Monday, March 31, 2008

Goldman Sach's Trading Strategy- Subprime Loan Based Securities

List of articles

Infosys - BPO

Leading Third Party Offshore Services Provider


A Recent Book on Investment Banking by Alan D. Morrison and William J. Wilhelm, Jr.

Investment Banking
Institutions, Politics, and Law Alan D. Morrison and William J. Wilhelm, Jr.
ISBN13: 9780199296576
ISBN10: 019929657X
Oxford University Press
Hardback, 360 pages Feb 2007,

Investment Banking: Institutions, Politics, and Law provides an economic rationale for the dominant role of investment banks in the capital markets, and uses it to explain both the historical evolution of the investment banking industry and also recent changes to its organization. Although investment decisions rely upon price-relevant information, it is impossible to establish property rights over it and hence it is very hard to coordinate its exchange. The authors argue that investment banks help to resolve this problem by managing "information marketplaces," within which extra-legal institutions support the production and dissemination of information that is important to investors. Reputations and relationships are more important in fulfilling this role than financial capital.

The authors substantiate their theory with reference to the industry's evolution during the last three centuries. They show how investment banking networks were formed, and identify the informal contracts that they supported. This historical development points to tensions between the relational contracting of investment banks and the regulatory impulses of the State, thus providing some explanation for the periodic large-scale State intervention in the operation of capital markets. Their theory also provides a technological explanation for the massive restructuring of the capital markets in recent decades, which the authors argue can be used to think about the likely future direction of the investment banking industry. Reviews
"Anyone hoping to understand investment banking must read Morrison and Wilhelm's book. Drawing up centuries of rich history, they advance a theory of investment banking that is relevant today for business people, regulators and scholars. "--Peter Tufano, Slyvan C. Coleman Professor of Financial Management, Harvard Business School

"This book fills an important gap in the literature by providing a comprehensive coverage of the investment banking industry. It is an outstanding contribution by two experts in the field."--Franklin Allen, Nippon Life Professor of Finance and Economics, The Wharton School, University of Pennsylvania

"A fascinating look at the investment banking industry from an historical and legal perspecive. It provides the reader with countless insights into the workings of one of the most powerful forces inthe global economy today."--James Harris, Founder, Seneca Financial Group

"Morrison & Wilhelm offer the most compelling explanation yet of the investment banking industry, from its unlikely emergence from the commodities market in the seventeenth century to the investment banks' recent shift from the partnership to he corporate form. Drawing on the insights of institutional economics, they show how investment banks function as information intermediaries in a wide range of market transactions. Vivid and meticulously researched, the book takes us inside the mysterious world of investment banking and shows what makes it tick. It is an intellectual masterpiece, destined to become a classic."--David Skeel, S. Samuel Arsht Professor of Corporate Law, University of Pennsylvania

"This is a good, interesting, and useful book. ...The book's wide appeal derives from how it goes about studying its subject, as well as from the interest of the subject itself. ...The authors 'develop an economic rationale for investment bankers'. In other words, they develop an economic explanation of why they exist - they discover what it is that they contribute to the functioning of a market economy. ...Every chapter is worth reading...The authors have combined economic analysis, economic history, and knowledge of law in a short and readable book. They are to be congratulated. I await their next publication with eager anticipation."--Geoffrey Wood, for Economic Affairs
Product Details
360 pages; 21 figures, 15 tables;

Table of Contents
1. Introduction
2. Institutional Theory
3. An Institutional Theory of Investment Banking
4. Investment Banking Origins
5. The Rise of the Investment Bank
6. Investment Banking in the Age of Laissez-Faire
7. Leviathan and the Investment Banks
8. The Modern Industrial Revolution
9. Inside the Investment Bank
10. What Next?

Wednesday, March 26, 2008

Goldman Sachs Asset Management Business History


In May 1989, Goldman Sachs entered asset management business under the leadership of Leon G. Cooperman.

The move was a significant shift for Goldman as it had stayed out of equity management till that time because it did not want to alienate its institutional customers. Salomon and Goldman had been the only leading Wall Street firms without such business/division. Donaldson, Lufkin & Jenrette, Shearson Lehman Hutton and Morgan Stanley had divisions with billions of dollars under management in mutual fund and pension fund accounts.

Mr. Cooperman, who has been with the firm for 22 years, will give up his position as head of equity research. The new business being formed as a division already invests $13 billion in money market funds for bank trust departments and bond accounts for institutional investors. Equity management will generate higher fees for Goldman than money market funds.

An announcement was made at that time "The 80-member division will be moved out of Goldman's headquarters in lower Manhattan to a separate location in the Wall Street area for ''legal and appearance purposes."''According to Cooperman said, that was done to signal that money management operation will not receive critical research information before the customers who pay high commissions for such services.

Mr. Cooperman was succeded by Michael Armellino, a partner in the research department as head of research department.

Robert Jones, a research analyst in the investment bank working on quantitative models, convinced Goldman client Bell Atlantic Corp. to let him manage $100 million in U.S. equities. Armed with the mandate, he persuaded Cooperman to bring him over to GSAM to launch a quantitative equities group in the asset management division.

Cooperman wanted to manage hedge funds, but Goldman's management committee turned him down. Senior partners did not approve the proposal. Cooperman quit Goldman in 1991 to set up his own hedge fund business, Omega Advisors.

In 1996, John McNulty, who had begun his Goldman career as an adviser in the private wealth management business, became a co-head of GSAM, along with David Ford, who had been appointed in 1994. McNulty led an aggressive expansion drive, and this time Goldman was more willing to consider hedge funds.

McNulty started selling Global Alpha, GSAM's first hedge fund, which was seeded with $10 million in capital from Goldman. The fund was designed and overseen by Clifford Asness, who holds a doctorate in finance from the University of Chicago and had been hired some years earlier.

McNulty acquired businesses for driving growth. In 1996 he purchased British pension fund manager CIN Management, which added $23 billion in assets, and Tampa, Florida­based growth equity manager Liberty Investment Management, which oversaw $6 billion in assets. The following year, he snapped up Princeton, New Jersey­based Commodities Corp., a managed-futures specialist that ran about $1.6 billion.

In January 1998, Asness left Goldman to set up his own firm, Greenwich, Connecticut­based AQR Capital Management. He took nine Goldman people with him, leaving only a handful of junior members and two senior members.

Robert Litterman, Goldman's head of risk management, was called in to head up a new group, quantitative resources, that included the team left behind by Asness. Within months, the two senior members, Carhart and Iwanowski were put in charge, and they quickly set about rebuilding the operation, hiring three senior staffers in their first year at the helm.

Goldman put its asset management and private wealth businesses under a new umbrella division, called investment management, shortly before the firm's 1999 initial public offering. McNulty became head of investment management and oversaw an expanded senior team. Philip Murphy, a former head of Goldman Sachs in Asia, returned to New York to head wealth management, and David Blood, a Goldman veteran, joined Ford as co-head of GSAM.

Doug Grip
President of Goldman Sachs Funds.

McNulty retired in 2001. He was succeeded by Philip Murphy and Peter Kraus, the former head of the financial institutions group.

Murphy retired in 2003. Schwartz was appointed as co-head of investment management by Goldman's then-CEO, Henry Paulson Jr., who became U.S. Treasury secretary, later. He and Kraus were given direct responsibility for GSAM.

In one of their first moves as co-heads, Schwartz and Kraus formalized GSAM's structure as a federation of distinct investment boutiques organized by asset class and subdivided by investing style, from funds of hedge funds and quantitative macro strategies to growth stocks and fixed income. Each of the boutiques(there are now 11) is charged with competing against the best firm in its respective area. GSAM's fixed-income business measures itself against bond houses BlackRock and Pacific Investment Management Co. rather than, say, Lehman and Morgan Stanley.

The GSAM boutiques have their own heads or co-heads and dedicated research teams. The heads report directly to Kraus and Schwartz and run their businesses independently.

The boutiques are encouraged to launch their own hedge fund strategies alongside long-only offerings. A case in point is the quantitative equities team. It has set up two hedge funds in the past four years, one investing in North American stocks and one that plays global equity markets. They plan to add another that invests in emerging markets.

GOLDMAN, SACHS & CO. analysts in a report on asset management business in 1995 predicted that within a few short years the money management business would be dominated by a few giant firms, alongside scores of specialist boutiques. The Goldman analysts declared that big fund managers would need at least $150 billion in assets to survive. At the time, just nine firms in the U.S. had that much. Goldman itself had only $46.3 billion in assets and was at 52nd-place slot in the 1995 Institutional Investor 300 ranking of the biggest money managers.

Goldman asset management division believe in their analysis and built their business to No. 14 by 2006 and at the end of February 2007 the asset under management were $719 billion. A cool $147 billion of those assets are in highly lucrative alternative investments. "We've got even more growth to come," asserts a confident Eric Schwartz, 44, who now runs the asset management business with Peter Kraus, 54.

The plans include, doubling in five years, the $102 billion they oversee in quantitatively managed equity portfolios, partly by selling new funds that invest in emerging markets and other new products, doubling the $213 billion they manage in fixed-income securities by aggressively targeting insurers and wealthy individuals seeking absolute-return and municipal bond strategies. They plan to keep pressing the accelerator in the hedge fund business by adding strategies and recruiting traders like the 18 credit specialists they hired in December from collapsed hedge fund Amaranth Advisors.

Goldman Sachs has appointed Edward Forst, its chief administrative officer, as co-head of its asset management division, one of the largest in the world with $800bn under management.

Mr Forst will share the role with Peter Kraus, who has been there for several years. He replaces Eric Schwartz, who left the firm this year to pursue other interests. Mr. Forst is based in London and he will still be there. Mr Forst, who joined Goldman in 1994, was co-head of operations, technology, finance and services for the past three years

Goldman appears to be committed to its asset management division, which has seen rapid growth, while Merrill sold its business to Black Rock and Citi sold its business to Legg Mason.

Raanan A. Agus, 39, head of equity proprietary trading desk at Goldman Sachs, where traders make bets on stocks with the bank’s own capital, moved to asset management division to start a hedgefund.

Mr. Agus will move part of his principal strategies team and this happended for the first time in Goldman Sachs. The group headed to Goldman Sachs Asset Management includes Mr. Agus, Kenneth Eberts, head of United States investments for principal strategies, half the United States team and the entire principal strategies team in Tokyo.

The fund, will be the bank’s first significant “long-short” fund, one which invests in stocks (“going long”) and hedges with bets that prices will fall (“going short”). Goldman already runs several hedge funds in its asset management division, including its flagship, the $10 billion Global Alpha fund.

Goldman has focused on building the hedge funds it runs in an effort to generate more fees and offer more variety to clients. Earlier this summer it raised $2.6 billion for its Liberty Harbor, a credit fund run by Greg Felton, who came from Amaranth Advisors. In all, Goldman runs about $40 billion in hedge fund assets, making it among the largest hedge fund complexes.


In the first quarter of 2008, the Goldman Sachs saw a 32% decline in investment banking revenue and a 46% percent drop in its trading and principal investments division. But itsasset management and securities services, provided a 28% increase in revenue. Also, Goldman Sachs increased its assets under management by $5 billion to $873 billion. The inflow of funds is more in money market assets.


Saturday, March 22, 2008

CFOs of Investment Banks

Nelson Chai
Merrill Lynch

Colm Kelleher
Morgan Stanley

Erin Callan
Lehman Brothers Holdings Inc.,

David Viniar
Goldman Sachs

Sunday, March 9, 2008

Innovation - BCG - insights

The Boston Consulting Group (BCG) Innovation Institute was established in 2005 to conduct research into the Innovation-to-Cash (ITC) process: from invention to realization to commercialization. The Institute works with companies, academic institutions, non-profit organizations, and other partners to generate a better understanding of and new solutions for the most pressing innovation challenges companies face today.

Idea followed by Execution
Innovation and customer understanding go hand in hand
Without customers there is no innovation

having the big idea is hard enough but commercialsing is still more hard.

Energy and persistence only give results

The secret of innovation

BCG Senior Management Innovation Survey August 2007

Measuring Innovation August 2007

Raising Return on Innovation - December 2003

Making Innovation Pay May 04 - Managing Innovation Process

Segmenting for Innovation

For a Video on Innovation

You can request a DVD also from the above page.

Risk Management - Books

1. Risk Management By Michel Crouhy, Dan Galai, Robert Mark

2. Value at Risk: The New Benchmark for Managing Financial Risk By Philippe Jorion, 2001

3. The Fundamentals of Risk Measurement By Christopher Ian Marrison,

4. Risk Management and Value Creation in Financial Institutions By Gerhard Schroeck, 2002

5. Managing Operational Risk: 20 Firmwide Best Practice Strategies By Douglas G Hoffman, 2002

6. Hedge Fund Risk Fundamentals: Solving the Risk Management and Transparency ...
by Richard Horwitz - 2004 - 275 pages

Hedge Fund Risk Fundamentals is the first book to bring these issues to the forefront.

7. Risk Management: Approaches for Fixed Income Markets By Bennett W. Golub, Leo M. Tilman, 2000

8. Elements of Financial Risk Management By Peter F. Christoffersen
2003 - 214 pages

This book will appeal to practitioners in the financial services and investment industries, as well as graduate students and advanced undergraduates.

9. Advances in Fixed Income Valuation Modeling and Risk Management By Frank J.Fabozzi - Business & Economics - 1997 - 391 pages

Advances in Fixed Income Valuation Modeling and Risk Management provides in-depth examinations by thirty-one expert research and opinion leaders.

10. The Risk Management Process: Business Strategy and Tactics By Christopher L.Culp - Business & Economics - 2001 - 624 pages

Written by an experienced consultant with impeccable academic credentials and incisive analytical thinking, this book is a must-read for the senior managers.

Saturday, March 8, 2008

Selling - Books

1. SPIN Selling By Neil Rackham

2. Consultative Selling: The Hanan Formula for High-Margin Sales

3. Red-Hot Cold Call Selling: Prospecting Techniques That Really Pay

4. CustomerCentric Selling By Michael T. Bosworth, John Holland

5. Proactive Selling: Control the Process, Win the Sale By William Skip Miller

6. Selling with Emotional Intelligence: 5 Skills for Building Stronger Client Relations

7. The Art of Selling to the Affluent: How to Attract, Service, and Retain Wealthy Customers and Clients for Life ... By Matt Oechsli

8. Selling to the Top: David Peoples' Executive Selling Skills By David A. Peoples

9. Make Millions Selling Real Estate: Earning Secrets of Top Agents By Jim Remley

10. Selling to the Affluent By Thomas J. Stanley

Marketing Financial Services - Books

Marketing Financial Services By Hooman Estelami

Seminar Selling: The Ultimate Resource Guide to Marketing

Marketing Planning For Financial Services By Roy Stephenson

Financial Services Marketing: An International Guide to Principles

Storyselling for Financial Advisors: How Top Producers Sell By Scott,M1

Marketing to the Affluent By Thomas J. Stanley,M1

Marketing Retail Financial Services to the Hispanic Community By Blaire Borthayre

22 Keys to Sales Success: How to Make It Big in Financial,M1

Google-books-Management Process

1. MANAGEMENT CHALLENGES for the 21st Century By Peter Ferdinand Drucker

2. Management: Tasks, Responsibilities, Practices By Peter Ferdinand Drucker

3. The Practice of Management By Peter Ferdinand Drucker

4. The Talent Management Handbook: Creating Organizational Excellence

5. Developing Management Skills By David Allred Whetten, Kim S. Cameron

6. Management Theory: A Critical and Reflexive Reading By Nanette Monin

7. Scientific Management: A History and Critiscism By Horace Bookwalter Drury

8. Principles of Management By Tony Morden

9. Systems Approaches to Management By Michael C. Jackson

10. Principles of Management By M. Govindarajan, S. Natarajan,M1

11. Management Skills for New Managers By Carol W. Ellis

Friday, March 7, 2008

Financial Services Blogs

Steinthal Financial Services IT Blog

Best Practices in the Financial Services Industry

Abtraining center

Trust and wealth management marketing

Books Financial Services Marketing

Managing financial services marketing
J. R. Marsh
Publisher: London : Pitman, 1988.
ISBN: 0273037005
Book Details:
Language: eng
Physical Description: x,419p ; 25cm.

• Advertising financial products and services (Alex Benn; ISBN: 0899301037;
• Managing financial services marketing (J. R. Marsh; ISBN: 0273028499
• Marketing financial services (by Robert C. Perez; ISBN: 0030624525;

Marketing financial services (edited by Christine Ennew, Trevor Watkins and Mike Wright; ISBN: 0434922021;
• Marketing financial services (James H. Donnelly, Leonard L. Berry, Thomas W. Thompson; ISBN: 0870945173; $25.00;

Advertising Slogans


Find Creative Ads in Financial Services

An interesting site where you can see advertisements of companies of various countries

Improving Financial Services Websites

Three Ways to Improve Financial Services Websites
by Dirk KnemeyerJuly 18, 2005

Innovating the online experience
Financial services companies can improve customers’ online experiences if they focus on three basic areas:

Integrate marketing channels.

Explore progressive, but safe, technology.

Improve interface design.

Visit for more details

Advertising magazine

Financial Services Advertising - Legal Considerations

IN UK, financial advertising, depending on the product, is governed by the self regulation system and additionally by statutory regulation by both the Financial Services Authority (FSA) and under the Consumer Credit legislation.

For more see

Advertising Standards Authority


Best Practices for Financial Services Search Ads

Live Search delivers millions of searchers seeking financial services information and products. By advertising with Microsoft adCenter, marketers can reach these highly active shoppers who account:
More than 4 million unique users per month.
More than 11 million searches per month.

Live Search visitors are more likely to have shopped and purchased online for investments, credit cards, banking, mutual funds, and stocks versus the online population. This means that you have a higher propensity to reach them on Live Search than with the competition.

Financial Services Demographics
Microsoft adCenter demographic data reveals that most searchers on financial services terms are female. Females not only see more impressions in financial services categories but they are more likely to click on ads.

Improving Your Performance with adCenter
When planning campaigns, make sure to include current promotions, new product offerings, and offline sales or marketing activity. The following tactics can help you to improve your campaign performance in Microsoft adCenter.

Keyword Expansion
Reach more customers through expanded keyword libraries. You can increase the potential for more traffic and help improve campaign performance in ranking, coverage of targeted terms, and coverage of tail terms.

Ad Copy Optimization
Appeal to consumer purchase behavior by optimizing copy. Using parameters and calls-to-action you can help boost your ROI by driving more click-throughs to your site.

Use incremental targeting to be more likely to reach searchers who are looking for financial services information or products: females and 35- to 50-year-olds.

Bid Optimization
Meet your campaign goals through bid optimization and reporting. By optimizing bids, you can help ensure you are prepared for heightened competition, increased demand, and seasonality trends.

Start Today
It’s easy to start your Microsoft search advertising campaign—simply provide your contact details and pay a one-time $5 fee to create your Microsoft adCenter account. Sign up now to see what adCenter can do for you.

Googe Search Advertising for Financial Services - Benefits

Solutions for Financial Services

The Google network reaches countless qualified financial services customers every day. Your advertising messages can reach customers when they search for your products and services and when they are reading relevant content on major financial websites.

Google users are heavy Financial Services consumers

Google users search daily for mortgages, bill payment, banking, home equity, credit cards, debt consolidation, life insurance, investment banking, and brokerage services to name a few. Search marketing is your opportunity to speak with these potential customers exactly when they're looking for your financial products and services.

Google users are more likely than the online population to search then purchase financial services products and services:1

• 24% more likely to apply online for a checking or savings account
• 7% more likely to purchase tax software online
• 14% more likely to apply online for a brokerage account

Google is the leading source of referral traffic in the top financial categories:2

• Banking: Google refers approximately 45% of search traffic to banking sites – more than all other search engines (Rank #1)
• Brokerage: Google refers approximately 35% of search traffic to brokerage sites – more than all other search engines (Rank #1)
• Insurance: Google refers approximately 39% of search traffic to insurance sites – more than all other search engines (Rank #1)
• Venture Capital: Google refers approximately 48% of search traffic to venture capital sites – more than all other search engines (Rank #1)

Google reaches 48% of US Internet users who apply online for credit cards.
Google reaches 49% of US Internet users who apply for health insurance online.
63% of Google users have researched or purchased stock trading online.
44% have looked into insurance.
85% of all American tax filers say they are hunting for tax preparation services or tax software...and you know where many of them start their searches.5

Nearly 3 in 4 Google users have gone online to learn more about financial products and services

Purchasing Patterns for Financial Services -Research paper

Prinzie & D. Van Den Poel, 2003. "Investigating Purchasing Patterns for Financial Services using Markov, MTD and MTDg Models," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 03/213, Ghent University, Faculty of Economics and Business Administration, revised .

Consumer behavior in accumulating household financial assets,

Stafford, Edward Jr.
Kasulis, Jack J.
Lusch, Robert F.

Journal of Business Research.

Volume (Year): 10 (1982)
Issue (Month): 4 (December)
Pages: 397-417

Job Satisfaction of Recent Graduates in Financial Services

Job Satisfaction of Recent Graduates in Financial Services
by Sharon A. DeVaney and Zhan (Sandy) Chen
Purdue University

In a survey on job satisfaction among recent college graduates in financial planning, respondents were asked to rank such factors as realization of expectations, company support, attitude, relationships with coworkers, and pay; the results, which indicate that these workers are reasonably satisfied with their jobs, support a "bottom-up" theory in which individuals sum up the positive and negative factors related to their jobs and decide how satisfied they are on that basis.

Read the full paper from

New Strategies for Financial Services Firms:



Introduction 1
University of Augsburg, Deutsche Bundesbank, Deutsche Bank AG
Definitions 9
Customer Relationship Management, virtual organization, eCRM
Mega Trends in the Financial Services Industry 16
reservation price, search market, Population Pyramid
Strategic Options 54
European Central Bank, HypoVereinsbank, life-cycle solution
The Importance of Trust 157
switching costs, home banking, Liberty Alliance Project
Summary and Outlook 175
Customer Lifetime Value, Secured socket layer, Hypertext transfer protocol

more »
List of Figures 181
Number, Home Banking, Germany

By Dennis Kundisch
Published 2003

Financial services
industry/ Germany

206 pages

The German financial services market is in deep crisis. Deregulation and the new means of communication have fostered competition and made the market a transparent level playing field. Moreover, customers increasingly demand individualized solutions to their financial problems. Many financial services providers reacted by merging to realize scale effects and adapted "me-too-strategies" that will not provide for a competitive advantage.

In this book, the life-cycle-solution approach is presented. This anti-cyclical strategy puts the customer and his life-cycle in the center of interest, in order to service him according to his latent needs - wherever it is economically sound to do so. However, this book does not stop at the strategic level, but presents two concepts that help to better utilize customer relationships. Using IT as an enabler, the quality of financial advice can be improved and at the same time cost can be lowered due to streamlined consultation processes.