chronicling the experiences of 31 Global Master of Finance (GMF) dual degree students during their two week long immersion course in Washington, DC and New York. Each blog will be written by a small subset of students during their experience.

Mr. Rogan spoke to us about current trends in hiring, the importance of casting a wide net for your first job, and highlighted the skills important to move up the ladder. Our professor Richard Ryffel also pointed out the importance of networking in a meaningful and impactful way instead of simply inviting people on LinkedIn.

Danny Meyer

Although we wish we had a Shake Shack burger for lunch today (the line was rather discouraging), something more wonderful happened. We had the chance to meet one of our very own–Danny Meyer. Mr. Meyer is a hospitality entrepreneur originally from St. Louis and CEO of Union Square Hospitality Group. Danny shared with us Union Square’s culture of hospitality, which in his opinion is the key to many aspects of his business.

When asked about how he view challenges and difficulties in expanding his business, Danny used an interesting metaphor related to surfing: Problems in business are like waves for surfers; they will keep coming. But if you love surfing, you will learn to ride the waves.

After paying a short visit to the original Shake Shack location, we were off to Goldman Sachs for the last stop of the day. The guest speaker, Mr. Mark Dehnert, is an experienced investment banking veteran and a Washington University alum. He is now the Managing Director of Goldman Sachs Execution & Clearing.

With extensive experience in derivatives trading, quantitative research, and algorithmic trading (e.g. High Frequency Trading), Mr. Dehnert was able to elaborate on a wide range of issues, from market news to how social networking has played a role in trading. For instance, Mr. Dehnert pointed out how trading has evolved to become more statistically oriented, as compared to days past when intuitions had a bigger role in driving trading decisions. Programming skills are highly preferred for graduate job candidates, when integration among front desk trading, quantitative research, and programming continue to deepen.

Mr. Dehnert also mentioned the increase in compliance cost associated with regulatory reform in the post-crisis era. Banks are forced to pass the cost to market in the form of higher bid-ask spread, which decreased market liquidity. In the worst cases, banks simply chose to exit businesses because of the excessive capital requirements, which resonated with what we heard from Mr. Richard Choi in Washington, D.C. on the first leg of the trip.

Guest Bloggers: Joshua Joseph, Yuan (Scotty) Hou, Amy Yu (GMF 2015)

Images from Union Square Hospitality Group website.

Friday, May 22 marked the last day at the Brookings Institute, and we did something a bit different. In addition to learning more about regulatory bodies, we had a flavor of the financial industry from the perspective of the private sector.

We started the day with some pretty exciting stories from Bill Camp, former Executive Vice President & Chief Financial Officer of Washington Real Estate Investment Trust (REIT). Drawing on his personal experiences, Mr. Camp introduced the responsibilities as a CFO, especially emphasizing the importance of accessing the capital market.

The second talk was a brief introduction of the Municipal Securities Rulemaking Board (MSRB) and the municipal market by Lynnette Kelly, MSRB’s Executive Director. We were guided through the unique funding model of municipal projects in the US. Apart from regulating brokers, dealers and advisors, MSRB also reaches out to investors–especially retail investors–by providing information and education on an electronic platform called “EMMA.”

Next, we engaged in a heated discussion with Jonathan Weisman, an economic policy reporter for The New York Times, who provided a unique perspective regarding some major concerns that the US government is currently dealing with. He touched on topics including IMF governance structure, the re-authorization of Export-Import Bank, and the Trans Pacific Partnership. In addition, he shared some interesting stories about covering the Obama campaign.

Frank Keating

The last speaker totally blew our minds. The Honorable Frank Keating, President and CEO of the American Bankers Association and former Governor of Oklahoma, comes from an economic background. He is also a big lover of racing sailboats, which requires strategic and analytical thinking. One day it strikes him that such a unique skill set can also be applied to investments; he then started an investment firm from scratch. Despite the ups and downs of the market, he always has a strong belief in sustainable competitive advantages and disciplined investment strategies.

Thanks to the Brookings Institute, we were able to have this once-in-a-lifetime opportunity to interact with all these amazing speakers. After such a wonderful week, we cannot wait to begin our journey in New York.

Guest Bloggers: Haojia Qi, Mengxing Xu, Qi Sun (GMF 2015)

This is the fifth in a series of 10 blogs chronicling the experiences of 31 Global Master of Finance (GMF) dual degree students during their two week long immersion course in Washington, DC and New York. Each blog will be written by a small subset of students during their experience.