All posts filed under “Business

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Signs of a very weak economy, how Clare College is taking advantage

This article in the New York Times shows exactly how weak the economy has become:

In the market equivalent of shoveling cash under the mattress, hordes of buyers were so eager on Tuesday to park money in the world’s safest investment, United States government debt, that they agreed to accept a zero percent rate of return.

The news sent a sobering signal: in these troubled economic times, when people have lost vast amounts on stocks, bonds and real estate, making an investment that offers security but no gain is tantamount to coming out ahead.

[…]

Investors accepted the zero percent rate in the government’s auction Tuesday of $30 billion worth of short-term securities that mature in four weeks. Demand was so great even for no return that the government could have sold four times as much.

In addition, for a brief moment, investors were willing to take a small loss for holding another ultra-safe security, the already-issued three-month Treasury bill.

How Clare College is taking advantage of the economy

Clare College is the second-oldest College at Cambridge, having been founded nearly 700 years ago. One of the benefits of this kind of longevity is that banks are more able and willing to make loans to you.

From the student newspaper about a month ago (sorry, no link):

Clare College has borrowed £15 million to invest in the stock market. The unprecedented inflation-linked loan is due to be repaid in 2048 and the College expects to make a profit of around £36 million.

[…]

This is the first time Clare has borrowed to invest in its 700-year history. Hearn acknowledged that it was a potentially dangerous strategy, but said the forty-year time frame brought security.

“Most Colleges have a very long-term perspective, which gives them an advantage over city funds which often have a short term focus.”

Wow…

Both of these stories are just unprecedented. The economy truly is upside-down.

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Things making me happy today…

These are the things that are making me happy today:

  • Top Gear! – Top Gear is back on television! One of the best shows on TV anywhere, it started its new season last night. Really funny, and just lots of fun to watch.

    This also allows me to bring up a HUGE pet peeve of mine with British TV. They do a HORRIBLE job of promoting new seasons of shows. With American TV, new shows debut around the same times of year (September, January, etc.) and the channels promote that the shows will be starting soon. On the BBC, I have NEVER heard that the new Top Gear season will be starting, even though I was checking their website every few weeks!

    For a show that makes a tremendous profit for the BBC, you’d think they would try to make sure that people are actually… you know… WATCHING IT?

  • Lewis Hamilton – Well done to Lewis Hamilton and the rest of the McLaren team. (Though I doubt he’s reading, congrats Oli!)

    If you don’t follow Formula 1 (far too many Americans, unfortunately), Lewis Hamilton just won the Drivers Championship yesterday in one of the most thrilling and nail-biting races I’ve ever seen or heard of! Coming into the last race (Brazilian Grand Prix), Lewis Hamilton was leading in number of points, but his only competition (Felippe Massa) has always dominated in Brazil, his home country. Even if Massa won, as long as Hamilton placed fifth or better he would become Formula 1 champion.

    The race was crazy. Rain at the start delayed the race and forced teams to upend their strategy as they changed tires to Wets. Hamilton stayed in fourth or fifth for the majority of the race and seemed to be playing it safe in order to win the championship. But on the final ten laps of the race, rain came out again, forcing teams to choose to either leave “slick” tires on and hope it didn’t rain hard or go into the pits and get their “wet” tires.

    On the second to last lap, Hamilton was in fifth place but passed! He drove like crazy trying to catch up, but didn’t, and the championship slipped out of his grasp… Massa crossed the finish line in first place. But out of nowhere, Lewis Hamilton passed the car that had been in third place! It hadn’t pitted to get new tires, and was slow on the wet track. Hamilton caught up and passed him just seconds before crossing the finish line… in fifth place!

    It was an amazing race. Lewis Hamilton became the youngest person to win the Formula 1 World Championship, and the first black man to win the Formula 1 World Championship. Britain hasn’t had a driver win the championship in twelve years, so the country is deservedly celebrating!

  • Barack Obama – Is Lewis Hamilton’s victory a portent of things to come in tomorrow’s election? I certainly hope so. According to fivethirtyeight.com, he’s heavily favored… winning >95% of the simulations.
  • Prototype – The prototype for my new venture is nearing completion. While it is FAR from perfect, I will be launching it within my MBA class here at Judge Business School soon to start getting feedback from real users. The U/I in particular is rather crude (my fault), but I’ve been talking to a really talented guy (a fellow Jesus College grad student) who’s going to be helping me out on the coding/design end of things.

    I do promise to write more about this soon, but that post will take longer to write than I have today!

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And the journey begins

Today was a big day, for a number of reasons.

First Pitch

I’ve been working on a business idea for a few months now, and I pitched it for the first time tonight, at a meeting of the Entrepreneurship Interest Group at Judge Business School. It was really good to pitch it first to friends and peers, especially since they came from a wide variety of backgrounds and had some really interesting perspectives on it all.

Talking about it to them made me realize just how much work I have in front of me, but just how much I could really “change the world” if I’m successful in my quest. Their comments and feedback have sharpened my ideas; they found a few weaknesses in my thinking, but also reinforced a few key principles on which I had based my plans. Next steps are to really start talking to people more widely about this.

First Exam

Yes, it’s only the third week at Cambridge and we had our first exam today, in Business Statistics. I’m a bit of a bone-head… I didn’t realize the exam was open-book until about 5 minutes before it began! Luckily that meant I had studied harder than I probably needed to, which did make the exam seem a little easier than I had expected. Stats can be a bit rough, especially since a number of the things you’re taught in class (particularly how to do statistics calculations in Excel) can’t be examined, which does tend to confuse things a bit.

Speaker Series

I’m part of Jesus College at the University of Cambridge, which has a 500+ year tradition. There are currently five MBA students studying at Jesus this year, and we’re looking at creating stronger links between Jesus and Judge through a speaker series. (There are some tremendously successful Jesus alumni out in the world… we want current students to hear from them!) It’s early days, but we had two really positive meetings today with key people and things are starting to look like they’re coming together. More on this as it develops.

Term Project

As part of the MBA, this term we complete a “Cambridge Venture Project.” Done part-time over approximately 4 weeks, teams of five students (our study groups) work with local small businesses on challenges they’re facing, typically marketing-focused. We received information on our project late last week, and had our first group meeting today. Can’t really talk about it here, but it sounds like it’s going to be a very interesting (and international) project.

Things are about to get much, much busier… should be fun.

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Privately-launched rockets = cool

In my last post lamenting the state of government activity in the space program, I mentioned SpaceX. Little did I know that shortly after I wrote that post, SpaceX made the first successful launch into orbit by a privately-funded company. WOW!

This is a landmark achievement, and I look forward to seeing more successes from them as they rollout increasingly bigger launch vehicles. (aka, Big-F’in Rockets) If they meet expectations, they will dramatically decrease the cost of launching satellites into space, which is a very good thing. (Dramatically = ~10-25% of current costs!)

Watch history in the making below. (My favorite part is hearing the employees in the background go nuts.)