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  • The Capital Asset Pricing Model : The Vast Shortcomings & More Efficient Alternatives. [View instapost]
    It's interesting that you call the CAPM nonsense. It is not, the shortcomings are well known in the industry and there are alternatives e.g. the Arbitrage Pricing Theory (APT) which is a linear factor model that can accomodate other factors that you think should affect the cost of equity.

    The alternatives you mentioned above are not alternatives to the CAPM. The CAPM estimates the cost of equity while the alternatives you mentioned above do not. Altman Z-Score predicts bankruptcy probabilities while the Beneish model estimates the probability of earnings manipulation.
    Jun 18 08:40 PM | Likes Like |Link to Comment
  • The iPad Revolution: Naysayers Miss the Big Picture [View article]
    Good analysis. I also think the iPad will succeed. I particularly liked the comparison with the iPhone's first day sales. What is missing in your analysis are reasons why people will buy. The market segments that the iPad will appeal to and how the iPad can expand into other segments and identifying specific market segments will solidify the investment thesis by providing a basis for quantifiable analysis. Good read.
    Apr 17 10:03 AM | 2 Likes Like |Link to Comment
  • Citi's Financial Crisis Derivatives Should Be Banned [View article]
    While it is true that the new derivative - CLX is likely to increase systemic risk (I actually think that is true of any new investable financial product), the question for me is the regulatory environment for such risky instruments.

    First, the CLX should be transparently traded by listing on an exchange rather than over the counter. This will be a key step in the right direction. Second, all insurance-related financial products should be regulated much like regular insurance and this might require that financial firms setup entities that are not bankruptcy remote and which specifically deal in these products. Third, the risk of such products should be highlighted such that if any firm takes on "crazy" risk, then it should be allowed to shoulder all the repercussions.

    A salient question, however, is whether the parameters used in constructing the CLX are "good" predictors of a liquidity crisis.
    Feb 12 10:52 AM | Likes Like |Link to Comment
  • Look to Invest in Intuit [View article]
    Perhaps Intuit is a good acquisition candidate. Is it possible Oracle (ORCL) could be eyeing Intuit in a couple of years?
    Sep 19 06:44 PM | Likes Like |Link to Comment
  • Looking for Confirmation of Improving Market Conditions [View article]
    I think your idea of searching for a confirmation using global indexes is interesting. But there are a few caveats. Depending on the markets/indices that appear correlated in the current environment, one should also consider the fear factor, investors' perception of market risk, which affects the level global investable capital. The market price of risk, in my opinion, can be a major factor in market dislocations. Moreover, since rallies can sometimes be lagging indicators especially since the economy is coming out of a recession, I think it may be more reliable to follow the fundamentals instead of using the indexes as confirmation. The markets are not necessarily that efficient to incorporate all available information right away. However, I like the idea presented above. Thanks for the insight.
    Jul 23 11:24 AM | 2 Likes Like |Link to Comment