Investments – Page 8 – Abnormal Capitalist

University of California : Swapping For A Loss

The bankruptcy automatically terminated the swap. Under the contract, the university was required to pay a $25 million termination fee to the now-bankrupt bank.

But at that point, there was one upside. Interest rates were volatile, but had not yet plunged. The swap was not yet deep underwater. The university was out of a gamble that looked increasingly precarious.

And last but not least,

In a decision that is still not clear, university officials decided to find another bank to provide a swap with the same terms. Deutsche Bank agreed to pay the university $31 million to reissue the swap – which officials now estimate will produce $123 million in losses in coming years.

→ Orange County Register

For the Love of Art, and Money

The latest auctions here demonstrated how buyers have now split into two main groups: Longer-term investors who hold to more traditional notions of collecting and who tend to focus on Impressionist, modern and classic contemporary works; and short-term speculators, known as “flippers,” who busy themselves with cut-and-run deals in the red-hot market for emerging artists.

→ The New York Times

Is Art Really a Good Investment ?

Art is, quite possibly, the least commoditised asset in the investment universe, offering the potential for great returns but also—as is rarely explained by its market proponents—subject to enormous risk.

→ The Art Newspaper

Financial Apartheid

The increasing reliance on private, rather than public, markets creates a system of financial apartheid. Retail investors, and the mutual funds they depend upon, have fewer and fewer U.S. companies to pick from. Private equity firms get access to the future Facebooks and Googles of the world, and they extract all they can before exiting into what is left of the public markets.

→ Traders Magazine