Wall Street Wedensday
The Human Factor by Josh Persky
The Fed cut key interest rates rate to near zero, and that's about what Madoff investors will recover. It is amazing how quickly money can come or go.
The market did not fight the Fed today, and although the recovery will take time, we will climb that mountain of fear.
An article I wrote last month, "Corporate Governance in the Age of Transparency," was just published in and Indian human resources magazine, "The Human Factor."
"Hi Joshua, How are you? I am so pleased to tell you that the latest issue of The Human Factor has just come out and it has turned out really well. I have attached a soft copy of your article with this email. Please do give me your feedback on the design and content of this issue - I'll wait eagerly for it! Best regards, Aditi"
"Corporate Governance in the Age of Transparency" Elliot Ogulnick and I have agreed to an interview with Reuters, but I regretfully had to pass on a request from a major Japanese network:
Dear Joshua, It was nice talking to you over the phone. As per our conversation, we're working on our morning daily news show for Fuji TV Network, a Japanese national broadcast. Using your creativity to survive this bad economy is quite inspiring, and we're very interested in featuring you in our Christmas special segment in our show....
And Kudos to Michael Cohn, Editor-in-Chief at WebCPA, for getting the story right and not wasting words:
www.webcpa.com/article.cfm?articleid=30135
Wall Street Wedensdays with Josh Persky
A Happy Ending Holiday Story
My happy ending holiday story is making the rounds on TV, radio and on-line. Yesterday, Cyrus Sanati of the NY Times put my story in the DealBook/Business section.
Today, my supervisor, Elliot Ogulnick, ASA, CPA, ABV, CVA, and I appeard on MSNBC, interviewed live by John Harwood and Tamron Hall.
It's hard to believe that five months have passed since I was pounding the pavement with my sign board - and all that's been happening!
Part 2. VALUATION TERMINOLOGY:
My happy ending holiday story is making the rounds on TV, radio and on-line. Yesterday, Cyrus Sanati of the NY Times put my story in the DealBook/Business section.
Today, my supervisor, Elliot Ogulnick, ASA, CPA, ABV, CVA, and I appeard on MSNBC, interviewed live by John Harwood and Tamron Hall.
It's hard to believe that five months have passed since I was pounding the pavement with my sign board - and all that's been happening!
Part 2. VALUATION TERMINOLOGY:
EBITDA is a company’s earnings excluding interest expense, taxes, depreciation and amortization (accrual based accounting measure)
- EBITDA is used by finance professionals when analyzing a company’s financial performance and determining its value
– The amount of cash a company generates from its operating activities
– Companies that generate more EBITDA can support higher interest payments and thus more debt
Free cash represents the amount of cash that is available to repay debt holders, distribute to shareholders as a dividend, or accumulate as cash on the balance sheet (after providing for on-going business operations) - “Funds the business does not need to support its operations and growth plan.”
To get to free cash flow, we must subtract the following from EBITDA:
- Capital Expenditures (Capex): Purchases of assets (e.g., buildings, computers, machinery) to support the operations of a business
- Change in Working Capital: The change in cash a business requires for day-to-day operations (e.g., the amount of cash needed to maintain adequate inventories, support investment in accounts receivable)
- Interest Expense: Expense for interest on a company’s debt
- Taxes: State and federal income taxes owed by a company
- EBITDA is used by finance professionals when analyzing a company’s financial performance and determining its value
– The amount of cash a company generates from its operating activities
– Companies that generate more EBITDA can support higher interest payments and thus more debt
Free cash represents the amount of cash that is available to repay debt holders, distribute to shareholders as a dividend, or accumulate as cash on the balance sheet (after providing for on-going business operations) - “Funds the business does not need to support its operations and growth plan.”
To get to free cash flow, we must subtract the following from EBITDA:
- Capital Expenditures (Capex): Purchases of assets (e.g., buildings, computers, machinery) to support the operations of a business
- Change in Working Capital: The change in cash a business requires for day-to-day operations (e.g., the amount of cash needed to maintain adequate inventories, support investment in accounts receivable)
- Interest Expense: Expense for interest on a company’s debt
- Taxes: State and federal income taxes owed by a company
Wall Street Wedensdays with Josh Persky
Persky appears in a Chinese newspaper handing out his resume on Wall Street. It paid off...he has a job now...and, like, hundreds of thousands of fans in China.
Last week, we told you the Josh Persky has gotten a job at a midtown accounting firm. This week, beyond the encouraging news of his employment, Josh takes a hard look at the financial crises from Omaha, in his last few days before heading back to NYC.
Hedge Fund Reality TV by Josh Persky
The hedge fund show from the Capitol Hill was impressive. The consensus seemed to be that leverage was to blame. The investment banks and other financial institutions (and almost everyone else) borrowed too much.
However, the hedge funds and their managers were not to blame. Those present admitted that they typically shy away from leverage and even agreed for the most part that more regulation (i.e. leverage limits) and transparency would be a good thing .
In my view, the crisis has many causes: The regulators who took a hands-off position on investment bank leverage and credit default swaps; everyone along the mortgage-backed securities chain who should have blown a whistle rather than passing the problem on; and, in my opinion the most culpable, the rating agencies, which allowed sows’ ears to be sold as silk purses.
- James Simons, Renaissance Technologies
I would suggest that most financial institutions should have minimum capital requirements, and I agree with Mr. Simmons that we need a new rating agency specializing in complex derivatives.
President Bush's free-market speech from Wall St. and the stock market touching bottom and then rebounding upward added to the day's great drama.
We're facing this challenge together and we're going to get through it together. The United States is determined to show the way back to economic growth and prosperity. I know some may question whether America's leadership in the global economy will continue. The world can be confident that it will, because our markets are flexible and we can rebound from setbacks. We saw that resilience in the 1940s, when America pulled itself out of Depression, marshaled a powerful army, and helped save the world from tyranny. We saw that resilience in the 1980s, when Americans overcame gas lines, turned stagflation into strong economic growth, and won the Cold War. We saw that resilience after September the 11th, 2001, when our nation recovered from a brutal attack, revitalized our shaken economy, and rallied the forces of freedom in the great ideological struggle of the 21st century. The world will see the resilience of America once again. We will work with our partners to correct the problems in the global financial system. We will rebuild our economic strength. And we will continue to lead the world toward prosperity and peace.
I would suggest that most financial institutions should have minimum capital requirements, and I agree with Mr. Simmons that we need a new rating agency specializing in complex derivatives.
President Bush's free-market speech from Wall St. and the stock market touching bottom and then rebounding upward added to the day's great drama.
We're facing this challenge together and we're going to get through it together. The United States is determined to show the way back to economic growth and prosperity. I know some may question whether America's leadership in the global economy will continue. The world can be confident that it will, because our markets are flexible and we can rebound from setbacks. We saw that resilience in the 1940s, when America pulled itself out of Depression, marshaled a powerful army, and helped save the world from tyranny. We saw that resilience in the 1980s, when Americans overcame gas lines, turned stagflation into strong economic growth, and won the Cold War. We saw that resilience after September the 11th, 2001, when our nation recovered from a brutal attack, revitalized our shaken economy, and rallied the forces of freedom in the great ideological struggle of the 21st century. The world will see the resilience of America once again. We will work with our partners to correct the problems in the global financial system. We will rebuild our economic strength. And we will continue to lead the world toward prosperity and peace.
Wall Street Wednesdays:
Josh Persky Gets a Job
The Investment Banker for Hire Gets Hired! Persky to head to midtown accounting firm. Looking for place on Upper West Side. Family may stay in Omaha for first few months. Stay tuned. Here are some congratulatory notes Josh received from around the world.
From India:
Dear Persky, Congrates for getting job.Thanks for your response. What is that website, plz tell about that. I feel very very happy for you getting a job. Keep it up. Usa is a no:1 country in this world. I think now you got a wonderful president. So be happy about this and your job. Dear Persky how is your family members. Plz convey my warm regards to all. Have a great day. I am add you in my daily prayer............. Loving friend Senthil kumar
From Germany: all the best mr. persky from germany and congratulation for the new job. mario mau
From China: hello, how is everything going? i really want to make friends with you, have you ever been to china, i have never been abroad, i fell bored about my poor english, i could read english newspaper, but i could not catch up with foriegners, to tell the truth, i have never seen an American face to face. i hope you can accept me, i want to chat with you, i want to share my happiness sadness and so on witt you, for the same i want to share your happiness and sadness, what do you think of that?
From Omaha: Hi Josh, I just heard you took a job in New York. Congratulations to you and your family! I hope it's everything you wanted, and i hope it brings you and your family comfort and success! Please keep in touch! Brett
Investmment Banker For Hire
Episode 2: Optimism in Omaha and an MIT alum based in Hong Kong Chimes In
As we catch up with our friend the Oracle of New York, he is back in Omaha searching for work, quotes a strong vote of confidence in the market from Warren Buffet, and hears from an MIT alumni based in Hong Kong, who offers to circulate Josh's resume....and notes that in Hong Kong, they're hiring.
Oracle of NY by Joshua Perskey
I'm back in Omaha, and the Oracle of Omaha, Warren Buffet, has spoken through the N.Y. Times:
"Over the long term, the stock market news will be good. In the 20th century, the United States endured two world wars and other traumatic and expensive military conflicts; the Depression; a dozen or so recessions and financial panics; oil shocks; a flu epidemic; and the resignation of a disgraced president. Yet the Dow rose from 66 to 11,497.
" I don’t like to opine on the stock market, and again I emphasize that I have no idea what the market will do in the short term. Nevertheless, I’ll follow the lead of a restaurant that opened in an empty bank building and then advertised: “Put your mouth where your money was.” Today my money and my mouth both say equities."
As soon as I get back on my feet, I'll start buying stocks, perhaps Warren Buffet's Berkshire Hathaway.
I made progress on the job front again today, writing a sample valuation for a financial services firm in NYC and playing phone tag with a CEO from a car parts re-manufacturing company based in the U.K.
Meanwhile, my fame continues to spread in Hong Kong. I received the following email from a fellow MIT alumni based in HK:
Josh, saw your news front page on HK newspaper. As shown in this postcard, I believe that we are going though some tough snowstorm like times... remember those days at MIT when we had snowstorms, we used to go out and ski and throw snows when classes were on halt. We should take it lightly and try to weather through this storm with a small sense of humour just like what you did. Listen, I work for a Canadian Bank called Royal Bank of Canada and we are rather immune so if you would like to shoot me your resume, I maybe able to help. FYI, we are hiring especially in the far east!
I made progress on the job front again today, writing a sample valuation for a financial services firm in NYC and playing phone tag with a CEO from a car parts re-manufacturing company based in the U.K.
Meanwhile, my fame continues to spread in Hong Kong. I received the following email from a fellow MIT alumni based in HK:
Josh, saw your news front page on HK newspaper. As shown in this postcard, I believe that we are going though some tough snowstorm like times... remember those days at MIT when we had snowstorms, we used to go out and ski and throw snows when classes were on halt. We should take it lightly and try to weather through this storm with a small sense of humour just like what you did. Listen, I work for a Canadian Bank called Royal Bank of Canada and we are rather immune so if you would like to shoot me your resume, I maybe able to help. FYI, we are hiring especially in the far east!
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