Category: Risk Management

Zvi Bodie tells Boston Globe, pension insurer’s aggressive switch to stocks is “totally crazy”

March 15th, 2010 in Finance, Risk Management, SMG Hot Topics

Zvi Bodie

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World-renowned retirement investment expert Zvi Bodie, the Norman and Adele Barron Professor of Management at Boston University, is interviewed by the Boston Globe for the article “Pension insurer shifted to stocks.”  “Concern increases as losses mount; Failing plans could overwhelm agency,” writes journalist Michael Kranish, who goes on to report:

Just months before the start of last year’s stock market collapse, the federal agency that insures the retirement funds of 44 million Americans departed from its conservative investment strategy and decided to put much of its $64 billion insurance fund into stocks.

Switching from a heavy reliance on bonds, the Pension Benefit Guaranty Corporation decided to pour billions of dollars into speculative investments such as stocks in emerging foreign markets, real estate, and private equity funds….Analysts expressed concern that large portions of the trust fund might have been lost at a time when many private pension plans are suffering major losses. The guarantee fund would be the only way to cover the plans if their companies go into bankruptcy.

“The truth is, this could be huge,” said Zvi Bodie, a Boston University finance professor who in 2002 advised the agency to rely almost entirely on bonds. “This has the potential to be another several hundred billion dollars. If the auto companies go under, they have huge unfunded liabilities” in pension plans that would be passed on to the agency….

Bodie…[also] questioned why a government entity that is supposed to be insuring pension funds should be investing in stocks and real estate at all. Bodie once likened the agency’s strategy to a company that insures against hurricane damage and then invests the premiums in beachfront property.

Since he issued that warning, he said, the agency has gone even more aggressively into stocks, which he called “totally crazy.”

Related video series:  Personal Finance with Zvi Bodie: The Conventional Wisdom is Wrong

Stanley Chu, Student in Math Finance, on Being Challenged

February 22nd, 2010 in MediaWatch, Risk Management, Video

Hung-Te (“Stanley”) Chu, a student the Mathematical Finance Program at Boston University and risk analyst Putnam Investments, discusses why he’s pursuing his degree at the School of Management. He explains how the program’s diversity and focus on teamwork keeps the classroom experience relevant to the corporate world, and what prospective students should expect here: first and foremost, to be challenged.

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More Math Finance Students on Film:

  • Guan Yu, Student in Math Finance, on the Program’s Intensity
  • Olesya Shubov, Student in  Math Finance,  Discusses Stochastic Calculus
  • Amish Shah, Student in Math Finance, Has Fun with Math
  • Adam Diamant, Student in Math Finance, Talks Fixed Income Derivatives

Related Video:

Guan Yu, Student in Math Finance, on the Program’s Intensity

February 22nd, 2010 in MediaWatch, Risk Management, Video

Guan Yu, a quantitative financial analyst at State Street Global Advisors, discusses the most significant things he’s learned as a student in the Mathematical Finance Program at Boston University and how the program provides a useful framework of knowledge that he can apply right away, in his current work.  He also mentions the most challenging aspects of pursuing his degree and urges prospective students to be prepared for intensity.

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More Math Finance Students on Film:

  • Stanley Chu, Student in Math Finance, on Being Challenged
  • Olesya Shubov, Student in  Math Finance,  Discusses Stochastic Calculus
  • Amish Shah, Student in Math Finance, Has Fun with Math
  • Adam Diamant, Student in Math Finance, Talks Fixed Income Derivatives

Related Video:

Olesya Shubov, Student in Math Finance, Discusses Stochastic Calculus

February 22nd, 2010 in MediaWatch, Risk Management, Video

Olesya Shubov discusses her favorite class in the Mathematical Finance Program, Stochastic Calculus, because it combines theoretical knowledge and the computational skills needed to program extensively in C++ and MATLAB.  Her advice to future students: you need to be dedicated to the program and the challenge of a highly theoretical and mathematical curriculum.

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More Math Finance Students on Film:

  • Stanley Chu, Student in Math Finance, on Being Challenged
  • Guan Yu, Student in Math Finance, on the Program’s Intensity
  • Amish Shah, Student in Math Finance, Has Fun with Math
  • Adam Diamant, Student in Math Finance, Talks Fixed Income Derivatives

Related Video:

Amish Shah, Student in Math Finance Program, Has Fun with Math

February 22nd, 2010 in MediaWatch, Risk Management, Video

Amish Shah describes his professional, and personal, goals; the importance of having fun with math; and the talent of the BU faculty for making the program’s highly challenging curriculum approachable and clear.

He also describes the amazing diversity of the Boston University Math Finance Program, which has given him an invaluable glimpse of the different ways people from disparate cultures approach both classroom material and life at large.

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More Math Finance Students on Film:

  • Stanley Chu, Student in Math Finance, on Being Challenged
  • Guan Yu, Student in Math Finance, on the Program’s Intensity
  • Olesya Shubov, Student in  Math Finance,  Discusses Stochastic
  • Calculus
  • Adam Diamant, Student in Math Finance, Talks Fixed Income Derivatives

Related Video:

Adam Diamant, Student in Math Finance, Talks Fixed Income Derivatives

February 22nd, 2010 in MediaWatch, Risk Management, Video

Adam Diamant, a student in the Math Finance Program with a background in computer science and physics, discusses why Fixed Income Derivatives is his favorite course at Boston University School of Management: because it presents highly interesting mathematical concepts and then helps you develop algorithms to apply these concepts to the actual business world.

He also explains how the program has introduced him to completely new areas of study, and his plans for next year to pursue a PhD in the field in order to build on what he’s learning now.

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More Math Finance Students on Film:

  • Stanley Chu, Student in Math Finance, on Being Challenged
  • Guan Yu, Student in Math Finance, on the Program’s Intensity
    Olesya Shubov, Student in  Math Finance,  Discusses Stochastic
  • Calculus
  • Amish Shah, Student in Math Finance, Has Fun with Math

Related Video:

What Is Mathematical Finance?

February 22nd, 2010 in MediaWatch, Risk Management, Video

What is Mathematical Finance?

Professor of Finance and Director of the Mathematical Finance Program Andrew Lyasoff answers this question, citing Newton’s law of gravity, the foundations of democracy, and GPS systems to explain the complicated financial instruments involved in business of mathematical finance.

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