Graziadio Business Report Blog

Davide Accomazzo, MBA

In my many years as a derivative trader and hedge fund manager, I forged a solid and long-lasting relationship with risk. Like a beautiful but dangerous woman, risk permeated my professional life—a constant courtship leading me to many attempts at fully understanding its mysterious ways. A never-ending effort!

The theoretical foundations of risk analysis were laid in business school where I diligently learned of Alpha and Beta, Random Walks and Efficient Market Hypotheses (EMH).* These theories were elegant and pure, like a fresh mantle of snow they seemed to perfectly cover all market uncertainties and provided a boost of confidence to a young man ready to leave his mark in Wall Street. Continue reading ‘Beta(ful) Market Hypotheses’

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In this video interview, David M. Smith, PhD, Associate Dean of Academic Affairs and Associate Professor of Economics at the Graziadio School of Business and Management discusses the impact of the American Reinvestment and Recovery Act so far, the fate of female and older workers in this down economy, and which sectors of the California economy are likely to bounce back. Continue reading ‘The State of the New Economy’

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In this video interview, John K. Paglia, PhD, Associate Professor of Finance at the Graziadio School of Business and Management, discusses the Pepperdine Private Capital Markets Project, which was released on July 27, 2009, in conjunction with a Los Angeles and California statewide economic forecast that Pepperdine partnered to deliver with Beacon Economics and the Los Angeles Area Chamber of Commerce. The study has been featured in the New York Times and the Wall Street Journal. Continue reading ‘VC Firms Still Expecting High ROIs’

This op-ed first appeared in the Los Angeles Business Journal and is reprinted with their permission.

Dave Smith, PhD

In recent weeks there hasn’t been much data supporting sustained economic stability, much less a recovery. However, it does appear the economy is no longer in a freefall, and we are likely experiencing the depths of this downturn.

Since the start of the recession in December 2007, 6.3 million people have lost their jobs in the United States. Hundreds of thousands more per month are likely to join the ranks of the unemployed for the next several months, and the national jobless rate is expected to reach as high as 10 percent. In California, unemployment hit 11.5 percent in May and will surely peak at more than 12 percent in the coming months. L.A. city’s unemployment rate was even worse at 12.5 percent.

There is little cheer for the currently unemployed, underemployed or those seeking better career prospects. However, looking ahead, there are some breaks forming in the gray cloud hanging over the economy, brightening the outlook for job seekers.

In reviewing a number of sources of information, I believe it is likely that several areas of the economy will lead the way for jobs and economic growth. It also is my opinion that near-term jobs created as an outgrowth of the 2009 American Recovery and Reinvestment Act will not be among them. Here’s how I see it: Continue reading ‘Learning on the Job’

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Continue reading ‘What’s Next LA: The Road to Economic Recovery (A Preview)’

The results of GBR poll #3 on the road to U.S. economic recovery are in!

• Half of participants think we’ll be back on track by 2010
• 20% think we’re already on the road to recovery
• 30% think all the initiatives to stabilize and grow the economy so far are only making things worse

The GBR Blog asked Peggy Crawford, PhD, Professor of Finance, and Terry W. Young, PhD, Professor of Economics at the Graziadio School of Business and Management, to comment on the results and offer some practical advice on how to take advantage of the current economy. They wrote: Continue reading ‘3 Tips on Surviving and Thriving in the New U.S. Economy’

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Continue reading ‘Econ Profs Question Conventional Buy-and-Hold Wisdom’

In the ongoing social debate on what kind of an economic system we should build on top of the rubble of the present financial mess, we as investors should focus less on the philosophical nuances and more on how to adjust our investment framework, expectations, and tactics.

As the work of free-market proponents Milton Friedman and Margaret Thatcher falls to pieces under the weight of human greed and hubris, it is important to acknowledge that greed and hubris were also the culprits in past socio-economic collapses: communism, failed monarchies, etc. It seems safe to say that whatever policy will be implemented next will carry within its DNA the same self-destructing gene.

History may not repeat itself but it certainly rhymes, as Mark Twain once said.

Continue reading ‘Of Alphas, Betas, and Predetermined Rates of Returns’

The results of the second GBR poll on debt vs. savings are in!

• All participants said they have changed their personal financial approach due to the current economic instability
• 60% say they are working harder to pay down all their debt.

The GBR Blog asked Davide Accomazzo, Adjunct Professor of Finance at the Graziadio School of Business and Management, to comment on the results and offer some practical advice on riding out the economic turbulence. He wrote: Continue reading ‘The Basics of a Balanced Personal Financial Strategy’

The financial turmoil of the last eighteen months has brought to everyone’s attention the problems and dichotomy of our present monetary and financial systems. While we are now dealing with the consequences of too much credit, it is also important to note that a system without credit (and—much to the delight of the populists—without bankers) would be a much poorer and less innovative social system.

So far, the attempted solutions suggested have varied from more leveraged credit to the substitution of the fiat currency system and the central bank with a gold-linked scheme.

The problem with most of these suggestions is a massive confusion about how the U.S. system really works, how it should work, and how we would like it to work (and here it gets really problematic as every individual interest invariably jockeys for a better position).

The issue with a fiat currency system is that it is backed by the credibility of the government and the central bank, which should be acting independently as a guardian of the currency. Governments have inherent conflicts of interest and may feel pressured to regularly weaken the currency as a means of veiled taxation; other sectors of the population will also look favorably on consistent inflation to reduce the burden of borrowing. The central bank is supposed to act independently to counterbalance these inherent social and political dynamics. Unfortunately, in the case of the U.S. and many other countries, the central bank, is hardly independent or focused on one true objective of financial stability. In reality, a central bank’s independence is very limited; true independence would require practically no accountability and a large degree of secrecy, which comes, of course, with its own problems.

The fine balance between a government’s and a society’s pull toward credit excesses and the countervailing force of the central bank is the key to successful economies. Continue reading ‘The Future of US Capitalism’