From corporate to personal

When Alexa von Tobel decided to take a job with Morgan Stanley out of college in 2006, she had no idea that she would be dropping out of business school and founding her own online company in just three years. LearnVest, a website that primarily aims to teach women about managing personal finances, has already attracted over 80,000 visitors since its launch in November 2009. It has garnered over $5 million in venture and angel funding and was recently named as one of 2009’s most promising startups by the TechCrunch50.

Tobel came across the idea of starting a tutorial for personal finance when she realized that it was something everyone needs but few have actually mastered. “I couldn’t believe that I was working as a trader,” she recalled at a Yale talk two weeks ago, “yet knew nothing about how simple things like credit cards and mortgages work.”

After spending two years at Morgan Stanley, Tobel decided to work for a file-sharing startup to gain some entrepreneurial experience. Six months later, she matriculated at Harvard Business School, only to drop out a semester later to start LearnVest. “Starting my own company was definitely daunting,” said Tobel, “but once I spent that first day just sitting at home wearing jeans, I knew it was for me and that I could not go back to the corporate world again.”

As a student at Harvard Business School, Tobel had screened her business idea through hundreds of peers, professors, and acquaintances to gain feedback. “I would find the smartest, brightest, most experienced people I knew and ask them for their thoughts about my idea,” she explained. And when they all expressed approval, Tobel knew that she had a viable plan. With the help of four professors and some enthusiastic classmates, she quickly assembled a development team and raised the necessary funds to launch the website. LearnVest is looking toward advertisements, live one-on-one professional tutorials, and bank referral partnerships to generate revenue.

Through LearnVest, Tobel hopes to educate women on managing their finances in a simple, easy-to-understand manner. “You can literally save hundreds of thousands of dollars by opening an IRA in your early 20s rather than waiting until your 30s,” Tobel said. “But no one teaches you these things, and no one wants to read through a thick, boring book just to learn this stuff.”

Certainly, the colorful buttons, user-friendly layout, and bold text make LearnVest much more aesthetically pleasing than the average textbook. So the next time you have a question about credit cards, tax forms, student loans, or more – take a look at learnvest.com and see for yourself.

-LYW

Argentina’s Real Estate Boom

Even though the long-term economic prospect for the United States real estate sector seems sober at best, investors have not completely abandoned the asset class. Following the United States housing bubble burst, interest has shifted toward overseas real estate holdings, primarily in South America. Venues like Argentina and Brazil have seen an influx of foreign direct investment into their real estate sectors.

Although affected by the recent global downturn, the South American real estate sector has continued to prove a lucrative sector for two main reasons: lack of credit and paltry investment options.

Unlike the United States, mortgages in countries like Argentina are relatively hard to find and, often at at rates often over 20%, prohibitively expensive. Over 90% of high-end homes in the Argentinean capital, Buenos Aires, are paid for in direct cash exchanges. This means less leverage (and less risk). Thus, even when the United States mortgage bubble imploded, South American real estate markets have shown more resilience.

Moreover, investment continues to concentrate itself in the real estate industry because there are few other domestic investment opportunities. Due to their own financial credit crunches in the past few decades, many South American nationals harbored general mistrust of financial institutions and their investment goods well before the latest global crisis. Over the past few months, these fears of financial products have become even more substantial, and rich South American investors continue to harbor their assets in the shield of tangible, illiquid holdings.

This South American housing boom continues to gather steam, even as other international markets like in China and United States have faced recent crises. It is therefore little surprising that the first Argentinean IPO in nearly two years will be the real estate developer TGLT.

—EH

Dwight Hall Socially Responsible Investment Fund

New Haven, Connecticut- The Board of Trustees of Dwight Hall recently approved the Dwight Hall Socially Responsible Investment Fund announces that proposals for socially responsible endowment investments.  Developed by members of Dwight Hall’s student-run socially responsible investment (SRI) committee, the first of its kind in the country, the Market-Driven and Mission-Driven Portfolios aim to promote Dwight Hall’s social values while paying their share of the Dwight Hall operating budget.

The Dwight Hall Socially Responsible Investment Fund was created in 2007 by the Board of Trustees of Dwight Hall, Yale University’s umbrella organization for public service and social justice groups, to invest a portion of Dwight Hall’s endowment according to environmental, social, and corporate governance guidelines. As the first undergraduate-run socially responsible investment endowment in the nation, the Fund aims to bring Dwight Hall’s investment policy in line with its institutional commitment to social change.  “The Dwight Hall SRI Fund is an innovative form of service that allows Dwight Hall to dedicate its resources fully to improving the communities in which it operates,” says committee chair Thomas Meyer ‘11.

Composed of about ten undergraduate students who receive mentoring from graduate students at the Yale School of Management, the Dwight Hall SRI Fund represents the nation’s first undergraduate socially responsible investment group whose returns are expected to support the institution with which it is affiliated.  The Fund has become the leading student-run socially responsible investment initiatives in the country, and its combined market- and mission-based approach represents an innovative SRI model.

When compiling their Market-Driven Portfolio proposal, students considered the entire universe of socially responsible investment funds and applicable traditional funds, using funnel analysis to eliminate funds that did not meet the group’s needs.  Positive and negative screening allowed students to evaluate the environmental, labor, and corporate governance policies of funds’ holdings.  Funds with assets greater than $200 million under management were expected to engage in shareholder advocacy.  Students also considered funds’ past performance, manager experience, duration of existence, investment strategy, and fee structure.  Each fund in the portfolio is expected to perform in line with or outperform the standard benchmark of its asset class.

The Mission-Driven Portfolio consists of a $10,000 investment in a certificate of deposit at The Community’s Bank of Bridgeport, Connecticut.  Chartered under the Community Reinvestment Act, the Bridgeport bank focuses on providing individuals underserved by the traditional banking community with access to credit.  Both FDIC-insured and classified as a community development bank, The Community’s Bank met the group’s criteria for financial viability and social impact.  The bank was selected after extensive research on investment options that would benefit the New Haven-area communities served by Dwight Hall.

Socially responsible investing refers to an investment strategy that seeks to maximize both financial return and social good, taking into account the social impact of a particular investment when making acquisition decisions.  This approach has roots in investment strategies of nineteenth century American religious groups.  It became increasingly prominent in the 1990s when institutional divestment of holdings with ties to South Africa—including at Dwight Hall—generated significant pressure to end apartheid. “With the support of hundreds of institutional investors representing trillions of dollars, responsible investment is playing a growing and prominent role in modern finance,” says committee member Aaron Podolny ‘12.

Following these initial investments, the Dwight Hall socially responsible investment committee will monitor the overall portfolio’s performance to ensure that it continues to meet their investment objectives.  The group will also explore options for further mission-based community investments.  A letter of intent has already been sent to help the First Community Bank of New Haven complete its federal chartering process.  “It’s exciting to see the country’s first undergraduate SRI endowment move forward with an investment strategy that not only will help to support the programs that Dwight Hall runs but also will grow in a healthy and responsible way,” says Meyer.

-Charlie

The Bursting of the Chinese Bubble in 2010

Over the past thirty years, China’s GDP has grown by over 10% per year, making it the second largest economy in the world behind only the United States. According to the Economist, the US and the Euro zone are expected to have 2.4% and 0.6% increases in their respective GDPs while China’s GDP is expected to increase by a whopping 8.6%.

However, China’s debt concerns many experts; China’s national government owes a debt equal to roughly 70% of the 2009 Chinese GDP. By contrast, the United States’ national government owes a debt equal to roughly 50% of the 2009 U.S. GDP. Experts worry that the more debt that is on the books, the more vulnerable borrowers will be to shocks.

Another issue that critics and naysayers point to is the competitive advantage enjoyed by Chinese exporters due to the artificially low value of the yuan is a double edged sword, as the low value of the yuan is putting pressure on domestic prices, contributing to inflation that has hovered around 7% since the yuan became unpegged.

Some experts have predicted a decline of the dollar in 2010; such a development could prove disastrous for the Chinese who hold trillions in U.S. debt. If the dollar declines, not only do Chinese asset values decline, Chinese exporters will also be hurt. However, the Chinese cannot liquidate their assets without causing a depreciation of the dollar.

However, China has been proving naysayers wrong for years, as early as 2001 experts were already predicting the burst of the Chinese bubble. Maybe China can continue surprising us for another decade.

-Daniel Ni

Japan’s Economic Prospects for 2010

Like President Obama, Japanese Prime Minister Yukio Hatoyama enjoyed a hopeful, albeit brief, honeymoon period with the Japanese public after last summer’s historic election in which the Democratic Party of Japan ended the Liberal Democratic Party’s fifty year rule. But as he brings his country into 2010, Hatoyama has little to celebrate about. After his approval rating slid to 50% from a high of 70% in September due to a political donations scandal and disputes with the U.S., Hatoyama admitted in a New Year’s address, “Our honeymoon period is over.”

Hatoyama and his party have been forced to regroup and refocus their efforts for 2010 on fixing Japan’s sluggish economy. Although it emerged from recession in the third quarter of last year, Japan still faces high unemployment, deflation, and soaring deficits. Unfortunately, these are problems with conflicting solutions. Hatoyama has made fighting deflation and cutting unemployment his clear priorities, at the expense of raising the deficit. In December, he unveiled a record $1 trillion budget for the 2010 fiscal year, designed to increase the spending power of households.

This option comes with considerable economic and political risks. Public optimism is key- unless there are indications that economic stagnation will end, households may decide to save the money funneled to them by the government instead of spending it, leading to further stagnation. Yet this kind of optimism will be hard to come by with poor employment figures and continuing deflation.  On top of this, Japan’s debt-to-GDP ratio is quickly approaching 200%, the highest in the developed world, leading many in the country to believe that massive public spending will prove to be unsustainable. Hatoyama’s government will need to bring about quick results to ease concerns and boost public confidence if it wants to achieve its objectives.

Still, Hatoyama seems to have a good sense of his challenges and the resources he can use to combat them. After the resignation of his finance minister, Hatoyama appointed deputy prime minister Naoto Kan to the position. Kan, known for battling bureaucrats throughout his career, is expected to help bring about reform by shifting power away from the bureaucrats of the powerful and highly secretive Finance Ministry, which has been entrenched in the policies of the LDP for the last fifty years.  How far this kind of judgment will take Hatoyama will be seen after the upcoming upper house elections this summer.

-Nabeem Hashem

Africa’s Coming-out Party: World Cup 2010

On June 11, 2009, Africa will step into the center of the world stage.  No, it won’t be because of AIDS or malaria, genocide or corruption.  We won’t be talking about aid programs or Africa’s backwardness.  Instead, we will be cheering for something far happier, more dramatic, and decidedly more beautiful.  It is because South Africa is hosting the FIFA World Cup.

The World Cup is the most widely viewed sporting event in the world, and as the Super Bowl and Olympics have shown, sport has become an increasingly powerful political and economic force.  From hosting the games alone, South Africa expects to generate almost $3 billion in GDP, roughly one percent of its economy.  With four weeks in the global spotlight, its government has an unrestricted opportunity to bolster its political voice and stake a greater share on the global stage.

Yet for South Africa, and by extension, for the continent as a whole, the World Cup is much more than a stimulus package or political tool.  It is an opportunity for Africa to display its history, culture, vitality, and modernity.  It is an unprecedented chance for the world’s most neglected continent to control its own global image, one too often defined by pictures of famished children and burnt villages.  Much as the Beijing Olympics served as a coming-out party for the Chinese, the South Africa World Cup could mark the beginning of a new Africa, a continent no longer seen as a stagnant land of despair, but a place of abundant life and opportunity.

In many ways, South Africa is on course to realize these hopes.  Construction is on schedule, and the country seems fully prepared to host the coming games, silencing many critics who doubted any African nation could manage such a colossal event.  Things are even looking good for African soccer.  With Cameroon, Nigeria, and the Ivory Coast fielding some of the strongest African squads in recent memory, we may even see an African team lift the World Cup trophy on home soil.  It would be the perfect ending to Africa’s own coming-out party.

-Raymond Xi

The Rise of China in 2010

The rise of China in the international market must be the foremost rags-to-riches story of recent times. With the country’s economic growth comes an increasingly significant role in the arena of global politics. If the 2000s were the story China’s economic growth-spurt, then the 2010s are likely to be the tale of its coming-of-age as a global power.

China will not have to wait long for the global limelight. In May, the 2010 World Expo will be held in Shanghai. The event will feature the breathtaking Expo Axis building and magnetically levitating trains, developments fitting the event slogan: “Better City—Better Life.” Pageantry aside, the Expo falls in the tradition of World Fairs that had announced the rise of London and Paris in the 19^th century. From today’s perspective, it is tempting to think that China is destined to follow the macronarrative of economic and political ascent of old European powers. But the world faces different issues today and the Peoples’ Republic will act accordingly.

China demonstrated some of its mettle in the international scene during the Copenhagen climate talks of late 2009. The country resisted calls for emissions reductions in the face of essentially universal pressure. Though its first move is one of environmental stubbornness, China certainly recognizes its substantial leveraging power at the global level. This influence, derived from the country’s prominent economic position, will be used to increasing effect in coming years.

China, however, will not be reckless with its recently-realized power. Beijing is burdened with the domestic concerns of the People’s Republic—a population of almost a billion and a half reaching for the promises of modern life. China’s test will be whether it can deliver the “Better City—Better Life” to its citizens while maturing into a responsible and responsive member of the global community.

-James Luo