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Milk “Crush”

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Got Cheese?

Whey is a by-product of cheese-making. It usually is used for feeding the pigs, but it could also be used to make more cheese (see Whey to Go).

Cheese Making : Milk –> Cheese + Whey

CME already had Dry Whey Futures & Milk Futures. All we need is a Cheese Futures to complete this important manufacturing cycle.

Now, lucky arbitragers have one new “crush” to play with. And this would definitely make me ponder a bit next time I hand over a glass of milk and a and a grilled cheese sandwich to my kids.

References:

Written by walkinggeek

June 15, 2010 at 3:15 pm

Posted in Investment

THE BIG EIGHT & Beyond

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Eight financial designations are premier within areas of investment professionals:

  • CAIASM. The Chartered Alternative Investment AnalystSM designation—the only certification among the Big Eight that’s specifically intended for alternative investments—concentrates on the primary alternative sectors of hedge funds, real estate, private equity, commodities, and managed futures. Since the Chartered Alternative Investment Analyst Association® awarded the first CAIAs in 2003, the rapid growth in alternatives has fostered a concomitant explosion in new CAIAs. As of June 2009, approximately 3,000 CAIAs had been awarded to designees in 62 countries.
  • CFA®. The oldest, most widely held, and perhaps most highly regarded financial designation is that of the Chartered Financial Analyst®. The first CFA certifications were awarded in 1963 by the Institute of Chartered Financial Analysts and the Financial Analysts Federation, which in 1999 merged under the umbrella of AIMR (Association for Investment Management and Research, renamed CFA Institute in 2004). As of May 2009, approximately 98,500 CFAs had been awarded to individuals in 130 countries. The qualifying exam covers a broad swath of subject matter applicable to securities analysis and portfolio management.
  • CFP®. The Certified Financial Planner Board of Standards owns and awards the Certified Financial Planner designation. Because of the CFP’s long history and popularity within the profession, and because of the breadth of material the CFP exams involve, the CFP can be viewed as the financial planning field’s equivalent to the CFA. The first CFPs were awarded in 1973; as of May 2009, there were about 59,000 active certificants. The CFP’s emphasis on domestic laws and estate issues means that it is currently awarded almost exclusively within the US.
  • CIC. The Chartered Investment Counselor designation is essentially an extension of the CFA geared specifically toward client-facing investment managers. It was first awarded in 1975 by the Investment Counsel Association of America, which became the Investment Adviser Association in 2005. As of June 2009, there were about 350 active CIC charterholders, the vast majority of whom are in the US.
  • CIMA®. Certified Investment Management AnalystsSM are generally investment consultants who focus on asset allocation, the construction of portfolios of multiple managers or strategies, manager search and selection, and performance measurement. The CIMA has been conferred by the Investment Management Consultants AssociationSM since the designation’s inauguration in 1988. As of the end of 2008, nearly 5,800 CIMAs had been awarded, mostly in the US.
  • CMT®. The Chartered Market Technician is devoted to the study and application of technical analysis. The Market Technicians Association awarded the first CMT charters in 1989. In June 2009, there were just over 800 active CMT charterholders in 36 countries.
  • CRPC®. Pre- and post-retirement planning is what the Chartered Retirement Planning CounselorSM is all about. Given the public’s heightened awareness of retirement-related issues, it’s not surprising that the annual growth rate of CRPCs is one of the highest among the Big Eight. The College for Financial Planning—the dominant administrator of the CFP exam—conferred the first CRPCs in 1996. The CRPC is based on US tax law and is therefore specific to the US. As of May 2009, around 15,500 investment professionals held CRPC charters.
  • FRM®. The need for effective risk management, underscored by the recent financial crisis, has prompted dramatic growth in certification of Financial Risk Managers by the Global Association of Risk Professionals. FRM certificants are trained in the major strategic disciplines of financial risk management (market, credit, and operational risks, and risk management in investment management). From 1997 through 2008, approximately 17,700 FRMs were awarded in 90 countries.

Outside investment world, there are other financial designations:

Series 7 & Series 63/66, for broker-dealer representative/sales.

CPA for accountants.

ASA, CERA, etc: P/1,FM/2, C/4 exams for actuary.

Source : Privilege of Peerage: The Value of Professional Designations

Written by walkinggeek

June 15, 2010 at 12:09 pm

Posted in Investment

Asset Liability Management

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The scope of ALM activities has widened. Today, ALM departments are addressing (non-trading) foreign exchange risks and other risks. Also, ALM has extended to non-financial firms. Corporations have adopted techniques of ALM to address interest-rate exposures, liquidity risk and foreign exchange risk.

The problem was not that the value of assets might fall or that the value of liabilities might rise. It was that capital might be depleted by narrowing of the difference between assets and liabilities. (see diagram below)

Besides ALM, securitization also allows firms to directly address asset-liability risk by removing assets or liabilities from their balance sheets. This not only eliminates asset-liability risk; it also frees up the balance sheet for new business.

On RiskGrossary.com

ALM on Wiki

ALM in Private Wealth Management

ALMProfessional.com

Written by walkinggeek

May 26, 2010 at 10:45 am

Posted in ALM, Investment

Liability-Driven Investing

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What is Liability-Driven Investing?

Many institutional investors have liabilities they must pay in the future, such as the retirement benefits that pension funds pay, or disability payments in the case of an insurance company. To meet these future obligations, pension funds, insurance companies and other institutions invest a pool of assets with the goal of paying their future liabilities from the returns on those assets. If returns are insufficient to cover the liabilities, the institution must contribute capital to fund the liabilities.

Historically, bonds were used as a partial hedge for these interest rate risks but the recent growth in LDI has focused on using swaps and other derivatives. These offer significant additional flexibility and capital efficiency compared to bonds.

Resources on PIMCO

LDI on wiki

Investment Strategies for an Insurance Company’s Capital Account

Written by walkinggeek

May 26, 2010 at 9:42 am

Posted in Investment