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jerryking : opacity   9

Family offices are diving into new markets
August 1, 2019 | Financial Times | by Gillian Tett.

Once, property advisers mainly sold malls to developers, retail groups or banks. Now, however, there is rising demand from family offices. The new owner of Water Tower Place was said to have experience acquiring and managing other “trophy quality, grocery-anchored shopping centers” in the US.

As the Fed and other central banks loosen monetary policy, private pools of capital are searching for ever-more innovative ways to earn returns. ....It is not easy to monitor such financial flows with precision, since the family office sector — which is estimated to control almost $6tn in assets — is highly secretive. However, financiers say that a shift is under way. A few decades ago, the sector (like most asset managers) put most of its money in public bond and equity markets, with a smaller allocation to real estate.

Then investing in hedge funds became all the rage. But a survey conducted late last year by UBS bank and Campden Wealth suggests just 5.7 per cent of family office assets now sit in hedge funds, sharply down from recent years. Meanwhile, the allocation to public markets is also falling, with just 28 per cent in equities and 16 per cent in bonds.

At the same time, investments in private equity and real estate have risen to account for 22 per cent and 17 per cent respectively. This trend seems set to intensify.....“Family offices continue to re-evaluate traditional approaches to investing [with] accelerating interest in making direct investments in real estate and operating businesses.”

This means that family offices are no longer just investing in private equity funds (which are already bloated with cash), but increasingly cutting direct deals. ...The more that elite private pools of capital find juicy returns outside public markets, the more this risks fuelling wealth gaps. After all, most non-elite investors remain stuck in public markets and bank deposits, exposed to the vagaries of low interest rates.

This return gap may be going largely unnoticed now, because private markets are so opaque. However, the difference is likely to grow.
family_office  Gillian_Tett  trends  opacity 
august 2019 by jerryking
CIBC’s Victor Dodig warns about global debt levels; urges Canada to prepare
SEPTEMBER 11, 2018 | The Globe and Mail | by JAMES BRADSHAW (BANKING REPORTER)

Who/Where/Occasion: CIBC's CEO Victor Dodig, in a speech to the Empire Club

Problem(s):
* alarm over rising global debt levels, warning that Canada needs to start preparing now for the next economic shock.
* some of the most acute threats to the global economy are beyond this country’s control, but cautioned Canadians not to get too comfortable while times are good.
* developing problems could ripple through interwoven financial markets around the world.
* “It sounds counterintuitive, but that same debt that helped the world recover is actually infusing risk into the global financial system today," ...“I think there’s a real serious global challenge of this low-interest-rate party developing a big hangover."

Remedies:
* clarify rules around foreign direct investment, which is falling in Canada. The main culprit is the uncertainty plaguing large business deals that require approval from Ottawa under opaque foreign-investment rules – and he cites the turmoil surrounding the Trans Mountain pipeline expansion as an example.
* more immigration to Canada, asking the government – which has already set higher immigration targets for the coming years – to open its arms even wider.
* governments and employers to work more closely with universities and colleges to match the skills graduates have to employers' needs, promoting what are known as the STEM disciplines – science, technology, engineering and math – as well as skilled trades.
* remove interprovincial trade barriers.
* allow companies to expense capital investments within one year to be more competitive with U.S. rules.

My Takeaways:
CEOs  CIBC  debt  FDI  global_economy  interconnections  interest_rates  opacity  pipelines  resilience  speeches  uncertainty  Victor_Dodig  war_for_talent  threats  beyond_one's_control  complacency  preparation  financial_system  readiness 
september 2018 by jerryking
How Financial Products Drive Today’s Art World
July 20, 2018 | The New York Times | By Scott Reyburn.

How does one invest in art without going through the complications of buying and owning an actual artwork?

That is the question behind financial products for investors attracted by soaring art prices but intimidated by the complexity and opacity of the market..... entrepreneurs are trying to iron out the archaic inefficiencies of the art world with new types of financial products, particularly the secure ledgers of blockchain...... “More transparency equals more trust, more trust equals more transactions, more transactions equals stronger markets,” Anne Bracegirdle, a specialist in the photographs department at Christie’s, said on Tuesday at the auction house’s first Art & Tech Summit, dedicated to exploring blockchain......blockchain’s decentralized record-keeping could create a “more welcoming art ecosystem” in which collectors and professionals routinely verify the authenticity, provenance and ownership of artworks on an industrywide registry securely situated in the cloud...... blockchain has already proved to be a game-changer in one important area of growth, according to those at the Christie’s event: art in digital forms.

“Digital art is a computer file that can be reproduced and redistributed infinitely. Where’s the resale value?”.....For other art and technology experts, “tokenization” — using the value of an artwork to underpin tradable digital tokens — is the way forward. “Blockchain represents a huge opportunity for the size of the market,” said Niccolò Filippo Veneri Savoia, founder of Look Lateral, a start-up looking to generate cryptocurrency trading in fractions of artworks.

“I see more transactions,” added Mr. Savoia, who pointed out that tokens representing a percentage of an artwork could be sold several times a year. “The crypto world will bring huge liquidity.”......the challenge for tokenization ventures such as Look Lateral is finding works of art of sufficient quality to hold their value after being exposed to fractional trading. The art market puts a premium on “blue chip” works that have not been overtraded, and these tend to be bought by wealthy individuals, not by fintech start-ups.....UTA Brant Fine Art Fund, devised by the seasoned New York collector Peter Brant and the United Talent Agency in Los Angeles.

The fund aims to invest $250 million in “best-in-class” postwar and contemporary works,...Noah Horowitz, in his 2011 primer, “Art of the Deal: Contemporary Art in a Global Financial Market,”.... funds, tokenization and even digital art are all investments that don’t give investors anything to hang on their walls.

“We should never forget that in the center of it all is artists,”
art  artists  art_advisory  art_authentication  art_finance  auctions  authenticity  best_of  blockchain  blue-chips  books  Christie's  collectors  conferences  contemporary_art  digital_artifacts  end_of_ownership  fin-tech  investing  investors  opacity  post-WWII  provenance  record-keeping  scarcity  tokenization  collectibles  replication  alternative_investments  crypto-currencies  digital_currencies  currencies  virtual_currencies  metacurrencies  art_market  fractional_ownership  primers  game_changers 
july 2018 by jerryking
Exchange Sale Reflects New Realities of Trading - NYTimes.com
December 20, 2012 | NYT | By BEN PROTESS and NATHANIEL POPPER.

(Idea for the Ontario Food Terminal and the OPMA??) the firm, IntercontinentalExchange, or ICE, an electronic operator of markets for derivatives and commodities, is buying the symbolic cradle of American capitalism, the New York Stock Exchange,for $8.2 billion....ICE was founded in 2000 by Mr. Sprecher, who began his career developing power plants. In the 1990s, he saw that many power companies and financial firms wanted to hedge their investments in energy with financial contracts, but the market for these contracts was disorganized and opaque.

Mr. Sprecher bought an obscure exchange for buying and selling electricity in Atlanta and turned it into ICE with financing from BP and Wall Street firms, including Goldman Sachs and Morgan Stanley.

Banks were drawn to the idea of a standardized place to buy and sell derivatives tied to the value of oil and other commodities. But they also hoped to create a competitor to the virtual monopoly position being built up by the Chicago Mercantile Exchange in futures trading....ICE also decided to fashion its own clearinghouse, rather than tap an outsize firm. It expanded through acquisitions, planting the seeds for growth in 2008, when it took over the Clearing Corporation, home to a popular derivative known as a credit-default swap.

The Dodd-Frank overhaul may provide additional benefits for ICE. Under the law, exchanges must turn over public and private information to outside data warehouses, which will, in turn, share the information with regulators. Sensing an opportunity, ICE created its own warehouse, named ICE Trade Vault.

ICE and its Chicago rival, CME Group, have also moved in recent months to convert swaps trades, which are facing more scrutiny under Dodd-Frank, into old-fashioned futures contracts. Futures trading is lucrative territory for the exchanges in part because they can shut out competitors.

“The reality is that there are incentives to convert swaps into futures, where there’s less competition,” said Richard M. McVey, chief executive of MarketAxess, an independent trading platform that is expanding into the swaps business. “There’s no requirement for CME and ICE to open their futures clearinghouses to other exchanges.”
contracts  stockmarkets  mergers_&_acquisitions  M&A  derivatives  Dodd-Frank  trading_platforms  bourses  OFT  hedging  opacity  public_information  private_information  disorganization  clearinghouses 
december 2012 by jerryking
On the Market
1 March 2012 | n + 1 | Alice Gregory.

I knew little about. In my interview, I told my future boss that I had never been able to imagine an idea that could be best expressed by painting it. “But,” I added, making exaggerated eye contact, “appreciating art doesn’t mean you can send effective emails. I can write. I can make your job easier for you.” This is the best thing to say in an interview if you are young and unqualified to do anything other than maintain a personal blog. I started three weeks later.....financial journalist Felix Salmon asserted in response that “the entire business of the art world is built on opacity and information asymmetry.” Salmon continued, “One of the weird things about conspicuous consumption in the art world is that for all that it’s conspicuous it isn’t public—outside the big public museums everybody tends to be very secretive indeed about what they own and what they don’t.”.....
art  auctions  Sotheby's  opacity  asymmetrical  conspicuous_consumption  information_asymmetry  provenance  financial_journalism  Felix_Salmon 
may 2012 by jerryking
Wealth Matters - The Rules That Madoff’s Investors Ignored - NYTimes.com
January 6, 2009 | | By PAUL SULLIVAN.

THE 10 PERCENT RULE The saddest Madoff stories are the ones about life savings lost. These were people who had, say, $5 million in one of his funds and now have nothing. Honestly, the people themselves need to bear some responsibility for this. The most basic book on investing will tell you never to put more than 5 or 10 percent into any one investment, particularly one meant to preserve wealth…Having a concentrated stock position when you’re working for a company is sometimes unavoidable. If you were a senior executive at Lehman or Bear Stearns, a part of your bonus was paid in shares, and such restricted stock needs to be held for a period of time, generally two to seven years. Having a concentrated position in other circumstances, however, is foolish. Any responsible wealth manager works to reduce or hedge a person’s concentrated stock position. With Mr. Madoff, investors went the other way and added money year after year. Discipline is key: stick to 10 percent or less and remember that any investment can go bust.
CONSISTENCY IS BAD - Consistency at the highest level isn’t bad; it’s impossible. There are too many variables that inhibit being great on a regular basis.
THE GRAND FALLOON Kurt Vonnegut coined this phrase in “Cat’s Cradle,” and never did it have a more devastating application than in the Madoff scheme. In Vonnegut’s world, a grand falloon was a false association mistaken for friendship — two people from the same town, same university, same company meet somewhere and believe that coincidental connection has significant meaning. It doesn’t, no more so than belonging to the Palm Beach Country Club or the Fifth Avenue Synagogue did for those who used their proximity to Mr. Madoff to coax him into taking their money.
This is a crucial point particularly in opaque investments, from hedge funds to private equity partnerships: just because someone is a good golfer does not mean he should be trusted to invest your money. Private bankers are forever telling their clients not to try to get into someone’s hedge fund just because you enjoyed their conversation on the course — or, worse, want to play with them again. Like taking care of your health, picking an investment adviser should be done with the utmost rigor.
‘DON’T ASK, DON’T TELL’ - Ask questions and don’t assume the person who brings an investment to you has vetted it. Nothing in which you are putting millions of dollars is so wonderful that it cannot withstand scrutiny.
PUT MONEY IN BUCKETS - follow the popular wisdom of private bank investment strategists: divide your money into buckets to insure the money you need to live on will always be safe. Most strategists advise putting your riskiest assets into your philanthropy bucket.
Bernard_Madoff  high_net_worth  fraud  mistakes  opacity  friendships  trustworthiness  diversification  biases  personal_finance  financial_planning  grand_falloon  wealth_management  concentrated_stock_positions  high-risk  philanthropy  due_diligence  passions  passion_investing  impact_investing 
october 2011 by jerryking
WikiLeaks: Unpluggable
Dec 2nd 2010 | The Economist. It would be an exaggeration to
say that diplomacy will never be the same again. Self-interest means that countries will still send & receive private msgs. But communication will be more difficult. The trading of opinions, insights & favours necessarily requires shadow, not light. Unofficial contacts such as businessmen, journalists, campaigners & other citizens who talk to American diplomats, out of goodwill or self-interest, will think twice about doing so. Being tarred as an American crony can be lethal. What is said will be less clear & interesting. Principals will use go-betweens rather than talking directly. Clear private speech will give way to euphemisms suitable for public consumption. (e.g. “convivial” for “drunk”; “unconventional” for “mad”.) All that will make communication more difficult. ...In the
longer term the odds are stacked against secrecy...America’s need to share colossal amounts of data across a sprawling govt. machine.
WikiLeaks  diplomacy  Communicating_&_Connecting  security_&_intelligence  confidentiality  self-censorship  self-interest  opacity  private_information 
december 2010 by jerryking
Quid Emerges From YouNoodle, Delves Into Data on Private Firms - Bloomberg
By Ari Levy - Sep 14, 2010. Quid Inc. aims to shed light on
the insular world of technology innovators & investors while making
money itself. While public companies disclose financial results and
research plans quarterly, private-company information is less
transparent. That’s where Quid comes in, using its relationships &
research to fill in the gaps. The challenge will be getting enough
customers to pay for the data. “It’s in private companies where so much
of the world’s technology is being developed,” “To date, no one has
delved into what these companies are doing. That’s the data we care most
about.” To succeed, Quid will have to go beyond the kind of data that
more-established competitors have collected. Hoover’s, a unit of D &
B., has info. on 65 million companies, both public and private. It
sells the data via subscriptions. Quid’s likeliest customers are
companies that need to track technology trends, as well as govt. groups
involved with economic development &security.
Quid  Peter_Thiel  privately_held_companies  start_ups  scuttlebutt  opacity  data 
october 2010 by jerryking
Blackstone probably just the tip of China's private equity iceberg
01/06/07 | From Friday's Globe and Mail| ERIC REGULY

China, the oil-rich Arab countries and Russia will use private equity
investments and partnerships to buy everything from oil sands and tech
companies in Canada to manufacturing and financial services in Europe.
Maybe those investments are being made right now, or have been made. We
don’t know. Private equity does not have loose lips. Secrecy is their
currency.
private_equity  Eric_Reguly  China  opacity  Blackstone  secrecy  discretion 
march 2009 by jerryking

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