Author Archive

• How I Invest
  Information Arbitrage, Roger Ehrenberg | December 28th, 2009 at 7:29 am

  

  As part of my year-end reflection and 2010 road map, I have been thinking deeply about how exactly I invest. How do I pick the companies and sectors on which to focus? I quickly realized that the principles I applied in the math of derivatives are the same ones I use as a venture investor. In short, I look at everything as a limit: "What does this (company/sector) look like at infinity?"

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• 2009: A Year of Opportunity
  Information Arbitrage, Roger Ehrenberg | December 26th, 2009 at 11:44 am

  

  2009 entered like a lamb. A tired, wounded lamb. The financial markets were in shambles. Consumer confidence had plummeted. Fear permeated almost every walk of life. Holiday parties a year ago were filled with gallows humor: "Boy, this has been a crappy year. How can things get much worse?" From a public markets standpoint, they did get worse until an abrupt V-turn in April caused both equity and credit markets to soar.

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• Thoughts on Taking Venture Money
  Information Arbitrage, Roger Ehrenberg | December 6th, 2009 at 11:16 am

  

  My (highly intelligent and experienced) friend Chris Dixon just posted on the importance of VC brands. He makes many good points and you should read his perspective. But the issue Chris raises begs a more fundamental question: whether or not to take venture money, and if so, from whom?

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• Vertical Integration in a Rapid World
  Information Arbitrage, Roger Ehrenberg | December 1st, 2009 at 7:09 am

  

  I have long been a student of organizational structure. In general, I've been a proponent of specialization and laser focus. This works against the concept of conglomerates specifically and vertically-organized enterprises generally.

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• Rethinking The Wall Street Business Model (Part 1)
  Information Arbitrage, Roger Ehrenberg | November 23rd, 2009 at 8:31 am

  

  "Too Big To Fail." "Shrink Wall Street."" Ban credit default swaps." These are just a few of the themes dominating the discussion around the Wall Street business model. They all, unfortunately, miss the point. Size, scale, and instruments that properly used help manage risk have their benefits. Lost in the fallout of the financial crisis is the reason why Wall Street exists: to facilitate capital formation and to provide tools for efficient capital allocation. These are customer-focused activities.

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• “Social Leverage” in Venture Capital
  Information Arbitrage, Roger Ehrenberg | November 12th, 2009 at 8:56 am

  

  I will soon be participating in a panel at Defrag titled "Is Social Leverage the next big thing for VCs?" with my friends Fred Wilson, Howard Lindzon, Brad Feld and Jim Tybur. This is an interesting question that can be interpreted a few different ways, so I thought I'd put a stake in the ground to spur my panel-mates to challenge my perspective.

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• Deal With It, Mr. Einhorn
  Information Arbitrage, Roger Ehrenberg | November 8th, 2009 at 12:31 pm

  

  David Einhorn is without question an exceptionally bright man and a very astute investor. However, the latest message being delivered from his bully pulpit, proposing a ban on credit default swaps (CDS), is misguided at best and dangerous at worst.

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• Barking Up the Wrong Tree
  Information Arbitrage, Roger Ehrenberg | November 7th, 2009 at 12:27 pm

  

  After reading the news, participating in key industry conferences and doing some thinking, I've come to the following conclusion: the regulators - and Congress - are barking up the wrong tree.

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• Fixing Wall Street? The Feds Blew It
  Information Arbitrage, Roger Ehrenberg | August 3rd, 2009 at 10:28 am

  

  Today's press is constantly filled with bluster about "new" regulatory regimes, Executive Pay Czars and other gripping topics stemming from 20/20 hindsight and populist zeal. Sadly, they all miss the point. Wall Street's weakest link, it's super-leveraged capital structure and reliance on overnight funding, was laid bare in the depths of the financial crisis last fall. If not for the wide-open purse strings of the US Government, institutions ranging from Citigroup to Goldman Sachs would have gone down. No doubt. This was the moment in history when smart minds could have gotten together and projected - really projected - what a better, safer, smarter Wall Street might look like, a Wall Street that wouldn't have collapsed like a house of cards so completely in the face of the mortgage crisis and credit derivatives melt-down. Rather than mindlessly shoveling liquidity in the system to prop up a broken model and failed institutions, a concerted effort could have been made to call time-out, not with respect to the markets but with respect to the institutions whose functioning had just been shown to be dangerously fragile. Needless to say, this is not how it was handled and we are suffering the aftermath today.

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• Re-designing the Wall Street Trader Compensation Model
  Information Arbitrage, Roger Ehrenberg | July 27th, 2009 at 8:11 am

  

  The recent flap over Phibro's Andrew Hall and his $100 million+ compensation package makes for good headlines, but fails to get at the essence of the real problem: the manner in which Wall Street trader compensation is calculated and disbursed.

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