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I, like many people in first year at Sauder, am interested in going into finance as my specialization.  The finance 2 class prompted me to research and learn more about finance.  This led me to Benjamin Felix’s blog, where he explains why it is so hard to beat the market, even if you are a smart portfolio manager.

Felix explains that in the ultra competitive world of finance, portfolio managers rarely beat the market rate of growth in their portfolios.  Almost all of them are certified and highly educated, which has led to a market where trades are almost bets; one manager sells because they think the stock will go down, and another buys as they think it will go up.  Only one will win.  As all stocks can only go one way, over an entire portfolio, almost all managers win some and lose some at about the same rate as the market grows.

Before reading Felix’s blog and watching the video in it, I believed that good portfolio managing was simply down to good analysis and timing of buying and selling stocks or bonds.  In class we learned about the ways the PMF program manages their portfolio, and similarly how the Canadian Pension Plan Investment board invests and makes money.  Although we were shown very convincing and thorough analysis, I wonder if that is good enough to make good returns.  Could it be the difference in beating the market? In the case of the CPPIB, would market level returns be acceptable, especially if the market goes down?  As a government using taxpayer dollars, does that change the amount of risk they are willing to take to get decent returns?  On the CPPIB website they outline similar active management techniques that Felix explains are not so effective.  I am sure the government would not to anything ineffective, but Felix’s blog has left me questioning how the CPPIB’s or any finance professional’s business is really conducted, and additionally, with an even greater interest in finance.

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I was reading my classmate Aaron Shin’s fourth blog and was very interested in his argument that anonymous peer evaluations are not a helpful as they are hurtful to improving performance.  He points out that often people will change their behavior and focus not on working hard and trying to improve, but on how they can get higher marks from their group members.  Thus, group members focus on themselves and how they can extract better review, and the group is less cohesive.

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I have been in similar situations where I think that keeping my thoughts to myself would be better for my team marks.  However, as we learned in class 2, an important part of teamwork is making sure feedback is rooted in good intention, and additionally, criticism and ideas are well communicated.  I disagree that anonymous peer evaluations do not improve team efficiency and is an obstacle.  I believe that a more overwhelming change other than pulling back efforts and communication, would be better and harder work and more contribution.  When I know I will be judged on my performance, I will work harder to be a better teammate, including giving constructive criticism.  With peer evaluations, members who put in more effort and contributions would be recognized and rewarded, and team members that do not will receive tangible feedback.  If they are unhappy with the judgement, the specified suggestions from team members provide a helpful framework on how to improve (as they should be with good intentions) and motivate change and betterment.  I think the negative effects of peer evaluations that Aaron cites are not systematic, but a consequence of poor communication.  Although peer evaluations could initially cause problems in a team, I believe that they can greatly improve a team.

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Samsung has reported record profits in the last quarter.  However, in a shock decision, CEO Kwon Oh-hyun has resigned from his position.  Kwon cites the crisis within the company for his move.  The heir to the company, Lee Jae-yong was found guilty of embezzlement and corruption last month.  Despite this reason, some are calling this a surprise as Samsung seems to be operating smoothly and recorded 12.8 billion dollars in profit last quarter.

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When I first saw the article, I was surprised as well.  Being the head of a company as large as Samsung while it’s doing so well must be a dream.  When I really started to think about it, I realized this would be the perfect time for him to step down.  The performance of the company is a result of his work, but from some time ago.  The net profit figure that is breaking records now is not because of the state of the company now, but when they made the decisions on what to develop and spend their time on, and now it is paying off.  And now that Lee has been found guilty, it could change the executive operations and mindset in the company for the worst.  That will heavily impact the performance of Samsung and it’s profits.  Samsung will start to struggle; not now, but after Kwon is long gone.  I think this is a perfect example of a lagging indicator that can show something entirely different on the surface than what is really happening on the inside, and how that can influence business decisions. Because of this, Kwon will be able to say he brought Samsung up to 12.8 billion dollars in profit, not down from it.

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Ride sharing is a very new and unexplored industry that has exploded over the last few years.  The face of this has largely been Uber, a company founded in 2009 for lowering the cost of black car services, and now being a ride sharing company that at one point controlled 84 percent of the ride hailing market.  However, that number is in decline.

A very, very long string of scandals  have been troubling Uber for the last few years, which all recently came to a head when the co-founder and CEO Travis Kalanick was pressured to resign.  Many point to the scandals surrounding Kalanick as the reason for yet another year of losses in 2016, estimated at around 3 billion dollars.  The removal of Kalanick’s polarizing character should theoretically stop the workplace environment problems and practices of spying on competitors like Lyft to get a competitive advantage.  Theoetically with those problems gone, they should be able to turn around the business and start making money.  However, this may not be the solution.

Although most major ride sharing companies are reporting huge growth, they are also all reporting losses.  Lyft, Uber’s main competitor in many parts of the world, have reported 600 million in losses  in 2016 alone, and Didi Chuxing, a Chinese ride sharing company that even partnered with Uber in China to try to minimize costs, lost 571 million in the first five months of 2015, although they were in a growth stage.

Ride sharing is very obviously very popular and is growing at an increasing rate.  Despite the popularity, ride share companies are struggling to find profits.  I think that the ride sharing industry is at a crossroad, where they have to evolve and change in a major way to become a viable business that can actually make money.  Uber has been at the front of the ride sharing explosion so far, but it will be interesting to see who can change the game and become the new face of the industry.

The events in Houston recently have made me question capitalism and the free market, specifically the operations in the free market that make America, and Canada, the place that it is.  These free market operations have given our countries growth and prosperity, but also have a flip side as shown by some stores hiking up prices for water and other necessities when people needed them the most, after hurricane Harvey devastated them.  This made me wonder about the validity of “ethical business” while maintaining the intrinsic self interest of the free market.  It seems that increasingly, businesses always go for the more profitable option, and only doing the “right” thing when public outrage or the risk of their choices outweigh their profits.  I feel similarly to Milton Friedman in thinking that there is no such thing as ethical business, as there is no ethical responsibility in business, and therefore only choices made to maximize profits that sometimes align with good morals.  There are also people with different opinions such as R. Edward Freeman, stating stakeholders in a business including workers, employees, and the community, control the actions of business.  However, we can see the suffering community in Houston who hold “stakes” in the businesses of Houston, but are not being taken into consideration and are being price gouged.  The stories of struggling families are hard to hear, but in the context of this class and business ethics, they provide interesting questions of business ethics.  Is it ethical for people to price gouge? Can a free market exist without it?  But more importantly, does ethical business even exist?