About
- Rose-Marie and Jack Anderson Senior Fellow
- President, American Finance Association (2009-2010)
- TIAA-CREF Institute Paul A. Samuelson Award for Asset Pricing (2001)
Voting History
Question A: Establishing a sovereign wealth fund to invest in domestic infrastructure, emerging technologies, and/or strategic sectors would bring substantial benefits to the US economy over a ten-year horizon.
Vote | Confidence | Median Survey Vote | Median Survey Confidence |
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Comment: With $26 trillion debt, "swf" is a smokescreen. This is debt-financed spending. Norway has oil revenue, invests abroad. That's a swf. US debt-financed spending is already a disaster. CA train, EV chargers,.... Need to clean up permitting and spending not smokescreen of finance.
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Question B: For the US, establishing a sovereign wealth fund would be substantially better for citizens relative to reducing public debt burdens.
Vote | Confidence | Median Survey Vote | Median Survey Confidence |
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Comment: The US federal government is not in a good position to run a debt-financed hedge fund, especially if "investments" are made as now mostly to preserve dying industries and rents to political constituencies.
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Question A: A bitcoin's value derives from the belief that others will want to use it, which implies that its purchasing power is likely to fluctuate over time to a degree that will limit its usefulness.
Vote | Confidence | Median Survey Vote | Median Survey Confidence |
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Comment: Its value is liquidity, like unbacked money. Positive price, no dividend. That means eventually it must earn zero expected return, and likely decline in value once "liquidity" (anonymity!) substitutes emerge. Volatility? Fiat money can have low volatility and low return.
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Question B: A substantial source of the value of unbacked decentralized private cryptocurrencies, such as Bitcoin, arises from their convenience for use in illegal activities.
Vote | Confidence | Median Survey Vote | Median Survey Confidence |
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Comment: Bitcoin is not very efficient for legal transactions. Not all "illegal" is bad. Do we want to enforce China, Venezuela currency controls? Enforce every single US law? (Starve the undocumented?) Lose all anonymity in transactions? Crypto needs an enlightened and difficult balance.
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Question C: A properly diversified portfolio should include crypto assets.
Vote | Confidence | Median Survey Vote | Median Survey Confidence |
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Comment: Unbacked crypto only has value for "liquidity" or convenience yield reasons. Long run legal investors have no need for that. Otherwise, pure zero-sum speculation. Invest if you're smarter than average. And half are deluded.
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Question A: The trend of consolidation in the US banking sector will lead to fewer, but more profitable, mega-banks with over $250 billion in assets dominating the market.
Vote | Confidence | Median Survey Vote | Median Survey Confidence |
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Comment: A "trend" is not a cause. Banks are becoming larger and immune to competition & entry because of regulatory barriers, protection, and fixed costs of regulation. Not obviously more profitable however. Regulated utilities aren't always profitable. Some activity can move to fintech.
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Question B: The current liquidity and capital regulations are inadequate to address run risks of banks in a digital era.
Vote | Confidence | Median Survey Vote | Median Survey Confidence |
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Comment: Not sure what "digital era" has to do with it. Inadequate capital has caused runs for centuries. "regulations" are not "inadequate," we have hundreds of thousands of pages of those, and Silicon Valley Bank. Capital is inadequate. With capital you don't need regulations.
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It is appropriate advice for retail investors to tilt their portfolio away from the market portfolio towards factors that have been identified in the academic literature to earn positive abnormal returns relative to the Capital Asset Pricing Model.
Vote | Confidence | Median Survey Vote | Median Survey Confidence |
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Comment: CAPM assumes one-period mean-variance objective, no outside income, and wealth is the market portfolio. So yes, many investors should deviate. But it's a zero sum game. Market=average investor portfolio. Not obvious that typical investor should long vs short anomalies.
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Question A:Stock markets around the world have seen an increasing concentration of trades in or near the closing auction. In the US, for example, about a third of all S&P 500 stock trades are now executed in the final ten minutes of the session, up from 27% in 2021.
The increased concentration of trading in the final minutes of the trading day has a measurably detrimental effect on market quality.
Vote | Confidence | Median Survey Vote | Median Survey Confidence |
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Comment: I know of little solid understanding why this happens, less still that it reflects an externality -- some reason why if people don't like it they can't do otherwise. Trading naturally bunches in time. Let's stop chicken-littleing every interesting feature of markets.
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Question B: Strict indexing implemented with trading at the close to avoid tracking error creates a measurable performance drag that could be avoided with more flexible passive strategies.
Vote | Confidence | Median Survey Vote | Median Survey Confidence |
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Comment: Nothing stops an index fund from choosing a different strategy, or people from choosing a different fund.
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Question A: Public companies that pursue social and environmental initiatives bear no measurable costs (in terms of lower profits) relative to similar companies that do not pursue such initiatives.
Vote | Confidence | Median Survey Vote | Median Survey Confidence |
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Comment: By definition, no? The definition of pursuing such initiatives is, "beyond the point of profit maximization." Corporations are darn clean and responsible on their own, just to maximize profits. But that's not the usual meaning of initiatives.
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Question B: Public companies that pursue social and environmental initiatives benefit from a measurably lower cost of capital than similar companies that do not pursue such initiatives.
Vote | Confidence | Median Survey Vote | Median Survey Confidence |
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Comment: Cost of capital is the return to shareholders and bondholders. Even lower profits can just mean lower price. Nobody but governments cut your interest rate for fashionable virtue. Only if a substantial number of investors basically want to make a charitable contribution, doubtful
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Question C: There are substantial social benefits when managers of public companies make choices that account for the impact of their decisions on customers, employees, and community members beyond the effects on shareholders.
Vote | Confidence | Median Survey Vote | Median Survey Confidence |
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Comment: Wiggle room in the wording. Companies that trash the environment, sell terrible products, offend community, mistreat workers, don't make money. Pure profit maximizers do all that. Beyond that, corporations are a terrible vehicle for social change.
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Question A: The lower willingness of private firms to go public, combined with the increased number of publicly traded firms being taken private over the last 25 years, is measurably net negative for economic growth.
Vote | Confidence | Median Survey Vote | Median Survey Confidence |
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Comment: It is likely a small net negative for the level of economic activity. Growth is harder. Though, keep track of the counterfactual. Companies are staying private for a reason. Economy only improves if we fix the reason. Forcing more public companies otherwise will hurt.
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Question B: All else equal, reducing regulatory barriers (including reporting requirements such as Sarbanes Oxley 404) to public listing would substantially increase the share of publicly traded firms in the economy.
Vote | Confidence | Median Survey Vote | Median Survey Confidence |
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Comment: It's pretty clear that useless regulatory requirements are part of the reason driving companies out of public listing. Regulation needs to be "better" not "less."
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Question C: The lack of transparency about unlisted private firms' financial performance substantially hinders the efficiency of the allocation of capital.
Vote | Confidence | Median Survey Vote | Median Survey Confidence |
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Comment: Wealthy private investors, channeled through venture and private equity funds, are able to demand the information they need before investing billions. And also able to not demand useless information.
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Question A: Letting publicly traded firms report earnings annually rather than quarterly would lead their executives to place more weight on long-term issues in their investments and other decisions.
Vote | Confidence | Median Survey Vote | Median Survey Confidence |
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Comment: "Short-termism" is a persistent myth. What are the highest priced stocks? Electric cars, rocket ships to mars, hallucinating AI. With elephants of regulatory dysfunction in the room, we worry about how frequency of accounting reports affect CEO psychology?
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Question B: A switch from quarterly to annual earnings reports would, on net, benefit shareholders.
Vote | Confidence | Median Survey Vote | Median Survey Confidence |
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Comment: Wild idea: how about letting the market decide what+how often reports are useful? (Without having to go private?) With big issues on the table -- corporate and individual taxes, regulatory and FDA assault, etc. -- the frequency of mandated reports seems like a 0.0000001% issue.
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Question A: It seems likely that Japanese authorities intervened in the foreign exchange market recently to prop up the yen – see, for example: https://www.ft.com/content/455784ec-0465-46ee-8c73-fc5ce3e31c37. In such circumstances, intervention refers to purchases or sales of domestic or foreign currency without changing the monetary policy stance.
Large-scale intervention by public authorities in currency markets can move exchange rates substantially.
Vote | Confidence | Median Survey Vote | Median Survey Confidence |
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Comment: It depends what kind of intervention. A country can peg its exchange rate, if it commits to unlimited buying and selling, and to tax as necessary to back the peg. Whatever it takes. Tentative quantity limited interventions can invite contrary speculative attack.
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Question B: The effectiveness of foreign exchange interventions can last beyond one month.
Vote | Confidence | Median Survey Vote | Median Survey Confidence |
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Comment: Again, "interventions" come in many flavors. A firm peg can last a long time. A tentative one time purchase blaming "fragmentation" or "dysfunction" less so. Asset pricing is all about expectations, monetary policy all about rules and commitments, not one time actions.
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Retail investors account for a large share of global wealth, but a small share in private equity holdings. (see link: https://bain.com/insights/why-private-equity-is-targeting-individual-investors-global-private-equity-report-2023/)
A reduction in the barriers to all retail investors investing in private equity funds - notably regulatory restrictions on investor wealth/income and on liquidity - would substantially improve household welfare.
Vote | Confidence | Median Survey Vote | Median Survey Confidence |
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Comment: A small paternalist regulation that one might as well clean up. No, the little dears are not too dumb to invest their money and caveat emptor. No big increase in welfare unless PE expands a lot. A small sock drawer of the hoarder nightmare of our financial regulatory mess.
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Regulator Probes BlackRock and Vanguard Over Huge Stakes in U.S. Banks – The WSJ reports that ‘The FDIC is scrutinizing whether the index-fund giants are sticking to passive roles when it comes to their investments in U.S. banks.’
The exemption of passive asset managers from banking rules - such as needing permission when they acquire shares above the 10% threshold - generates measurable risks to the accomplishment of the FDIC's mission.
Vote | Confidence | Median Survey Vote | Median Survey Confidence |
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Comment: This kind of proposal seems designed to certify that regulators have a lot of time on their hands and no idea how anything works. They completely missed Silicon Valley Bank, yet think Vanguard owning 10% of a bank without filling out another mountain of paperwork is a danger?
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Question A: Allowing short selling of financial securities, such as stocks and government bonds, leads to prices that, on average, are closer to their fundamental values.
Vote | Confidence | Median Survey Vote | Median Survey Confidence |
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Comment: Some of the most convincing evidence of "overpricing" occurs when short sales are impeded.
-see background information here -see background information here |
Question B: When short sellers start to establish substantial short positions in a stock, the stock is likely to have been overvalued.
Vote | Confidence | Median Survey Vote | Median Survey Confidence |
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Comment: When stocks are overvalued, shorts try to pile in, though they often can't (which is why the stock got overvalued). Shorts sometimes pile in for other reasons. -- wide dispersion of opinion, lots of uncertainty. Badly worded question.
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Question C: Requiring investors to disclose short positions in a stock at the equivalent threshold as they are required to do for long positions would improve the informativeness of stock prices.
Vote | Confidence | Median Survey Vote | Median Survey Confidence |
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With some measures of concentration by market capitalization within broad US stock market indices at an all-time high, investors seeking a well-diversified passive equity portfolio should consider alternatives to market-cap-weighted indices.
Vote | Confidence | Median Survey Vote | Median Survey Confidence |
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Comment: The average investor holds the market-cap weighted market portfolio. Period. Anything else is a zero-sum game. You'd better hope you're smarter than the person on the other side who thinks he's smarter than you. Or, more reasonably, have different risk exposures.
-see background information here |
Tesla shareholders are likely to benefit substantially from the decision by the Delaware Court of Chancery to void Elon Musk's $56 billion remuneration package.
Vote | Confidence | Median Survey Vote | Median Survey Confidence |
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Comment: Tesla's stratospheric stock value depends on the belief that Musk will deliver magic, not selling cars. The package was not cash today, but options granted before stock rose, reward for performance. Denying ex ante maybe, but ex post welching on deals is not good.
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On 10 January 2024, the SEC approved spot Bitcoin exchange-traded products:
https://www.sec.gov/news/statement/gensler-statement-spot-bitcoin-011023\
The SEC's approval of spot Bitcoin exchange-traded products makes investors overall measurably better off.
Vote | Confidence | Median Survey Vote | Median Survey Confidence |
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Comment: It's not the SEC's job to stop people from making what it thinks are bad investments. I don't think investors as a whole are better off holding bitcoin, but I've been wrong before and so has the SEC. "Investors better off" is not the question for regulation!
-see background information here |
The Biden Administration's recommendation to lower the real discount rate used in the cost and benefit analysis of federal regulations to 2 percent (from the current levels of 3 or 7 percent) will substantially improve regulatory analysis.
Vote | Confidence | Median Survey Vote | Median Survey Confidence |
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Comment: Discount rate attracts attention: promises 50 years ahead justify big costs. The calculation of benefits is worse. "Dignity" and "indigenous culture" (p. 44). Income redistribution (p. 65.) Good: p. 27 no price controls, etc. 91 pages, paperwork mountain and lawsuit bonanza.
-see background information here |
Question A: Harry Markowitz, the Nobel Prize-winning pioneer of modern portfolio theory, passed away earlier this year:
https://afajof.org/news/in-memoriam-harry-markowitz-past-president-of-the-american-finance-association-1927-2023/
Application of the principles of modern portfolio theory allows investors in practice to achieve substantial improvements in the risk-expected return trade-off relative to naive strategies such as equal-weighting that do not take account of return covariances.
Vote | Confidence | Median Survey Vote | Median Survey Confidence |
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Comment: Actual mean-variance calculations don't work well in practice. But portfolio theory tells us all to diversify, and what that means exactly. Investors today, via funds, hold portfolios that are much better diversified than the individual stocks they held when Markowitz wrote.
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Question B: Widespread adoption of modern portfolio theory by investors has substantially improved the efficiency of capital allocation in financial markets.
Vote | Confidence | Median Survey Vote | Median Survey Confidence |
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Comment: Investors haven't adopted portfolio theory. (Some hedge funds do, but not most institutions and individuals). Plus, it was never about investment or market efficiency.
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Question A: The Federal Reserve has begun quantitative tightening (QT) to reduce the size of its balance sheet. Fed holdings of Treasury securities have declined by $800 billion relative to the March 2020 peak. The Fed currently holds $4.9 trillion of Treasury securities, significantly larger than the $2.5 trillion holdings prior to the Covid pandemic.
A reduction in Fed holdings of Treasury securities measurably increases the interest rate on long-term U.S. Treasury bonds.
Vote | Confidence | Median Survey Vote | Median Survey Confidence |
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Comment: Perhaps for a day or two. But when the Fed buys bonds it gives interest bearing reserves in return. Do people care about bonds vs. a big money market fund that holds bonds (the Fed)? Maybe, but static demand curves for different maturities makes little sense.
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Question B: A reduction in Fed holdings of Treasury securities measurably increases volatility in the Treasury market.
Vote | Confidence | Median Survey Vote | Median Survey Confidence |
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Comment: How? Even a static demand for maturities, so more "supply" lowers prices, doesn't naturally generate prices changing over time more quickly. Perhaps deep in the microstructure it's harder to speculate, but then trading profits should rise and more speculators/capital enters.
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Question A: September 2023 was the 25th anniversary of the collapse of Long-Term Capital Management (LTCM). In response to LTCM's troubles, the Federal Reserve orchestrated a multi-billion dollar rescue package by a consortium of banks and it cut the Federal funds rate target by 75 basis points within six weeks.
The hedge fund sector's contribution to systemic risk is substantially lower today than at the time of LTCM.
Vote | Confidence | Median Survey Vote | Median Survey Confidence |
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Comment: The question presumes LTCM was a "systemic risk," not clear. "Systemic risk" means a system wide run on short term debt, not that someone might lose some money. Only if HF have a lot of short financing, and failures could infect others, would it be such a risk. Not clear.
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Question B: Financial market participants' expectation that the Fed will aggressively ease monetary policy in response to financial market dislocations is a substantial source of financial instability.
Vote | Confidence | Median Survey Vote | Median Survey Confidence |
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Comment: The "Fed put" encourages risk taking, short term debt financing, and not keeping cash around to buy on dips for sure. But lower fed funds rate is not that big a deal. Fed's habit of bailing out, now extended to direct buys (corp bonds) is more harmful to this moral hazard.
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Question A: SEC Announcement: https://www.sec.gov/news/press-release/2023-155
The benefits of the new SEC rules on private funds - which require private funds to provide transparency to their investors regarding the fees and expenses and other terms of their relationship with private fund advisers and the performance of such private funds - substantially exceed their costs.
Vote | Confidence | Median Survey Vote | Median Survey Confidence |
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Comment: These are bargains between sophisticated people. "Market failure" happens when a market disappears. This one is booming. Caveat emptor. Also will quash competition by adding vague regulations. Funds need lobbyists and lawyers to function. See Hester Pierce's blistering comment.
-see background information here |
Question B: The new SEC rules will have a substantially negative impact on the industry by stifling capital formation and reducing competition.
Vote | Confidence | Median Survey Vote | Median Survey Confidence |
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Comment: Negative impact on industry, yes. Will turn it in to a few large more monopolistic firms that are good with regulators. Capital formation, no. This is expensive fingers on scales of bilateral negotiations of large institutions, won't affect stock prices or flow of investment.
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Question C: It is appropriate policy for the SEC to impose such rules on private funds even though the investors (limited partners) are sophisticated entities.
Vote | Confidence | Median Survey Vote | Median Survey Confidence |
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Comment: Regulalors always underestimate heterogeneity. These are sophisticated investors. Smaller investors do cost more.
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Question A: New Money Market Fund (MMF) Rules: The SEC adopted amendments to the MMF rules, including a new mandatory liquidity fee for institutional prime and tax-exempt funds. The liquidity fee would trigger when daily net redemptions exceed five percent and when the costs associated with such redemptions are more than de minimus. https://www.sec.gov/news/press-release/2023-129
The new liquidity fee will substantially reduce the likelihood of runs on MMFs.
Vote | Confidence | Median Survey Vote | Median Survey Confidence |
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Comment: I'd go with "reduce" but not "substantially." We'll see what goes wrong. The rule has too much discretion. Management will never want to put in fees or gates. Has to be totally automatic.
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Question B: The new liquidity fee will cause a substantial shift of assets under management from institutional prime and tax-exempt funds to government MMFs (which are exempt from the fees).
Vote | Confidence | Median Survey Vote | Median Survey Confidence |
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Comment: Historically, people forget that banks can fail and chase higher interest rates. They will do that again. In addition, government has shown it will always bail out MMMF in times of trouble.
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Question A: The impact of the Covid-19 pandemic on working and shopping habits has not been fully priced into current private valuations of downtown commercial properties in major cities.
Vote | Confidence | Median Survey Vote | Median Survey Confidence |
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Comment: Most commercial real estate problems are not due to pandemic per se, but subsequent policies. Pandemic didn't cause crime. "Not priced in" is weird. Prices are low, and few buying. The effects on rents and debt are rolling in. Prices that ignore information are not central.
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Question B: A continued fall in commercial real estate valuations would trigger another round of banking panic.
Vote | Confidence | Median Survey Vote | Median Survey Confidence |
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Comment: First "price" now "valuation." Different items. Questions fixation on prices is strange. No rents, empty buildings, laws forbidding conversion, defaults are a big problem. "Valuation" less so. You go bankrupt when you run out of cash.
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Question A: Regulation that allows state pension funds to consider environmental, social, and governance factors in investment decisions only if these factors are material for risk and expected return would make retirees measurably worse off.
Vote | Confidence | Median Survey Vote | Median Survey Confidence |
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Comment: Is this worded right? Logically, using something only if it is material to risk and return has to make people better off. Is the restriction the "only?" Is this relative to full use of ESG? Is it relative to can't use ESG at all?
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Question B: Regulation that prevents state pension funds from considering environmental, social, and governance factors in investment decisions even if these factors are material for risk and expected return would make retirees measurably worse off.
Vote | Confidence | Median Survey Vote | Median Survey Confidence |
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Comment: Again, the logic puzzles me. Now you can use anything that is material for returns. If ESG really were demonstrably material, you'd be in trouble for not using it. Is anyone proposing banning ESG even if it is material? Sounds looney.
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Question A: Since maturity transformation is an inherent feature of commercial banks' business model, some duration mismatch between assets and liabilities is unavoidable.
Vote | Confidence | Median Survey Vote | Median Survey Confidence |
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Did Not Answer | |||
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Question B: For the purposes of capital regulation, banks should be required to mark their holdings of Treasury and Agency securities to market at all times (even though their loans are not marked to market).
Vote | Confidence | Median Survey Vote | Median Survey Confidence |
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Did Not Answer | |||
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Question A: Despite the empirical failures of the Capital Asset Pricing Model (CAPM) in explaining expected stock returns, a shareholder-value maximizing publicly-traded firm should still use the CAPM to calculate the cost of equity in capital budgeting.
Vote | Confidence | Median Survey Vote | Median Survey Confidence |
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Comment: For most projects, comparable are better than CAPM. To price a burger, look at the restaurant next door or calculate cost of raising a cow. Beyond CAPM failures, we don't know betas or expected returns.
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Question B: The equity risk premium that U.S. publicly traded firms should use in cost of equity calculations in April 2023 is above 6%.
Vote | Confidence | Median Survey Vote | Median Survey Confidence |
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Comment: Most guesses of the equity premium (stocks over bonds) are lower than 6% these days, hovering more in the 3% area. The postwar period was pretty lucky, and growth has slowed. Still, stocks are so volatile that the standard error will always be high.
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Question A: Financial regulators in the US and Europe lack the tools and authority to deter runs on banks by uninsured depositors.
Vote | Confidence | Median Survey Vote | Median Survey Confidence |
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Comment: They just showed they have a bazooka: blanket guarantee. They have many other tools to stop runs should they choose to use them. But we shouldn't be here. Failing to see interest rate risk and run prone deposits is a huge failure of the regulatory architecture.
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Question B: Not guaranteeing uninsured deposits at Silicon Valley Bank in full would have created substantial damage to the US economy.
Vote | Confidence | Median Survey Vote | Median Survey Confidence |
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Comment: The main damage case is difficulties of SVB's depositors accessing cash. Other tools exist. The Fed could have lent against uninsured deposits. Beyond that we're speculating about "contagion." Once a run has happened, though, guarantees stop it. Then, let's address moral hazard?
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Question C: Fully guaranteeing uninsured deposits at Silicon Valley Bank substantially increases banks’ incentives to engage in excessive risk-taking.
Vote | Confidence | Median Survey Vote | Median Survey Confidence |
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Comment: The idea that depositors "monitor," or that monitoring via a threat to run is a good idea, does not seem very good. Yes, uninsured deposits are now effectively guaranteed. The architecture is broken. Time for narrow deposit taking and equity+long debt financed banking.
-see background information here |
Question A: By issuing inflation-indexed bonds, and thereby providing a long-term real safe asset for pension funds and retirement savers, governments can make a substantial contribution to social welfare.
Vote | Confidence | Median Survey Vote | Median Survey Confidence |
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Comment: Inflation indexed bonds are an important security. But it is not necessary for governments to "provide" securities. Those bonds are repaid by taxes, so one pocket to another. The reluctance of the private sector, with real revenues, to issue index linked bonds is a puzzle.
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Question B: Issuance of inflation-indexed bonds substantially helps government commit to a responsible fiscal and monetary policy.
Vote | Confidence | Median Survey Vote | Median Survey Confidence |
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Comment: Index bonds are like debt, repay or default. Nominal bonds are like equity, can inflate away. Both are useful! Indexed/foreign debt offers precommitment, but painful default in bad times. Debt/equity, index/nominal, ex ante/ex post, bailout/moral hazard always tough questions!
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Question A: Large-scale stock buybacks by public corporations provide short-term rewards for shareholders and senior executives at the expense of potentially higher-return corporate investments.
Vote | Confidence | Median Survey Vote | Median Survey Confidence |
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Comment: There is little sillier than the current war on buybacks. A company that has no good ideas should return money to shareholders, to reinvest in companies that do. Allowing buybacks was a reform against big inefficient conglomorates & corporate waste! Buyback tax protects them.
-see background information here -see background information here -see background information here |
Question B: The proposed higher tax on corporate stock buybacks (an increase from 1% to 4%) would generate substantial public revenues.
Vote | Confidence | Median Survey Vote | Median Survey Confidence |
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Comment: When you tax something, people adjust to avoid paying the tax. I expect a lot less buybacks, and consequently little revenue. Also, a mild retardant to economic growth. Buybacks are more efficient than dividends or other ways of giving money to shareholders.
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Question C: The proposed higher tax on corporate stock buybacks would generate a substantial increase in corporate investment.
Vote | Confidence | Median Survey Vote | Median Survey Confidence |
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Comment: Many buybacks were undertaken to lever up. That's not great, but has little to do with investment. Companies with poor ideas will just directly buy assets of other companies, rather than give it to investors to do that. So we get the same amount of investment, just directed badly
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Question A: Missing payments on the US Treasury security obligations for several weeks would pose a substantial risk of a global financial crisis.
Vote | Confidence | Median Survey Vote | Median Survey Confidence |
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Comment: Delaying payments for weeks would cause problems, but not obviously a huge crisis. Regulators would quickly allow treasurys as collateral anywey. Not good, not known, big uncertainty, but could be Y2K. That Treasury cannot issue more debt to offer bailouts might be bigger.
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Question B: The requirement to periodically increase the debt ceiling measurably reduces the long-run size of the debt.
Vote | Confidence | Median Survey Vote | Median Survey Confidence |
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Comment: It's popular to deny this, but in my view it has some effect. The regular budget process is completely broken. This is one deadline that forces some spending/tax compromises. Not as much as we might like, but would be worse without this last overall budget mechanism.
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Question A: The SEC’s proposed new rule for stock orders from individual investors is likely to be effective in giving those investors better prices on their trades on average.
Vote | Confidence | Median Survey Vote | Median Survey Confidence |
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Comment: We can't all have better prices. Who loses? Execution is a tiny issue relative to long term rates of return. Actual knowledge of how SEC rules change equilibrium trading is very thin.
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Question B: The new rule would improve the overall operation of the stock market.
Vote | Confidence | Median Survey Vote | Median Survey Confidence |
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Comment: One thing we know as "experts" is how much other "experts" really don't know. Just how SEC rules improve or diminish market function is mostly made up. Many cases we do know SEC rules make things worse.
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Question A: Although the reported volatility of asset values in private markets (private equity, buyouts, and venture capital) is lower than that of comparable assets in public markets, their true volatility is broadly similar or greater.
Vote | Confidence | Median Survey Vote | Median Survey Confidence |
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Comment: Privately held assets (and real estate) are not marked to market. Market valuations change quickly. To some extent that's the point: "volatility laundering" or "beta laundering" allows investors to ignore valuation changes, some of which mean revert.
-see background information here -see background information here |
Question B: Since the global financial crisis, the realized returns on private equities have measurably exceeded the returns on public equities.
Vote | Confidence | Median Survey Vote | Median Survey Confidence |
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Comment: If privately held hide volatility by not marking to market, it's hard to know what performance is, isn't it? After 14 years we have some data, others will review better. But we also need to control for risk characteristics, which, per first question, is hard.
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Question A: The collapse of a major crypto intermediary will have little impact on the wider economy and the stability of the traditional financial system.
Vote | Confidence | Median Survey Vote | Median Survey Confidence |
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Comment: Collapse of THIS intermediary will have little systemic effect because large banks and other intermediaries were smart enough to stay out, and no "contagion" of trust in real finance. No overall wealth lost either. For each dollar one loses on crypto, another gains.
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Question B: The collapse of a major crypto intermediary suggests the need for the crypto asset class to be more tightly regulated.
Vote | Confidence | Median Survey Vote | Median Survey Confidence |
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Comment: Regulation is not "more" or "less," it is smart or dumb, effective or ineffective. FTX was in Bahamas precisely to avoid regulation. No systemically important US institution is affected. US regulation worked. Yes, fraud. But caveat emptor. People have to be free to lose money.
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The amount of passively invested funds has reached levels at which it has a measurable detrimental effect on market efficiency.
Vote | Confidence | Median Survey Vote | Median Survey Confidence |
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Comment: Index funds largely expand investing to a population that didn't hold stocks. Hedge funds have expanded. Not much evidence that there is less overall informed money, or that markets have become less efficient over time.
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Question A: Research on the nature and impact of bank runs has made it possible to limit substantially the wider economic damage from financial crises.
Vote | Confidence | Median Survey Vote | Median Survey Confidence |
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Comment: I agree, though not for the usual reason. Research shows just what it takes to cause runs, and opens the door to the effective solution rather than current patches: Equity financed banking and narrow deposit taking.
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Question B: Reforms of financial regulation since 2008 (and macroprudential policies in some countries) will not substantially reduce the probability of financial crises.
Vote | Confidence | Median Survey Vote | Median Survey Confidence |
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Comment: The current wave of reform is one more larger patch on the same leaky boat. Guarantee more creditors, ever larger bailouts, promise that this time regulators will see risks ahead of time. It failed again in 2020.
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Question A: The costs and risks associated with a sharp fall in the value of sterling outweigh any macroeconomic benefits for the UK of export stimulus due to a weaker currency.
Vote | Confidence | Median Survey Vote | Median Survey Confidence |
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Comment: Both costs and benefits of short-term currency movements are over rated. And what to do about it? Absent a peg with ironclad fiscal commitment, propping up or devaluing the currency is not a wise policy.
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Question B: Concerns about government finances and debt sustainability can undermine the reserve currency status of a major currency.
Vote | Confidence | Median Survey Vote | Median Survey Confidence |
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Comment: Concern about debt sustainability can certainly drive currency lower and inflation higher. "Reserve currency" status is over-rated. EU governments, and Switzerland too can borrow at similar rates and quantities to US.
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Question A: The typical chief executive officer of a publicly traded corporation in the U.S. is paid more than his or her marginal contribution to the firm's value.
Vote | Confidence | Median Survey Vote | Median Survey Confidence |
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Comment: Executives get paid a lot more than you and me. But companies are huge, and pretty competitive market. Much pay stocks anyway. Think of how much a bad CEO can ruin a company!
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Question B: Mandating that U.S. publicly listed corporations must allow shareholders to cast a non-binding vote on executive compensation was a good idea.
Vote | Confidence | Median Survey Vote | Median Survey Confidence |
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Comment: "Mandating." By who? If good, why does it need law/regulation? Why don't they do it now? Representative democracy is good, not every decision should be voted by shareholders. Shareholder voting is very distorted now, and political agendas creeping in.
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Question A: Having companies run to maximize shareholder value creates significant negative externalities for workers and communities.
Vote | Confidence | Median Survey Vote | Median Survey Confidence |
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Comment: Question misuses "externality." Voluntary market transactions are not externalities. Having? Absence of government coercion is not "having."
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Question B: Appropriately managed corporations could create significantly greater value than they currently do for a range of stakeholders – including workers, suppliers, customers and community members – with negligible impacts on shareholder value.
Vote | Confidence | Median Survey Vote | Median Survey Confidence |
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Comment: Horrible question. "Appropriately managed" can increase value for all. But by who? Question implies government. Sentences with subjects pls!
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Question C: Effective mechanisms for boards of directors to ensure that CEOs act in ways that balance the interests of all stakeholders would be straightforward to introduce.
Vote | Confidence | Median Survey Vote | Median Survey Confidence |
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Comment: Passive agian. By who? By boards or by regulators? Interests are traded, not balanced. A gains, B loses. Owners pillaged, golden goose dies
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Question A: A mandate for public companies to provide climate-related disclosures (such as their greenhouse gas emissions and carbon footprint) would provide financially material information that enables investors to make better decisions.
Vote | Confidence | Median Survey Vote | Median Survey Confidence |
---|---|---|---|
Comment: Especially scope 3 -- carbon emissions by up and downstream links, triple-counting, are entirely made up numbers.
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Question B: A mandate for public companies to provide climate-related disclosures would provide material information that enables investors to make better decisions with regards to non-financial objectives (such as aiding portfolio choice based on ESG principles).
Vote | Confidence | Median Survey Vote | Median Survey Confidence |
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Comment: The question is squishy. It will help only if investors care about the numbers that the regulation demands. My low rating reflects a view that the numbers will be largely meaningless. Except for forecasting regulatory displeasure, which does matter financially.
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Question C: A mandate for public companies to provide climate-related disclosures would induce them to reduce their climate impact substantially.
Vote | Confidence | Median Survey Vote | Median Survey Confidence |
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Comment: It will induce them to do policies demanded by regulators. So far, many of these have negligible or negative impacts on actually fixing the climate.
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