Thursday, April 20, 2006

A Quick One

by Ken Houghton

Packing my office (such as it is) and trying to catch up from the holidays, but this has to be noted, especially in the context of my soon-to-be-continuing rants series about Investing in Equities.

So call this Post 1A of that series.

Attended a seminar last night from an Investment Professional who was giving members of our firm a briefing about "the capital markets." Now, since about 90-95% of all firms can only access the debt (read: Fixed Income [FI]) markets, and since I've spent my career (term used loosely) in FI, I was basically using it for the Continuing Ed credit and to see if there was something new happening in FI.

A glance at the presentation revealed that the speaker was going to concentrate on Equities. I grabbed a brownie and went back upstairs, where I could watch it and work at the same time.

The presentation--though by a gentleman who is my age (or even older), and with a similar background--was rather superficial. If it was intended for our just-out-of-school hires (too early, no?), then I fear for our hiring practices.

There were, however, two notable things in it:
(1) He noted that most companies now are insisting on Dutch Auction for their IPOs. More on this on a later rock, but, as you might guess, he was not overly supportive of the idea.

(2) He made it clear that the market has little sense of history, since he spoke of Enron as if it were the first time the ratings agencies were completely caught off-guard.

The superficiality issue reminds me of a presentation given to us by a usually well-paid consultant on our then-nascent ESOP. The normal supply and demand factors were pretty obvious -- the usual audiences might be rationally ignorant of the details of the plans -- but that didn't work in a room where the modal degree held was a PhD in economics.

The final arrangement (which included an unfortunate elevator trip in which the guy mistook my youthful appearance for being a member of the junior staff) involved his employer agreeing not to be paid for the seminar, presumably in return for otherwise retaining our business.
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