CFA Society Chicago NewsBrief
Sep. 30, 2014

Yellen warning on unsettled rate timetable ignored by investors
Federal Reserve Chair Janet Yellen says she wants investors to be prepared for the possibility that the Fed will raise interest rates sooner than they currently project. Her words are going unheeded. Volatility across stocks, bonds and currencies worldwide is close to record or multi-year lows, even after Yellen cautioned that the Fed’s commitment to keep interest rates near zero for a “considerable time” could change if U.S. economic performance continues to exceed expectations.More

Siegel: 'Why the Tried and True Triumph over the Bold and New'
CFA Chicago
Jeremy Siegel is the Russell E. Palmer Professor of Finance at the Wharton School of the University of Pennsylvania. In addition to being one of the most respected business school professors in the nation, Siegel has a long and storied career in finance, as well as highly-acclaimed books on investments. Join CFA Chicago for the Jeremy Siegel Distinguished Speaker Series, on Nov. 13. The event will be held from 12 p.m. - 1 p.m. at The University Club. Tickets will sell quickly, so register today.More

Deadline for the 2014 Annual Dinner is Thursday
CFA Chicago
The 2014 Annual Dinner is our premier networking event of the year, bringing together nearly 1,000 investment professionals and key decision-makers. The Officers and Directors of CFA Society Chicago invite you to attend this year's event where you will have the opportunity to socialize with individual members and show support for the new class of CFA Charterholders, the CFA designation and for the society. Gov. Jon Huntsman will serve as the keynote speaker, and Ralph Wanger, CFA, will be awarded the Hortense Friedman, CFA, Award for Excellence. The deadline for registration is Oct. 2 at 5 p.m., so register today to secure your spot.More

Do valuation shorts work?
CFA Institute's Enterprising Investor
Reasons to short a stock fall broadly into two “buckets:" Fraud and valuation. Fraud shorts are stocks where the (short) investor believes the company is misleading the public about its business. This can range from mild and small-scale, such as aggressive but GAAP-defensible accounting, all the way up to massive and brazen fraud, such as fictitious revenue and profits. Let’s Gowex is a recent and spectacular example of the latter. More

Tick-size pilot program could help small caps
Pensions & Investments
The SEC's proposed tick-size pilot program targeting small-cap stocks should lead to improved access to capital for small companies, sources say, but whether that translates to higher returns for institutional small-cap investors is less clear. The proposed one-year program, announced by the Securities and Exchange Commission and created by the Financial Industry Regulatory Authority and national securities exchanges like the New York Stock Exchange, awaits a decision by the full commission before implementing.More

Lots of 'ticking time bombs' out there: Sternlicht
Closely followed investor Barry Sternlicht told CNBC that he really hopes the stock market's current run has at least two more years left. "I hope we' 2005, with a couple of years," said the Starwood Capital Group chairman and CEO, handicapping whether another financial crisis may be brewing and whether a recent stock plunge could be the start of the long-awaited correction.More

Which Chicago startup will be next with an IPO?
Crain's Chicago Business
The IPO market in the U.S. is dot-com hot and so are the prospects for Chicago companies hopeful for the big payday that comes by going public or getting acquired. More than two dozen technology companies could be IPO candidates or takeover targets, based on conversations with venture capitalists, investment bankers and entrepreneurs. Generally, they're companies that are pulling in tens of millions in revenue annually, growing at double-digit rates and backed by venture-capital funds.More

Jeremy Siegel vs. Zvi Bodie: Does equity risk decrease over time?
Value Walk
Stocks should be the asset class of choice for the long run, according to Wharton Professor Jeremy Siegel — and he has provided the data to prove it. But that paradigm has been challenged by Boston University Professor Zvi Bodie and others, who have shown that stocks become riskier the longer one owns them. Either view has profound implications for whether equity allocations should increase or decrease over time. Using Monte Carlo simulations, Value Walk provides guidance for the advisory profession.More

Can this man save the Chicago Stock Exchange?
Crain's Chicago Business
If John Kerin has his way, one of Chicago's oldest companies will be one of the city's newest tech darlings. Mr. Kerin is the new CEO of CHX Holdings Inc., privately held parent of the 132-year-old Chicago Stock Exchange. When he started at the exchange in 1988, it had 1,000 employees and handled about 10 percent of trading volume in stocks in the U.S. Today its headcount is down to 80, while its market share has shrunk to just half of one percent.More

The bond king has left the building
Pensions & Investments
PIMCO executives began preparing months ago for William H. Gross' departure, sources said, although the announcement on Sept. 26 that he was leaving to become a portfolio manager at Janus Capital Group surprised the money management industry and financial markets. “We've been hearing that there's been a replacement in place for quite some time,” said Alan Kosan, senior vice president and head of alpha research at investment consultant Segal Rogerscasey, Darien, Connecticut.More

Ex-Illinois president of Citibank lands at Urban Partnership Bank
Crain's Chicago Business
The former Illinois president of banking goliath Citibank has come out of retirement to run retail banking for far smaller Urban Partnership Bank. Darryl Hendricks, who retired from Citibank more than two years ago, is the new director of consumer banking at Chicago-based Urban Partnership Bank, a business and mortgage lender in low-income minority neighborhoods in Chicago and Detroit.More

Yellen warning on unsettled rate timetable ignored by investors
Federal Reserve Chair Janet Yellen says she wants investors to be prepared for the possibility that the Fed will raise interest rates sooner than they currently project. Her words are going unheeded. More

Gene Fama: When's the right time for active investing? Never
Early on in his presentation at the Morningstar ETF conference,, Eugene Fama, the 2013 Nobel Prize winner in economic sciences, asked himself a simple question. “When is active management good? The answer is ‘Never.’"More

The wealthy have good news for Chicago, but (much) less of it for startups
Chicago Business Journal
Some good news for Chicago. The city's very rich are bullish on Chicago's economic future. But about the state of Illinois as whole, much less so, according to a new survey of 326 high net-worth investors in the Chicago area conducted between May and July of this year by Morgan Stanley's Wealth Management unit.More