Postingan

Trust is a Facade in the Banking World

Gambar
What is Trust? In the business world is a fiduciary matter to manage and take responsibility for once asset based on their interest and objective. However, this fiduciary act has some errors, deception and fraud, hence the world we live in, some people live to the quote “take what you can and give nothing back” essentially describe in Wells Fargo account fraud and the CEO, directors and senior managers motive to close the secrecy. In the fraud story, Wells Fargo was charge for million in saving and checking account transaction fraudulent, where the company increase the accounts to one customer to have 8 accounts with the objective to obtain high income and commission, this is done by transferring funds from checking account to checking account in a cycle which the customer obtains additional fees, credit and expenses unaware of the transaction. The company was penalized around $185 million from the fraudulent action and the executives are currently charge on criminal and civ
6 komentar
Baca selengkapnya

The Dark Side of Oil, BP 30 Billion Blowout

Gambar
One of the most devastating occurrences in business and oil history, and questions the definition of business ethics and an accident. BP $30 billion blow out and cause high number of workers injured and 11 of the workers died. A tragic story that created the movie Deep Water Horizon, a master piece on real world events where people are working in dangerous areas and place. I watch a full documentary regarding the BP incident which devastated one of the biggest oil company and questioning the corporate governance for all company’s employment safety, hence high number of citizens provide dispute to the company and Barack Obama stands and provide consequences to BP insufficient management. What happen was, in the oil rig, there was a machine malfunction based on the kick which creates an oil spill and with high amount of pressure the oil will create flames and with that so much oil it destroyed the oil plant and a blowout. This incident caused the headline of business news maki
4 komentar
Baca selengkapnya

The deal of the Century? Or is it a Trap?

Gambar
On 14 th of December 2017, a huge landmark deal come in to place; Disney acquiring 21 st century fox assets for $52.4 billion in cash and stock, with the objective of launching streaming services. Not only that, personally it signify that Disney will gain the privilege of investing and controlling 21 st century fox entertainment assets based on X Men and Fantastic 4 Intellectual Properties to enter the Marvel family, allowing Disney to launch new moves based on those brands which will increase Disney’s revenues because who doesn’t like to pay and watch new Marvel movies because it is iconic and fans will always craving more on those movies and will subscribe to Disney streaming media if it is available.   Focusing on Merging and Acquisition theory, well it’s all about synergies and takeover cases. Such as in 2018 Disney values 21 st Century Fox for $71.3 billion and I am confuse on how they manage to value that much for a company that currently have $34 billion in Net Asset
4 komentar
Baca selengkapnya

Are we living in a world of Lies?

Gambar
It started in 2005, where housing market is booming, sub prime loans in demand, poor families issue a mortgage and gain 5 or more houses based on large borrowings. Securitisation is applied, converting mortgages to Mortgage Backed Securities and bundled them together accordance to credit ratings packaged to a Collateralized Debt Obligation. Sounds complex isn’t it? But, there’s only one thing that come out of my mind, what really happen? That make this sparks an economic crisis, and how investors provide wrong valuations to these securities and companies thinking that it will generate profits, solvency, growth and future business benchmarks, but at the end it’s a toxic investment, incur losses to everyone and companies went bankrupt. There was a scene that shocked me, where Brownfield Fund bet against the market with the help of Ben to short Mortgage Backed Securities with AA ratings, and that scene where the Brownfield Fund successfully short the MBS, Ben claims that if they ar
4 komentar
Baca selengkapnya

Will cutting dividend payment enhance company’s growth or sparks bankruptcy?

When you invest in a company, what do you expect? Gaining higher returns from the investment or sustaining that ownership in the company? Obviously, sustaining the ownership of the company with the objective of a business future benchmark, that way to gain continues return which increases your wealth and enables financial sustainability. However, some companies provide new dividend policies that does not make sense and making the company's lose its shareholders and experience insolvency, which are in strains to cut the dividend payment with the objective of increase the income of the company, well, obviously the shareholders will sell their shares from this bad news of gaining lower return from the guaranteed amount, hence negative abnormal returns.  Current example may include General Electric share price in 2017 was $20.49 and share price in 2018 reduces to $9.42 because of new dividend policies with massive reduction of 50% dividend yield and if this continuously reducing t
6 komentar
Baca selengkapnya

The Economics of Capital Structuring

One of my favorite school subjects was Economics, because it teaches you the science within decision makers based on human nature and fallibility impacts the real world along with themselves. This signify as human behavior or corporate behavior based on their decision making on funding and spending either from equity or debt, which is called capital structuring. The basic assumption of human spending is by using their own money or someone else’s money, the reason of borrowing someone else’s money is because to double their spending and investment to gain more resources to satisfy wants and needs. However, the consequence of borrowing is that it accumulated debt payment and possible debt default. Compare to a company the capital structure is basically based on the pecking order theory, either the company use its own money, borrow money, issuing hybrid stocks or issuing common stocks. Knowing that, the most use financial tool that drives the world is money, and most companies in
7 komentar
Baca selengkapnya

Life Investment Lesson from the Fall of Lehman Brothers

Gambar
On this Blog I will review about the infamous Lehman Brothers that has the entitlement to be: The Bank that crash the world, the Bank that creates the infamous 2008 credit crisis and lastly the bank with a long-term successful CEO, however nowadays his known as a criminal. The 2008 financial crisis is one of my favourite economic cases that devastate not only in the US, however all around the world, and one of the major players was Lehman Brothers which was the 4 th major Investment Bank in the US with a net profit of $1.3 billion and $398 billion in assets in 2007, however because of its insidious banking strategies that creates the financial crisis, Lehman Brothers went bankrupt. Furthermore, I’m going to relate this topic with the finance theory of International Cost of Capital which are formulas and calculation to value a debt and equity securities and determining the amount of return, value, spreads and risks. Lehman Brothers plays a big role in international inve
4 komentar
Baca selengkapnya