The second round of my (hopefully) daily round-up of the tastiest tech stories from Philly and beyond.

Commence the tech!

I’m still getting the hang of this and, at least for a little while, you’re probably going to see a lot of repetition as far as which sites I’m culling these tidbits from.

Also, I hope you like the image — I threw it together this morning from Creative Commons and public domain photos, using a site called SplashUp. It’s the most creative thing I’ve done in months, and that makes me really sad. But enough whining, didn’t I already commence the tech?

Local Bytes

• Philly.com reports that local venture capital firm TL Ventures, which used its $1 billion to buy little tech companies all over the country in the late 1990s, is attempting to recapture $3 million in fees paid to some of its partners as the fund faces dissolution. (Link)
• UPenn’s Wharton Business School has a great read about the Comcast-NBC Universal deal. It’s actually a couple days old, but a great read. (Link)

Everything Else

• CNET’s gadget blog Fully Equipped rounds up 20 of the past decade’s most innovative products in an excellent gallery. (Link)
• Ars Technica talks about the first couple of levels of Dante’s Inferno, the new video game from Visceral Games based on the famous epic poem by Dante Alighieri. (Link)
• Engadget reports on Virgin Galactic’s spaceship unveiling. You, too, can go to space for a measly $200,000! (Link)
• Gearlog posts about one designer’s dream handset, the xPhone, which sports a 48 megapixel camera that accepts add-on lenses, direct-print functionality, a CD-ROM drive, a cassette player, a nuclear battery, and, well, you get the point. (Link)
• Geek.com tells tales of the upcoming Android OS updates for Verizon’s Motorola Droid and HTC Droid Eris users. (Link)
• VentureBeat’s blog DigitalBeat reported on the “collapsed man” caught by Google Maps‘ Street View cameras. Google has since removed the image. (Link)

The prestigious University of Pennsylvania is known for a number of programs, one of which is its business school. I attend the Wharton School of Business and feel very privileged to even be there. When I initially sent in my application, I knew I was well qualified, but still worried that I may not be admitted. This is an extremely competitive program and I am very grateful that they wanted me to join it. I’ve had a lot of fun here over the years, definitely subscribing to the typical student mentality of “Work hard, play hard.” I feel that the University of Pennsylvania is going to prepare me for my future career in business, and I’m excited to get started!

What is Wharton’s Supernova but a lovefest for the clueful, where M&Ms are passed around and no one goes hungry for the next big idea.  It’s a tiny TED, Bar Association, Crunch Up drizzled with Kevin Werbach’s special sauce. A think drink where scholars ponder a sensored society (not censored) where all things are connected and Big Brother stands as our collective consciousness.  A forum where the likes of Esther Dyson come to hear what Tim O’Reilly’s has to say and vice versa.  Much of the video is posted at supernovahub.com/2009/11/supernova-live-stream. and there was active tweeting at #SN09.  Here are some notes:

Adam Greenfield, Nokia
Half the world’s population lives in urban space, soon every element will be self-authenticating, addressable, scriptable, most pieces of street furniture will have cameras with face recognition software, RFIDs will be ubiquitous.  By 2012, 20% of non-video traffic will be network embedded sensors.  We are becoming consumers of urban space, where watchers are being watched.  The fight will be making the data public that the public makes.  Brisbane bus shelters sold user data that show the number of people waiting at bus stops, will we soon see helpful mugging apps. We don’t always want to live in public, when things become overtly explicit they become uncomfortable.

Jonathan Zittrain, Harvard
Author, Future of the Internet & How To Stop It, recently revisited Cluetrain Manifesto, talked about abuses (potential and actual) of Amazon Mechanical Turk, where simple tasks that cannot be done by a computer—for example, labeling images—are outsourced to anyone with an internet connection for 1 or 2 cents apiece.  He shared a vision of a child playing a matching game online which unbeknownst to the child helps Iran identify political dissidents.  He also shared a photo of that TOASTER Reed Hastings referred to at NewTeeVee Live, and laughingly described it as a soon to be service relationship with a breakfast oriented device.  Lastly he talked about an incident where the wiretap law allowed the FBI to turn on the mic in the car of criminals.  Whose mic is next?

Peter Guber, Mandalay Entertainment
As the voice of reason, must merge poet and engineer, embrace and bring artistry to the quantum rate of change, cast your line over the horizon and trust you’ll be pulled toward it, surrender anxiety, ask how-to, not what-if.  In a business with a 60% fail rate, you can’t just make hits.  Avatar cost $.5B, catering was higher than the budgets of most films.  By the end of launch day, they’ll know the film’s LTV.  How does such a film compete with an $11,000 Paranormal, or piracy.  Flashdance sold 14mm albums, if it was in the era of iTunes, be living in a trailer park.  Technology is a cold comfort if it doesn’t enhance the benefit of the artist.  Movies are a collaborative effort but a single vision is needed.

Phil McKinney, HP
Wish we had the failure rate of Hollywood.  HP sees 220 raw ideas a year, gets 2 products.

Werner Vogels, Amazon, @werner
Talked about the power of the cloud, the explosion of infrastructure as a service over the past three years, and how Amazon Web Services is revolutionizing the way businesses can control costs and scale for the moments needed. Like when Playfish launched Restaurant City for 10,000 and was hit with 8mm logging on, AWS helped them scale in the moment with reliability and security.  Customers include NASDAQ, Forbes.com, ESPN, even AVOD competitors Netflix Instant Watch.  Currently 82B objects are being stored on Amazon S3.  Clearly the leader of the indie revolution (AWS, CreateSpace, Withoutabox, Marketplace), perhaps the next frontier they’ll mainstream is FAB on demand…

Chris Anderson, Wired
Shared his thoughts on Atoms as the New Bits, and the future of personal manufacturing.  Talked about the democratization of the tools of production via web, crowdsourcing, DIY and the long tail of stuff.  Post-institutional revolution on web now being played out in the physical world to allow for an economically sustainable model for small business. Sites like alibaba.com allow buyers and suppliers to connect in a global B2B marketplace.

Dick Costolo & Alex Macgillivray, Twitter
Talked about the limitations of Twitter search, the not-insignificant challenge of indexing, and the promise of Bing and future partnerships to create greater access to the historical record of tweets that currently goes back about 14 days.

The Lawyers – Laura Covington, Yahoo!, Zahavah Levine, YouTube, Dan Dougherty, eBay
Shared Yahoo! policy of not letting advertisers bid on competitor’s keywords (btw Google does), YouTube’s automated content ID systems and the DMCA 512 (3 strikes out policy), and eBay’s policy for counterfeit goods claims – 75% get taken down in 4 hours, proactively remove as much as all brand owners combined.  Zahavah thanked the DMCA for MySpace, FB, Craigslist, eBay, Amazon, Shutterfly, Flickr, YouTube, search engines, ISPs, US web.  Many users don’t understand copyright – I took that video myself at the concert, I own that CD…

The last panel with Wikipedia’s Jimmy Wales, Craigslist’s Craig Newmark and State Department’s Alec Ross can be viewed here:  www.ustream.tv/recorded/2703438

At the University of Pennsylvania, I’ve chosen three concentrations on which to focus: Finance, Marketing and Entrepreneurship. I feel that these three areas of specialization will form a great balance of knowledge that will adequately and effectively prepare me for the cold, hard business world. Finance was an easy choice, it being an obvious necessity to any modern successful businessperson. Marketing is meant to direct my sales directives toward the right groups of people, making them ultimately more lucrative over time. And Entrepreneurship was a personal choice for me, and has been probably the most informative of the three – this concentration has helped me build the skills I’ll need to be my own boss someday, which is my long-term and most heartfelt goal.

Of all the things we want/hope/expect to learn in our lives, what are we expected to learn in school versus learn “by doing”?

Simply put, subjects (like history) are meant to be learned in school, but practices (like management) need to be learned outside the classroom.

I recently heard a recording of an interview with Russell Ackoff, the late Professor Emeritus of Management at the Wharton School, which I found exceptionally interesting. Not only was Dr. Ackoff an innovator through his theories on business education, but he also has a way of motivating and inspiring business performance that I can’t quite put my finger on. And all this from a simple interview with the BBC? I think my head might have exploded if I had had the opportunity to take one of his courses.

Rolling into town this week is Kevin Werbach’s Supernova at Mission Bay #SN09, Scott Kirsner’s Building Audiences at BAVC, and Ken Goldberg’s Future of the Forum at UC Berkeley.  Meanwhile in Vegas, the International Film & Music Festival Summit will be training screeners and festival directors, chatting about programming strategies and brainstorming the future role of festivals as distributors. You can follow that conversation at #IFFS09, #IMFCON09.  We’ll be here in San Francisco focusing on Supernova as well as dropping in on the San Francisco International Auto Show at Moscone to check out the latest in auto-entertainment platforms. Supernova will be streaming live at:  http://bit.ly/sn09stream. Network age briefings at http://www.blogtalkradio.com/supernova.  Here’s the guide:

Tu 12/1 Supernova @ Mission Bay
9, Social Networks in the Workplace
Denise Howell, This Week in Law, Alex Macgillivray, Twitter, Kerry Krzynowek, Deloitte, Gabe Ramsey, Orrick
10, Trademarks and Intermediaries
Eric Goldman, Santa Clara University Law School, Samir Jain, WilmerHale, Laura Covington, Yahoo!, Dan Dougherty, eBay
11, Copyright:  A Fair (Use) Fight
Zahavah Levine, YouTube, Ashlie Beringer, Gibson, Colette Vogele, Larry Downes
12, Lunch
1, Opening Remarks
Kevin Werbach, Wharton
1:10, Pervasive Connectivity Alters Everything
Danah Boyd, Microsoft, Adam Greenfield, Nokia
2, Changing Networks
Werner Vogels, Amazon, Jonathan Zittrain, Harvard, Bradley Horowitz, Google
3, Break
3:30 Networks for Change
Umair Haque, Havas, Anil Dash, Expert Labs, David Weinberger, Cluetrain Manifesto, Andrew McLaughlin, Deputy US CTO
4:15, Break
4:30, Strategic Change
Chris Anderson, Wired, Peter Guber, Mandalay, Phil McKinney, HP
5:45, Surprise Entertainment
6:30, Opening Gala & Tech Showcase

W 12/2 Supernova @  Folger, 101 Howard/Spear, Suite 500
7:30 Breakfast
9, Strategies for a Connected World
Kevin Werbach, Wharton, JP Rangaswami, BT, John Hagel, Deloitte, Umair Haque, Havas, Ellen Levy, LinkedIn
10:30, Wharton Talks
Karl Ulrich & Eric Clemons, Wharton, Larry Strickling, NTIA
11, Building Startups Today
Dave McClure, Founders Fund, Rashmi Sinha, SlideShare, Christine Herron, First Round Capital, Bruce Jenett, DLA Piper
11, Is There a Media Business?
Lisa Stone, BlogHer, Jim Griffin, WMG, Catharine Hays, Wharton, Cory Ondrejka, Second Life
11, Privacy and the Social Web
Kraig Baker, Davis Wright, Harriet Pearson, IBM, Anne Toth, Yahoo!, Deirdre Mulligan, UC Berkeley
12:30, Lunch
1:30, Real-Time Flow
Tim O’Reilly, Dick Costolo, Twitter, Brett Slatkin, Google, Monica Keller, MySpace
3, Life in the 21st Century
Esther Dyson, EDventure, Bernardo Huberman, HP Labs, Linda Stone
3, Broadband After Unviersal Connectivity
Joe Waz, Comcast, Paul Brigner, Verizon
4:30, Nicole Wong, Google
6, Cocktails

Th 12/3 Supernova @ Folger, 101 Howard/Spear, Suite 500
7:30, Breakfast
8:30, Fun with Fun with Charles Hudson, Serious Business
8:30, Telecom as Software with Jonathan Christiansen, Skype, Craig Walker, Google
10, Data Minimization
10:30, Taking Data Seriously with Chris Kemp, NASA Ames
10:30, Tech Meets Sustainability with Adam Werbach, Saatchi, Robin Chase, Zipcar..
12, Lunch
1, Roundtables
2:30, Closing Plenary
Jimmy Wales, Wikipedia, Craig Newmark, Craigslist

Have you ever needed to buy something that you can’t get cheaply on Amazon or another online retailer, or just needed to purchase something quickly without having to wait for it to ship? Of course you have. It’s the way that shopping worked before the online era!

But now that you’ve gotten used to comparison shopping online, the reality of how clueless you are price-wise when shopping at brick-and-mortar stores really sets in. Many times, it’s difficult to obtain prices, and even when you can, you still have to fumble through multiple catalogs or call the store directly for the latest price. Calling 20 stores just to do some price-checking is a complete waste of time, right?

Jack Abraham, a 2008 graduate of Penn’s Wharton undergraduate program, thought so too, leading him to create Milo.com. “Abraham said he started the site out of frustration. ‘I do the majority of my shopping locally, and it’s hard to figure out what’s available without driving to the stores or calling them.’”

Now, you can check prices at some 42,000 stores across the United States, and also get descriptions, reviews, and information about whether or not a certain item is currently in stock. Just in time for Black Friday!

For more info, go to the New York Times article, which covered Milo.com’s fundraising announcement from Tuesday. Milo.com raised $4 million in Series A funding from True Ventures, as well as notable angels such as Ron Conway. And of course, start checking out Milo.com to make your shopping easier.

As I approach my last couple of weeks of college, I am struck by so many emotions and thoughts about my college experience. My time at the University of Pennsylvania has been wonderful, and a little stressful at times. I’m unsure about the future, but excited at the same time. Now is the time to make plans for my career, living situation and personal life as an adult. I know it’s going to be so different from college but I’m really looking forward to the new challenge. In December of 2009 I will officially be a grown-up. I can’t believe it!

Earlier this fall, I discovered that some of my fellow 2009 graduates from Penn had started a social venture called Hydros Bottle. Now that I’ve established a blog platform with a focus on social entrepreneurship, I’ve decided to take this opportunity to write about their startup, which has been featured in the Dell Social Innovation Competition and also received seed funding from the Wharton Venture Initiation Program.

Hydros Bottle  started off as an effort to “sustainably provide purified water to increasingly mobile, urban people in the developing world.” But as they discovered in the process of their initial research, the issue of low-quality water was one not limited to just developing countries. Hydros explains, “Many areas of the United States are afflicted with poor quality public tap water that is often laced with dangerous levels of heavy metals and toxins (Find out what is in your water). As a result, we decided first to focus on releasing Hydros Bottle right here at home.”

Many of you may have used filters such as Brita before, but the Hydros Bottle does the pitcher filters one better. No, wait… two better. In addition to using activated carbon filtration like Brita, Hydros Bottle also features a proprietary Inn-Lay technology to remove chemicals from your water. Furthermore, the Hydros Bottle is portable. Essentially, what you get is a bottle with a built-in filter, making it unnecessary to have a big clunky pitcher with you if you’re looking for filtered water. In the Philadelphia airport but don’t want to pay airport prices for bottled water nor drink Philly tap water? Just pull out your Hydros Bottle and fill ‘er up. The water simply flows through the built-in filter, and mere seconds later, you have clean filtered water to drink.

Worried about nasty odor-causing bacteria building up inside your Hydros Bottle? Not to worry. These bottles feature IonArmour microbial protection, which inhibits the growth of bacteria, mold, and other microbes.

To purchase one of these bottles, click here to get started. You’ll be buying a product that provides you safer and better-tasting water, helps the environment by avoiding wasteful consumption of plastic disposable bottles, and promotes a social mission of increasing global access to potable water. Also, enter the code “OperationHydros” to get free shipping and free filters for one year with your order.

If you’d like to read more about Hydros Bottle, check out Springwise’s recent feature from last Wednesday or visit Hydros Bottle’s FAQ page.

(Matéria em destaque no Informativo Semanal que chega esta quinta-feira, 19/11, nas caixas de entrada dos clientes Gradual)

O Brasil está na capa das revistas internacionais de economia como um bom exemplo para o mundo. Como você se sente em relação a isso?

A revista The Economist que tem data de capa 14 de novembro de 2009 entrou para a história. Pelo menos, para a história sentimental dos brasileiros. Poucas vezes na história, uma publicação deixou tão orgulhosa uma nação inteira. À capa, de rara felicidade, juntou-se um texto que diz com todas as letras que deixamos de ser apenas promessas para começar a entregar. Leia mais…

Khi những đợt đầu cơ xuống giá bị sụt giảm trong tháng ba, một số người trong cuộc đã tranh cãi rằng thật sai lầm khi đổ lỗi cho những dự đoán rủi ro của công ty trong việc dùng cổ phiếu để thế chấp bởi họ đã có một bị cáo khác: đó chính là những người giao dịch chứng khoán muốn trục lợi đã cùng bàn nhau kiếm tiền bằng cách kéo giá cổ phiếu xuống trong cái thế giới luôn chao đảo đó.

Không một ai công khai thú nhận việc tổ chức một đợt “đầu cơ xuống giá” khi việc chủ tâm thao túng thị trường giá cổ phiếu được coi là phạm pháp, và trong khi chính Phố Wall vẫn tin rằng những đợt đầu cơ xuống giá không chỉ có thể mà còn thường xảy ra liên tục. Tuy nhiên, vừa có một số nghiên cứu từ các trường đại học nhằm giải thích động lực của việc này. Hiên nay, có hai chuyên gia tài chính mới đưa ra một số quan niệm dựa trên quá trình đó. Và theo lời giáo sư tài chính Itay Goldstein thuộc trường Wharton thì: “Chúng tôi chủ yếu mô tả một học thuyết của hành động thao túng đầu cơ xuống giá như thế nào.” Ông cùng Alexander Guembel đến từ trường kinh doanh Said và trường cao đẳng Lincoln của đại học Oxford đã mô tả thủ tục này trong bài báo của họ có tiêu đề là “Manipulation and the Allocational Role of Prices”.

Nghiên cứu quan trọng của họ đã làm sáng tỏ được ảnh hưởng qua lại giữa giá trị kinh tế thực của một công ty và giá cổ phiếu của nó, bằng việc chỉ ra được những người giao dịch chứng khoán chủ tâm hướng cho giá thị trường cổ phiếu đi xuống để có thể ngầm phá hoại tình hình hoạt động của công ty, cũng như làm cho giá cổ phiếu bị sụt giảm trong tương lai theo một chu trình luẩn quẩn.

Giáo sư Goldstein giải thích rằng: “Cái chúng tôi chỉ ra ở đây đó chính là nhờ việc bán cổ phần mà bạn có được một sự tác động thực tế vào công ty. Nhưng việc kết nối với giá trị thực lại là một việc hoàn toàn khác. Đó chính là yếu tố quyết định.”

Goldstein và Guembel nhận thấy rằng quá trình này chỉ xảy ra khi mục đích là để phá hoại công ty, khi những người giao dịch chứng khoán không có cùng khả năng để tạo được một vòng phản hồi nhằm hướng cho giá cổ phiếu tăng lên.

Mục đích của hành động này chỉ là trục lợi, bởi khi một người giao dịch chứng khoán vay được cổ phiếu của một người môi giới thì họ sẽ bán chúng và hy vọng trả lại khoản nợ đó bằng cổ phiếu đã được mua lại sau khi bán để ăn chênh lệch. Mà hành động trục lợi này có lãi chỉ khi giá thị trường cổ phiếu đi xuống – tức là bán ra thì cao và sau đó mua vào thì thấp. Và nếu giá tăng lên thì anh ta phải mua những cổ phiếu thay thế nhiều hơn những cái mà anh ta đã bán.

Dàn xếp việc định giá cổ phiếu

Sự kết nối giữa giá cổ phiếu của một công ty với giá trị thực của nó không hề khít nhau như nhiều người vẫn nghĩ. Các công ty bán cổ phần ra thị trường để có thêm vốn. Vì thế, một khi các cổ phiếu được lưu thông thì giá của nó có xu hướng tăng hay giảm đều phản ánh được lợi nhuận của công ty đó là nhiều hay ít, nhưng có những động lực khác lại hấp dẫn hơn nhiều – cũng là xu hướng chung trong thị trường hoặc kinh doanh – đó là việc thực hiện của công ty đều liênquan tới các đối thủ cạnh tranh của nó, và như vậy, sẽ có một sự đầu cơ về chiến lược hoạt động của công ty ra sao để sản phẩm và tính cạnh tranh sẽ có tác động đến doanh thu sau này.

Lúc này các nhà đầu tư nhiệt tình có thể đẩy giá cổ phiếu lên cao cho dù không hề có bằng chứng chắc chắn nào doanh thu sẽ tăng. Nhưng lúc sau thì chính cảm tính của nhà đầu tư lại có thể quay ngược lại, dẫn tới việc giá cổ phiếu đi xuống cho dù công ty đó hoạt động hoàn toàn tốt như thường.

Do mối quan hệ giữa việc thực hiện hoạt động kinh doanh của một công ty với giá cổ phiếu có thể quá lỏng lẻo cho nên nó sẽ kéo dài cảm giác rằng số phận của cổ phiếu không nhất thiết phải có bất kỳ ảnh hưởng trực tiếp nào đến giá trị kinh tế thực của một công ty, điều luôn được đánh giá bằng những thứ như tài sản và doanh thu của công ty đó.

Và rõ ràng là những kẻ đầu cơ có thể dàn xếp để đẩy cho giá cổ phiếu xuống với một mục đích trục lợi, nhưng theo một số quan điểm của những người giao dịch chứng khoán khác – hoàn toàn tin vào tình hình hoạt động bình thường của công ty – đều nhìn thấy các cổ phiếu như một sự mặc cả và nhu cầu cao hơn sẽ làm cho giá cổ phiếu ổn định hay tăng lên. Vì thế mà một đợt đầu cơ xuống giá sẽ không có tác động lâu dài. Nhưng nếu việc rớt giá cổ phiểu được gây ra bởi một đợt đầu cơ xuống giá gây ra sự thiệt hại về kinh tế thực sự cho công ty thì các nhà đầu tư khác sẽ ngay lập tức bán tháo cổ phiếu, và chính điều này gây ra một chu trình luẩn quẩn về việc rớt giá cổ phiếu cũng như sự thiệt hại về kinh tế sẽ khiến cho đợt đầu cơ xuống giá đó thu được nhiều lợi nhuận hơn.

Để kiểm tra kịch bản này một cách khách quan hơn, Goldstein và Guembel đã xem xét kỹ một công ty vừa rót khá nhiều tiền vào một dự án tới mức chính công ty cũng khó có thể xác định được chính xác. Và cũng thời điểm đó, có một người đầu cơ biết được giá trị của dự án đó mà chính công ty còn chưa biết được. Lấy ví dụ ở đây là anh ta có thể có được một sự hiểu biết đặc biệt đối với các chi phí về vốn.

Vậy thì, nếu sự hiểu biết đặc biệt này nhận thấy kế hoạch chi tiêu của công ty đó sẽ làm việc tốt thì người đầu cơ đó sẽ mua cổ phần và nhu cầu của anh ta sẽ thúc đẩy giá cổ phiếu lên. Còn nếu sự hiểu biết đặc biệt này nhận thấy kế hoạch chi tiêu sẽ thất bại, anh ta sẽ bán lại cổ phần và chính cái nhu cầu bị giảm đi này sẽ đẩy cho giá cổ phiếu xuống. Và cho dù có bằng cách nào thì sự hiểu biết của người đầu cơ này đều được phản ánh bằng giá cổ phiếu.

Goldstein và Guembel sau đó đưa thêm một yếu tố vào quan điểm truyền thống đối với thị trường này. Đó là công ty xem xét kỹ việc thay đổi giá cổ phiếu như một tín hiệu đánh giá thị trường về triển vọng của kế hoạch chi tiêu của công ty. Và nếu giá cổ phiếu rớt xuống thì việc đánh giá sẽ trở thành vô nghĩa và công ty có thể phải từ bỏ kế hoạch này.

Quay lại vấn đề lúc trước thì người đầu cơ kia cũng đang đưa ra một quyết định theo sự đánh giá của riêng anh ta đối với kế hoạch chi tiêu này. Thế nhưng cả Goldstein và Guembel đều tranh luận rằng cho dù một kẻ đầu cơ chỉ là một người không có sự hiểu biết đặc biệt về kế hoạch đó thì vẫn có thể khai thác được quá trình này nhằm chủ tâm định hướng cho giá cổ phiếu đi xuống.

Giảm giá trị của công ty

Trong nhiều trường hợp, các thương vụ quan trọng vẫn được thực hiện thông qua những người tạo lập thị thường ở Phố Wall, những người có thể mua hay bán chính những cổ phần của riêng họ đang sở hữu. Người tạo lập thị trường này thường đưa ra một giá dựa trên sự đánh giá của họ về thị trường và họ sẽ quyết định mua hoặc bántheo đặt hàng từ một người đầu cơ cho dù đó là người có biết rõ được đôi điều về công ty đó hoặc không hề biết chút gì. Nhưng nói chung, những người giao dịch chứng khoán có kiến thức thường đóng góp cho thị trường này rất hiệu quả bằng cách đảm bảo rằng giá cổ phiếu luôn phản ánh một cách đúng đắn các giá trị của công ty. Và chính việc truyền được niềm tin cho thị trường mà sự hiệu quả này luôn hướng cho giá cổ phiếu tăng lên.

Nhưng theo ví dụ của các tác giả thì khi người đầu cơ bán cổ phiếu cho người tạo lập thị trường là chỉ vì mục đích trục lợi chứ không hề có sự thấu hiểu tình hình. Hơn nữa, việc anh ta bán ra thực sự là làm giảm hiệu quả của thị trường, mở rộng các hướng cho giá cổ phiếu bị sụt giảm và thu được khoản lợi nhuận trước mắt.

Bên cạnh đó, người đầu cơ có thể thực hiện đươc rất nhiều phi vụ trục lợi như vậy để hướng cho giá cổ phiếu xuống. Việc nhìn thấy sụt giảm giá cổ phiếu như một lá phiếu dành cho việc không còn sự tin tưởng, đồng nghĩa là công ty sẽ phải bỏ lại kế hoạch chi tiêu của nó, bị thất thu do mất đi lợi ích mà dự án đó đáng ra mang lại cho nó và cũng vì thế mà gây ra cho giá cổ phiếu bị rớt xuống trong tương lai.

Các tác giả viết rằng: “Thông thường, đây là quyết định sai lầm và chính nó sẽ làm giảm bớt giá trị của công ty đó. Mà điều này có thể khiến cho người đầu cơ kiểm soát được vị thế tạm thời lúc đó của anh ta về việc bỏ ra chi phí thấp hơn nhưng vẫn thu được lợi nhuận. Và để đúng với bản chất của chiến lược này, chúng tôi coi nó như sự thao túng.”

Tất nhiên, việc hết sức quan trọng là để không một ai biết người đầu cơ định sẽ làm tiếp điều gì, chính thế mà Goldstein nói rằng: “Nếu ai ai trên thị trường cũng đều biết rằng mục đích ngăn cản của kẻ đầu cơ là để thao túng cổ phiếu thì nó sẽ không hề có tác dụng.” Ông cũng cho biết thêm rằng việc thiết yếu nữa đó là những người khác tham gia vào thị trường này đều cho rằng người thao túng thường dựa vào những quyết định dựa trên sự thấu hiểu tình hình của anh ta cho dù có thể anh ta chẳng biết chút gì.

Và khi việc thao túng này xuất hiện nó sẽ khiến cho giá cổ phiếu chao đảo, mà đó là điều có ảnh hưởng tới quyết định của công ty xem liệu có nên tiếp tục với dự án chi tiêu của nó hay không. Điều này chỉ có thể xảy ra nếu thỏa mãn ba điều kiện:

1. Giá trị của dự án chi tiêu đó không được quá cao.
2. Phải có được một bản thỏa thuận tốt về tình hình không rõ ràng về việc làm sao mà dự án đó dừng lại.
3. Công ty phải có được sự phản hồi tích cực từ các thị trường tài chính về triển vọng của dự án đó.

Chính thế nên Goldstein và Guembel viết rằng: “Cuối cùng, chúng tôi thấy rằng sự thao túng sẽ trở thành lợi nhuận chỉ khi nó thông qua được những đơn đặt bán ra. Đấy là bởi vì có hai nguồn lợi nhuận đằng sau chiến lược thao túng đó … không thể tạo được lợi nhuận với những đơn đặt mua vào.” Và các giáo sư giải thích rằng: người đầu cơ không hề có sự thấu hiểu về tình hình của công ty sẽ giả định nó có giá trị thấp hơn giá thị trường phản ánh, vậy là anh ta sẽ có một sự động viên để bán ra hơn là mua vào.

Tương tự, một người đầu cơ đang hoạt động mà không có một chút kiến thức chuyên môn nào cũng sẽ tạo ra những điều thiếu hiệu quả tương ứng làm cho giá cổ phiếu bị sụt giảm về sau. Và để có được lợi nhuận dựa trên việc sụt giá cổ phiếu, người đầu cơ này phải sử dụng những phi vụ bán ra nhanh bởi anh ta sẽ bị mất tiền nếu anh ta lại mua vào cổ phiếu.

Như vậy, điều cốt yếu đối với sự thao túng đó chính là sự kết nối giữa giá cổ phiếu với giá trị thực của công ty. Thế nên, giáo sư Goldstein đã nói rằng: “Theo truyền thống, mọi người đều nghĩ những thị trường tài chính dường như không có ảnh hưởng gì tới công ty. Nhưng hoàn toàn đó lại không phải là sự thật.”

Minh Hà dịch từ HSB

Litterbury is currently reading The Prince of Tides by Pat Conroy which was given to him as a gift.

I’m also just going into some of the original Oz books by L. Frank Baum.  I’d previously read the first 4, but I decided to skip 5 and moved onto 6, The Emerald City of Oz, and I ended up skipping 7 and just received 8, Tik Tok of Oz, from Amazon.  I normally wouldn’t be so sporadic, but I’m actually collecting the facsimile editions put out by Books Of Wonder (they are gorgeous!)  and am picking and choosing what interests me as I scrape together any available cash.  The maps of Oz on Tik Tok’s endpapers were what sent it over for me.

On a side note, I’m in kind of an Ozzy mood right now and not because of the new DVD of the MGM musical, but because I just watched the Tin Man miniseries on DVD.  It was good (decent?), but it was no Return to Oz, a.k.a., the best Oz film ever.  I might have further things to say on all of that later.  Pending!

I also recently acquired a second Edith Wharton book from the Library of America.  I already had the selected novels, and have read two out of four (House of Mirth, The Reef; both of which were extraordinary), but I received Novellas and Other writings for my birthday and I just read Madame de Treymes;  impeccably written as usual.  Wharton might be one of the best authors I’ve ever read.  She is damn good.

Another recent acquisition was the newly published edition of The Count of Monte Cristo by Dumas from Everyman’s Library.  I’m probably not going to read it, as I read the newer, updated and restored translation by Robin Buss from Penguin; all roughly 1250 pages of it.  I had read an abridged version in the past from Signet (years ago, sixth grade?), but I now realize how very butchered it was.  The Buss translation is a real stunner, and I cried through quite a bit of it.  That actually surprised me because I remember liking the book for it’s adventure, but felt it lacked the emotional depth and warmth that had so endeared me to my beloved Musketeers.  That was clearly an effect from the butchering.  So, the Buss translation is the one to have, but I felt compelled to have Edmond on acid-free paper with a ribbon marker for safe-keeping.  He does look handsome on the shelf!

I also received a very special present of another Monte Cristo copy, this one being from the Collector’s Library from Barnes and Noble.  It’s tiny! And not just because it’s an abridged cut, but that it’s only a few inches by a few inches.  Nice detailing on it though, with ribbon marker, gold top-stain and an embossed publishing stamp on the front of it’s hardcover, and it features custom publishers endpapers and a little dust-jacket.  Too much Dumas is never enough.

I also received the LOA edition of F. Scott Fitzgerald but have not started it yet.  I’ve read The Great Gatsby twice and each time I’ve failed to see why everyone ohh’s and ahh’s over it; I think it’s a bit overrated if you ask me.  I did once get about halfway through This Side of Paradise (7th grade) but quit, which I’m not sure why because I remember loving it and marveling at how it was so much better than Gatsby.  Bear in mind, I think Gatsby is fantastic as a time capsule of a compelling era, and I appreciated the sexuality of the book in regards to the scene of two guys in bed together (despite the fact that it flies over everyone’s head; even mine the first time I read it!), but I take real issue with any book that is so wildly overblown, and given it’s lorded over reputation, and the fact that it makes every high school graduate’s list of favorite books of all time, I delight is skewering it.

EDIT: spelling; “their” and “they are” are obviously different!

The Wharton Journal is published every Monday of the academic year by students at the Wharton School. The Journal seeks to showcase the analysis and comment of the Wharton School’s graduate and undergraduate students, and it is an opportunity that many utilize as one of the first steps into the public eye.

Taek Jho Low made a number of contributions to The Wharton Journal, primarily financial analyses of stocks and business companies and their worth as investments.

Two of these articles are hosted on TaekJhoLow.WordPress.com at the following links:

Mr. Jho Low’s analysis of Baxter International Inc.

Mr Jho Low’s analysis of Infinity Broadcasting.

This WordPress Blog will serve as a window onto the world of Malaysia, the ASEAN nations and those who influence the business life in these places.  Our job is to consolidate the freshest online material as it appears as well as offering the inside scoops on many of the stories that will make the news.

Learn about leading Malaysian business people including Taek Jho Low and others.

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When a retinue of waiters hoisting champagne and sparklers parted the crowd at the Angel Ball after-party at 1Oak — and the deejay intoned, “23 bottles of Cristal for Lindsay Lohan’s 23rd birthday” — the starlet looked startled.

A half-hour later, 23 more bottles were paraded around. When someone congratulated her, Lohan laughed, “I don’t know why they are doing this. My birthday is July 2nd.”

It was unclear who sprang for the bubbly, but suspicion fell on the mysterious Malaysian who earlier at the ball bid $100,000 for Lorraine Schwartz diamond earrings and a Birkin bag.

This brief item in the New York Post a couple of weeks ago may not have elicited much attention, but it was the first ripple in the pond announcing the presence of a new clubland kingpin.

The Post dutifully followed up, sending two reporters to sleuth out the scoop on this Malaysian mystery man. Now the NYC gossip blogs have followed suit, and everyone in town is talking about the curious spending spree of heretofore-unknown Taek Jho Low.

Now J-Low’s legend is spreading fast.

He’s never without a bodyguard! Jamie Foxx gave him a red sports car for his birthday! He pays Megan Fox to hang out with him in Vegas! A fleet of Escalades are constantly idling outside his Manhattan apartment building!

For a guy who looks a lot like Hiro from Heroes, J-Low is outpimping everyone in sight.

Here is the introduction to the the follow-up Post story that put the question on everyone’s lips: “Who the hell is Taek Jho Low?”

A fleet of black Cadillac Escalades hums outside Chelsea hot spot Avenue — the A-list watering hole of such celebrities as Justin Timberlake and Lindsay Lohan.

As the car doors open, a dozen men emerge and a bouncer whisks them over the club’s threshold, past a group of shivering models behind the velvet rope.

“Who is it?” one of them wonders out loud. “Is it P. Diddy?”

But the man at the center of the entourage isn’t a celebrity. He isn’t even a mogul. He’s Taek Jho Low, a 20-something Wharton grad from Malaysia who has burned through hundreds of thousands of dollars at the city’s hottest nightspots in the last three months — and shows no signs of stopping.

The nightlife scene is abuzz with tales of this international man of mystery — who goes by the name Jho Low and whose chubby, bespectacled appearance hardly meets the image of a wealthy gadabout.

Here are some highlights from Jho Low’s rampage through the NYC party scene:

• He routinely blows $50,000 on nights out at Pink Elephant, and once took off with eight waitresses after closing time so they could party in Malaysia.
• He dwells in a $100,000/month pad in the Park Imperial, and also pays the tab for two other apartments for his security detail, totaling an additional $50,000/month.
• He recently spent $300,000 on six private club memberships in Midtown.
• He’s known to fork out cash just to get entertainment stars to party with him, like the time he flew Megan Fox to Vegas.

In a recap of the Post story on Gawker, Ravi Somaiya quipped, “The report said that no-one knows how Taek Jho Low, a 20-something Wharton grad, has so much money. Reliable sources say that despite his cuddly appearance, he is actually quite a dangerous character. More when I get it/do not fear death.”

Somaiya also made reference to supermarket magnate Ron Burkle supposedly shelling out cash to see Paris Hilton hit it with another lady, and implied that that’s the kind of thing that goes down when rich dudes start flying starlets around to “party.”

I can’t imagine Fox submitting herself to Jennifer-Connelly-in-Requiem-for-a-Dream treatment, but then again, maybe it’s just the next step down the dark alley that begins with washing Michael Bay’s Ferrari.

The Post ran another follow-up item today that described J-Low’s birthday party in Vegas.

It’s absolutely awesome:

Low just celebrated his 28th birthday in Las Vegas, a four-day affair that started out last Wednesday at Caesars Palace, where sources said the swimming pool was stocked with bikini-clad party girls and surrounded by caged lions and tigers.

The baby-faced, bespectacled Wharton Business School grad — who is often mistaken for Chance Yeh, a photographer who shoots for the Patrick McMullan Agency — was flown out by Caesars with his entourage on what was described as “a jumbo jet.”

The party continued at a nightclub where Low is said to have bought 120 bottles of Cristal. Among the celebs who partied with him were Paris Hilton, Usher and Jamie Foxx, who gifted the birthday boy with a red sports car.

Again, nobody has any idea where this guy came from, or where his money is coming from.

While he graduated from the prestigious Wharton School of Business, a “stock picks” article he published while studying there indicates he is less than a genius:

Stock Picks
Enron boasts top growth
Taek Jho Low, WH ‘04
Issue date: 11/6/00 Section: Undergraduate

Traditionally considered a natural gas pipeline company, Enron’s core business is now the management of price risk in fast-growing and deregulating commodity markets. The risk merchant franchise accounts for 75 percent of operating income and is growing at a 30 percent–40 percent annual rate. The company has the No. 1 market share in the relatively mature $80 billion U.S. natural gas market, is No. 1 in the $235 billion U.S. electricity market, opened in 1996 and rapidly growing. And it is a leader in related energy commodities, such as coal, pollution emissions, and weather hedges. Enron also has first-mover advantage in the $270 billion European market, opened in February 1999, where it is already profitable and has seen volume grow tenfold. Enron grows by expanding into new geographies and new commodities. It also successfully uses new tools; for example, I expect Enron will solidify its market position using the Internet.

Deregulation of commodity markets creates price volatility, which must be managed. Enron has successfully done this in gas and now power on a global basis. Seventy-five percent of the growth opportunity is ahead of Enron — in energy alone, an $800 billion global market opportunity.

The value of the bandwidth commodity market will be determined in 2000/2001. The ultimate potential of this market, with significantly greater “top-line” growth than energy, could exceed the energy commodity market by 2005. Enron is a leader targeting the bandwidth commodity opportunity.

Enron is also a first mover into new commodities and geographies with its risk merchant strategy. As a result, it earns the highest margins, about three times those of its nearest competitor.

My 12-month price target of $100 projects an energy franchise value of $60 per share, coupled with $40 in share value for bandwidth.

In October of 2001, 11 months after J-Low proclaimed this prediction, Enron spiraled into bankruptcy disaster and the stock plummeted to less than $1 per share.

So I’m thinking we can rule out the “Jho Low is the Malaysian Warren Buffett with the spending appetites of Ron Burkle” theory.

According to the Post, though, NYC nightclub impresarios don’t give a good goddamn where J-Low gets his money from — they want him to spend it in their establishments, and they’ll gladly keep his secrets.

JHO Low — the mysterious Malaysian who likes to surround himself with long-legged models and run up six-figure tabs buying bottles of Cristal — is a golden goose for nightclub owners, who are fiercely protecting his privacy.

“A Jho Low comes around once in a lifetime,” marveled one industry veteran. It’s been open war as each club operator tries to get Low into his place and keep him out of his competitors.

For his part, Low’s spokesman vehemently denies the tabloid tales, even as the smoke from this story is noticeable enough to rally the Five Nations to the warpath.

Low did not respond to e-mails for comment, and his spokesman David Tan refused to reveal his boss’ birthday or background.

“Mr. Low is currently in the USA for holiday and has on several occasions stayed in New York City with his friend[s],” Tan said via e-mail. “He, however, has not rented any property or purchased any property in New York City. Mr. Low did not spend $160,000 at Avenue on one night during Fashion Week.”

That’s right, he spent $159,632! (pinky to mouth)

A really informative article on Knowledge@WhartonIndia about the viability and market potential of Amazon Kindle’s entry into Indian Market caught my eye.

Post the launch of Kindle DX, which was much fanfare, it hasn’t gained much a momentum. Indian market doesn’t seem to have given an open arm to this new ebook Reader on the shelf.

"There is no plan to advertise the Kindle," says Laura Porco, director of Kindle Books, who was in Mumbai last month for the launch. "We will rely on word-of-mouth publicity."

But who is going to create a word of mouth. Indians are pretty stiff about talking good about something. On top of that, connectivity in India (on the fly) is not much to support Amazon’s vision of “download any book in 60 seconds”.

At a price of $350 it is really difficult for an Indian consumer (the regular 9-to-5) to imaging buying a tablet that only reads books and newspaper. The same price brings her a laptop, with many more features. At the same time, the biggest enabler to Kindle is connectivity, which will take much more time to make it possible for the “60 second download”.

For the full article jump here

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Let’s begin with a fact: the Graduate Record Examination (GRE) is not as heavy as it may sound. There is no need to study, all you need is to be is in tune with the basics, practical and smart. If cleared well, the test opens doors to several prestigious colleges in the United States (and a few in Europe), and also to financial aid throughout the course. “Almost all the top foreign universities, besides a number of renowned B-schools such as Harvard, Wharton, Sloan, Stanford, etc. consider GRE as a measure of a student’s ability and aptitude,” says Bidyut Dutta, Head-Academics, International Education, Career Launcher.
Developed and conducted by the Education Testing Services group (ETS), GRE can be taken all year round by paying a test fee of US$180. The test is largely mandatory for those who dream of pursuing a Master’s or a Ph.D programme from a university abroad. Admissions panels and committees use the GRE score to support a candidate’s undergraduate records, and other qualifications required for graduate study.

About the test
The examination has a General Test that measures verbal reasoning, quantitative reasoning and critical thinking as well as the analytical writing skills of the students. The GRE Subject Tests, if required by the university one is keen to join, gauges undergraduate achievement in eight specific fields of study. The use and value of GRE scores vary not only from one institute to another, but also among departments. For example, programmes in arts may only consider an aspirant’s verbal scores, while the engineering programmes may put more weightage on one’s quantitative ability.
GRE comprises two types of tests namely: the General Test and Subject Specific Test. The former, which is mandatory, evaluates general aptitude via two multiple-choice sections — quantitative aptitude and verbal ability. A third section consisting of essay writing is called Analytical Writing Assessment (AWA). The verbal section tests language ability (reading skills and vocabulary), while the quantitative section tests a candidate’s knowledge in arithmetic, algebra, geometry and data analysis. “The AWA section tests one’s prowess in analysing a given situation and presenting complex ideas clearly,” says Vineet Gupta, MD, Jamboree Education, adding, “Since colleges abroad open for admissions from December to April, one must have a GRE score by September.”
As mentioned before, the subject-specific exams assess skills in eight specific disciplines, which include biochemistry, cell and molecular biology, biology, chemistry, computer science, English literature, mathematics, physics and psychology. Each subject test is intended to evaluate extensive knowledge in the subject the GRE aspirant has majored in.

Score and beyond
Beyond the GRE score, colleges look at a student’s grades in college, recommendation letters from teachers and project work done. These will decide how one ranks on the merit list of a university. Depending on the net score, one could get financial aid. “Various funding options are available for international students, including grants, scholarships, loans and work/study options. Your best tool in learning about college financial aid is seeking the advice of the financial aid counsellor at the college you plan to attend,” says Dutta.
The ETS recently launched an updated version of its popular site TakeTheGRE.com that includes information on a host of new tools to help you get noticed by graduate and professional schools. By placing important resources right at your fingertips, the website makes registering for the GRE tests, obtaining free practice material and planning for test day simpler, faster and easier.

Today I met up with someone who is currently applying to quite a few 1-year executive MBA programs. He has applied to the PGPX programs at the IIMs, and was recently invited to an interview. He is also thinking of applying to Nanyang (Singapore), as well as other programs in south-east Asia. We briefly discussed about US programs, but agreed that it would not be possible for most of us (including him) to arrange for the kind of funding needed for them (therefore, INSEAD, IMD and Kellogg are out).

[Note: Here, the term executive MBA program is being used very loosely. PGPX is certainly an executive MBA program, but many others that we talked about, such as Kellogg and Columbia, are not. His primary goal is to be able to get into a 1-year MBA program, and since he has quite a few years of work experience, is not looking at conventional 2-year programs.]

Unlike BS, MS and PhD degrees, an MBA is not simply a course of study. More learning takes place from fellow participants than professors. A lot of the learning is experiential, and classes teach hard theory as well as soft skills. Brands matter for most degrees, but it matters even more so for an MBA degree. Of course there are guys who have never graduated school or college, and therefore have no education worth the name, who lead multi-billion dollar organizations (a single look at the Forbes list of billionaires will prove my claim). However, such people are considered outliers, and if you, the reader, are taking the time to read this post, it might be safe to assume that you are not (and probably never will be) be one of them (for some reason, I can never imagine Bill Gates, Michael Dell, Steve Jobs or Lawrence Ellison reading my posts!). For people like us, it makes a lot of sense to go for a brand-MBA degree. After all, on an average, a HBS MBA fares better in life than one from say Ohio State University. A disproportionate number of heads (CXO level officials) of Fortune 500 companies are graduates of super-elite business schools. McKinsey has a very large number of HBS and INSEAD graduates, and every other banker on Wall Street seems to be either from Wharton or Booth (University of Chicago). Many top IT companies are headed by graduates from Sanford GSB and MIT Sloan, while in “industry”, you can find usually find a homogeneous mixture of HBS, LBS and INSEAD graduates. The point that I am trying to make, which is obvious by now, is that it does go a long way to do an MBA from one of the top business schools.

Interestingly, though this guy is spending sleepless nights thinking about how best he would be able to arrange for funds, should he be accepted to Nanyang, he said that the most difficult part of the application process, apart from spending hours writing essays, is getting his recommenders to write so many recommendations. When I told him that he could as well apply to Kellogg, he said that his recommenders would probably not entertain him any further.

I hope everything finally works out fine for him, and that he is able to get a loan to at least cover his tuition and basic living expenses.

Working out a financial package to support oneself through an MBA is a daunting task. It is particularly difficult for students from developing and third world countries. I personally know people who have graduated from top 5 US business schools who had to come back to their own country (which happens to be a third world country), and therefore earn in in local currency and pay back their loans in US dollars. In many cases, the EMI of their loans is more than their salary. Added to the problem, when they took the loan, they had put up their homes as collateral. For them, the situation could not have been worse – they have old retired parents at home to support, a home that is not theirs until their loans are paid off, and a job that is paying them in local currency, which when converted to US dollars, turns out to be a paltry figure. Contrary to the picture Financial Times MBA rankings might project, I know a few Indian School of Business (ISB) graduates who had no other option but to accept jobs that are paying them almost the same salary that they used to get before their MBA, and repaying back their loans is proving to be a daunting task.

I was going through Businessweek.com forums where I came across financial aid-related posts, many from admits to INSEAD, who might not be able to attend if not awarded a fellowship. I think that for a school of the stature of INSEAD, there should be a suitable program for international students to be able to receive a loan without a cosigner. For an international school that attracts students from all over the world, which includes a great number of third world countries, it is imperative that such a program exist. HBS, Wharton and MIT Sloan have such loan programs, and therefore their students don’t face the kind of problems that INSEAD admits do. The possibility of a Wharton graduate not being able to find himself a job on Wall Street, and therefore having to come back to India, is of course there. But it feels bad to see so many students not being able to join INSEAD just because they don’t have adequate funds, and therefore forever wondering what it would have been like to have an INSEAD MBA. Maybe a few of such applicants would have ended up like a Wharton graduate with a job in India with hefty EMIs to be paid at month-ends, but still that is better than being accepted to INSEAD but not being able to attend just because of insufficient funds.

Over the next year or two, as the economic situation improves, many schools should be able to work out suitable loan programs for international students who don’t have a cosigner. However, it does not look as if that will happen anytime soon for the current admits (class starting Jan 2010) to take advantage of. Hopefully the situation will be much better when I apply.

A really informative article on Knowledge@WhartonIndia about the viability and market potential of Amazon Kindle’s entry into Indian Market caught my eye.

Post the launch of Kindle DX, which was much fanfare, it hasn’t gained much a momentum. Indian market doesn’t seem to have given an open arm to this new ebook Reader on the shelf.

"There is no plan to advertise the Kindle," says Laura Porco, director of Kindle Books, who was in Mumbai last month for the launch. "We will rely on word-of-mouth publicity."

But who is going to create a word of mouth. Indians are pretty stiff about talking good about something. On top of that, connectivity in India (on the fly) is not much to support Amazon’s vision of “download any book in 60 seconds”.

At a price of $350 it is really difficult for an Indian consumer (the regular 9-to-5) to imaging buying a tablet that only reads books and newspaper. The same price brings her a laptop, with many more features. At the same time, the biggest enabler to Kindle is connectivity, which will take much more time to make it possible for the “60 second download”.

For the full article jump here

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“Loss aversion is the systematic mistake of segregating gains and losses — evaluating decisions in isolation rather than in the aggregate — and over-weighting losses relative to gains,” according to Maurice Schweitzer, professor of Operations & Information Management at The Wharton School of Business.

Prof. Schweitzer makes this assertion based on growing studies on the impact of behavior on decision making. This is important because behavioral analysis increasingly shows that we often do not make economically rational decisions – even when we are ‘experts’. For example, a study of top golfers has shown that they tend towards safe shots, rather than winning shots. And hence the observation that even they – as leading experts – focus on the immediate risk of doing well on a specific hole, rather than their overall tournament score.

This is highly relevant to all those in the world of contracting, because the comparison relates to our focus on individual transactions, rather than on the portfolio of contracts and relationships. By having this focus, not only do we sub-optimize business results, but we also create unintended risks.

Sub-optimization occurs because ‘playing it safe’ most or all of the time results in a predictable outcome, but one where we can rarely emerge as big-time winners. We fail to gain competitive edge because we consistently achieve par, but rarely score a birdie. Unintended risk arises because we are concentrating on the acceptability of individual deals and not the cumulative effect of many deals. The collapse of the bankign industry is a classic example; each individual sub-prime mortgage made perfect sense. Many thousands did not.

The Wharton study goes on to observe  that behavior “reflects a bias towards avoiding loss” , In business people view performance in the context of a specific account, or a particular contract …. “People make mistakes when they view related decisions independently.” The study also refers to Prospect Theory, a concept in economics which was developed by psychologists Daniel Kahneman and Amos Tversky in 1979. Prospect Theory predicts that people become more risk averse when they are recording gains than when at risk of suffering a loss. Again, for those in the world of contracts and the law, this reflects our tendency to seek holes in new opportunities – which of course is frustrating for the optimists in sales and often also for executive management.

What lessons should we learn? Perhaps the key point is that we must find ways to undertake analysis and make risk judgments in a more composite fashion. We need tools that allow individual decisions to be made in the context of the overall contracts portfolio and that offer visibility to past experience across the organization. Most contracts and legal groups undertake deal analysis and review on a case by case basis that relies almost exclsuively on individual judgment. We lack data to observe volumes or patterns. Our insight to portfolio risk and opportunity is typically limited to personal or team experience. As a result, we are most likely overly conservative on individual opportunities – but may be guilty of allowing unacceptable risks to arise in the overall business portfolio. In addition, the limits of our personal experience may leave us unaware of the perfectly good opportunities that we are missing as a result of overly cautious risk assessment.

Ding from Wharton…

I was hoping to atleast get an interview invite so that I can experience what it is like interacting with a top school like Wharton. Oh well, this is how the cookie crumbles. I’m happy I wrote some good essays and did my best with this app. I couldn’t have done anymore in life or app and I accept this decision with no sadness and plenty of optimism for the future.

Next up: Babson app submission this weekend!