markets
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The markets for debt, both public and private far exceed the entire stock market in value and importance. The U.S. Treasury issues debt of various maturities through auctions, which are open only to authorized buyers. Corporations issue debt with investment banks as intermediaries. The interest rates are not set by the Treasury, the corporations or the investment bankers, but are determined by the market, reflecting economic forces about w...more
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This lecture gives a brief history of the young field of financial theory, which began in business schools quite separate from economics, and of my growing interest in the field and in Wall Street. A cornerstone of standard financial theory is the efficient markets hypothesis, but that has been discredited by the financial crisis of 2007-09. This lecture describes the kinds of questions standard financial theory nevertheless answers well. ...more
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Regulation of financial and securities markets is intended to protect investors while still enabling them to make personal investment decisions. Psychological phenomena, such as magical thinking, overconfidence, and representativeness heuristic can cause deviations from rational behavior and distort financial decision-making. However, regulation and regulatory bodies, such as the SEC, FDIC, and SIPC, most of which were created just after t...more
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Professor Shiller provides a description of the course, Financial Markets, including administrative details and the topics to be discussed in each lecture. He briefly discusses the importance of studying finance and each key topic. Lecture topics will include: behavioral finance, financial technology, financial instruments, commercial banking, investment banking, financial markets and institutions, real estate, regulation, monetary policy,...more
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Frank Levinson's Top 10 Things You Must Have to Start a Business. These include: 1) Spending everything on a good team and equipment 2) Letting people know the company is in business 3) Raising limited capital 4) Taking stock of a company and determining its needs 5) Being open to opportunities 6) Having a supportive family 7) Targeting mass markets, not just niche markets 8) Having confidence in new ideas 9) Acquiring an...more
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Eisenhardt explains her findings about teams and markets using the Surfer Model of Venture Growth. In her research, she found that there is great synergy between great teams and great markets. The returns obtained by this pair dwarf any other combination.
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Scott describes his experience at Stratacom where for the first 5 years the company lost a lot of money and had modest revenue growth, and then after some refocusing of resources, the company did really well and was eventually bought out for 5 billion dollars. He explains that what changed was their target market, and not the people in the company. He states that identifying markets with high growth and attaching oneself to such markets is...more
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Over time, economists' justifications for why free markets are a good thing have changed. In the first few classes, we saw how under some conditions, the competitive allocation maximizes the sum of agents' utilities. When it was found that this property didn't hold generally, the idea of Pareto efficiency was developed. This class reviews two proofs that equilibrium is Pareto efficient, looking at the arguments of economists Edgeworth and ...more
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Winblad talks about how the market is driven by consumers who want connectivity across devices, customizable products, and fair prices. Communication and collaboration are key to delivering the product the consumers want, she notes. The pricing structure cannot just be made up -- a company must demonstrate they can deliver undeniable short-term return on investment to the customer in order to justify the price.
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Several theories in finance relate to stock price analysis and prediction. The efficient markets hypothesis states that stock prices for publicly-traded companies reflect all available information. Prices adjust to new information instantaneously, so it is impossible to "beat the market." Furthermore, the random walk theory asserts that changes in stock prices arise only from unanticipated new information, and so it is impossible to predic...more
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Danger was able to break into the US market by convincing wireless carriers to adopt a fixed rate pricing scheme for the device, which is almost essential in the minds of Americans for using services like AIM and web surfing. The Asian and European markets are further ahead and calls are cheaper, making it more difficult for the Hiptop to be profitable.
