Teaching Math at Wharton
A logger sells a truckload of lumber for $100. His cost of production is 4/5 of the price. What is his profit? Please create six different financial scenarios with notes.
Teaching Math at Columbia
A logger sells a truckload of lumber for $100. His cost of production is 4/5 of the price, or $80. What is his profit?
Teaching Math at Kellogg
A logger sells a truckload of lumber for $100. His cost of production is 4/5 of the price, or $80. His profit is $20. But that’s irrelevant - what would be a cool slogan to put on his truck? Please indicate color scheme as well. Read more →
Do you ever face a mental blank at the drawing board? If so, it might be time to explore new ways to come up with creative ideas. After all, today’s entrepreneur is under attack not only from domestic competitors but from foreign ones as well. And what’s the best competitive weapon in a rapidly commoditizing world? Fresh ideas that will distinguish your products and services.
Over the years I’ve discovered that many entrepreneurs who become successful idea generators follow a routine. By learning their brainstorming patterns, you can demystify your creative thought processes and generate better ideas with more regularity. Read more →
Betsy Gelb, Demetra Andrews and Son K. Lam argue that while most managers would think long and hard before bringing to market a product that lacked patent protection and could be easily imitated, many invest in sales promotions that are easier to imitate than the simplest new product.
Others sign off on plans so generic that they seem unrelated to the brand or company offering them, despite the fact that sales promotions may absorb a significant portion of a company’s promotional dollars and they are increasingly being used for both packaged goods and consumer durables as concern has grown about the cost effectiveness of media advertising. Read more →
Students from Emory’s Goizueta Business School and McCombs School of Business at UT Austin were invited to come visit Mr. Buffett for a Q&A session.
I have 2 views on diversification. If you are a professional and have confidence, then I would advocate lots of concentration. For everyone else, if it’s not your game, participate in total diversification. The economy will do fine over time. Make sure you don’t buy at the wrong price or the wrong time. That’s what most people should do, buy a cheap index fund and slowly dollar cost average into it. If you try to be just a little bit smart, spending an hour a week investing, you’re liable to be really dumb.
If it’s your game, diversification doesn’t make sense. It’s crazy to put money into your 20th choice rather than your 1st choice. “Lebron James” analogy. If you have Lebron James on your team, don’t take him out of the game just to make room for someone else. If you have a harem of 40 women, you never really get to know any of them well.
Charlie and I operated mostly with 5 positions. If I were running 50, 100, 200 million, I would have 80% in 5 positions, with 25% for the largest. In 1964 I found a position I was willing to go heavier into, up to 40%. I told investors they could pull their money out. None did. The position was American Express after the Salad Oil Scandal. In 1951 I put the bulk of my net worth into GEICO. Later in 1998, LTCM was in trouble. With the spread between the on-the-run versus off-the-run 30 year Treasury bonds, I would have been willing to put 75% of my portfolio into it. There were various times I would have gone up to 75%, even in the past few years. If it’s your game and you really know your business, you can load up.
Over the past 50-60 years, Charlie and I have never permanently lost more than 2% of our personal worth on a position. We’ve suffered quotational loss, 50% movements. That’s why you should never borrow money. We don’t want to get into situations where anyone can pull the rug out from under our feet.
In stocks, it’s the only place where when things go on sale, people get unhappy. If I like a business, then it makes sense to buy more at 20 than at 30. If McDonalds reduces the price of hamburgers, I think it’s great.
See also here and here.
The number one reason some people get more work done faster is because they are absolutely clear about their goals and objectives and they don’t deviate from them. A major reason for procrastination and lack of motivation is vagueness, confusion, and fuzzy-mindedness about what you’ve supposed to do and in what order and for what reason. You must avoid this common condition with all your strength by striving for greater clarity in everything you do.
Here is a great rule for success: Think on paper. Only about 3% of adults have clear, written goals. These people accomplish five and ten times as much as people of equal or better education and ability but who have never taken the time to write out exactly what it is they want.
There’s a powerful formula for setting and achieving goals that you can use for the rest of your life. It consists of seven simple steps. Taking any one of these steps can double or triple your productivity if you’re not currently using it. Many graduates of my training programs have increased their incomes dramatically in a matter of a few years, or even a few months, with this simple, seven-step method. Read more →
Einstein once said, “Every child is born a genius.” But the reason why most people do not function at genius levels is because they are not aware of how creative and smart they really are. I call it the “Schwarzenegger effect.” No one would look at a person such as Arnold Schwarzenegger and think how lucky he is to have been born with such tremendous muscles. Everyone knows that he, and people like him, have worked many thousands of hours to build up their bodies so they can compete and win in bodybuilding competitions.
Your creative capabilities are just the same. They actually grow as they are used. But you don’t need to spend thousands of hours to increase your creative-thinking abilities. By practicing a few simple exercises and applications, you can start your creative juices flowing, and you may even amaze yourself at the quality and quantity of good ideas that you come up with. Let’s start off with the definition of creativity.
In my estimation, after years of research on this subject, the very best definition of creativity is, simply, “improvement.” You don’t have to be a rocket scientist or an artist in order to be creative. All you have to do is develop the ability to improve your situation, wherever you are and whatever you are doing. All great fortunes were started with ideas for improving something in some way. Read more →
One of your major goals in life should be financial independence. You must aim to reach the point where you have enough money so that you never have to worry about money again. The good news is that financial independence is easier to achieve today than it has ever been before.
We live in the richest country at the richest time in all of human history. We are surrounded by more wealth and affluence than ever before. Your goal should be to participate fully in what many people are starting to refer to as the “Golden Age”of mankind.
Money has energy of its own and it is largely attracted to people who treat it well. Money tends to flow toward those people who can use it in the most productive ways to produce valuable goods and services, and who can invest it to create employment and opportunities that benefit others. Read more →
Corporate culture has long been a vital, if elusive, element of a company’s success. Cost-cutting and entrepreneurial cultures, for example, have been credited for the long-term success of many companies. Conversely, culture clashes have been blamed for merger and acquisition failures and incompatible employees. But just how corporate culture can be measured is still a mystery. For instance, the causal link, if any, between casual Fridays and a “risk-taking culture” remains empirically undemonstrated.
Three researchers are beginning to get a handle on measurable and meaningful characteristics through which corporate culture manifests. Corporate policies captured by investment and financial styles and operational budgeting provide windows into a company’s culture. In their January 2007 working paper, Does Corporate Culture Matter for Firm Policies?, Henrik Cronqvist and Mattias Nilsson, assistant professors of finance at Ohio State University’s Fisher College of Business and Worcester Polytechnic Institute, respectively, and Angie Low, a Ph.D. student at Ohio State University and Nanyang Technological University, suggest that when companies spin off new business units, those new corporations will inherit their parent companies’ culture. This inheritance, the authors propose, is evident in the comparison of the corporate policies of parents with their spinoffs. They looked at 217 spinoffs (excluding those forced by mergers and those owned by multiple parents) from 1980 through mid-2005 to see whether those companies’ policies more closely resembled those of their parents or their industry peers. Read more →
Christopher Marquis and Julie Battilana develop an institutional theory of how local communities continue to matter for organizations, and why community factors are particularly important in a global age. Since globalization has taken center stage in both practitioner and academic circles, research has shifted away from understanding effects of local factors.
In their paper, entitled Acting Globally but Thinking Locally? The Influence of Local Communities on Organizations, they try to redirect theoretical and empirical attention back to understanding the determinants and importance of local influences. They review classical and contemporary research from organizational theory, sociology and economics that have focused on geographic influences on organizations–adapting Scott’s influential three pillars model, including regulative, social-normative and cultural-cognitive features to conceptualize an overarching model of how communities influence organizations.
Their approach thus runs counter to the idea that globalization is a homogeneity-producing process and the view that society is moving from particularism to universalism. With globalization, not only has the local remained important, but in many ways local particularities have become more visible and salient, and so understanding these dynamics will be helpful for researchers addressing institutional isomorphism and change.
Hedge funds have historically lodged in a dark corner of the investment universe, where investors and regulators were happy to leave them. There they have rested, mostly in the investment portfolios of the wealthy clients of private banks as tools to preserve wealth.
But institutional investors – the big pension funds, local authorities, charities and university endowment funds –- have become more interested in alternative investments. Falling markets have highlighted the benefits of funds that can pay positive returns regardless of what stock markets are doing, apparently with less volatility.
Fund managers, too, are seeking more flexibility in the way they invest, and have migrated in their hundreds to set up and run their own hedge funds. The number of hedge funds now exceeds 6,500, according to some estimates. And the amount of money invested has more than doubled since 1998 to more than $750bn. Read more →
