Finance History
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Episode 73
Featuring Daniel Peris
Demetri Kofinas speaks with Daniel Peris about the history of financial theory, how certain theories like MPT, CAPM, efficient markets, etc., became the dominant paradigm by which investors have come to understand risk, and what happens when happens when everyone is using them.

In this week’s episode of Hidden Forces, Demetri Kofinas speaks with Daniel Peris, a Senior Portfolio Manager at Federated Investors in Pittsburgh where he oversees the firm's dividend-focused products. He is the author of three books on investing, most recently: "Getting Back to Business: Why Modern Portfolio Theory Fails Investors, and How You Can Bring Common Sense to Your Portfolio." Before transitioning into asset management, Peris was a historian focused on modern Russian history. He is the author of a book and several articles on the Soviet Union in the 1920s and 1930s.

 

Today’s conversation is about the evolution of financial theory, beginning with the rough and tumble world of 19th-century finance with its stock syndicates, market corners, and curb exchanges. Where big personalities like Daniel Drew, James Fisk, and Jay Gould conspired and fought to take from Joe Public, and from each other, the riches afforded to them by laissez-faire capitalism and the industrial revolution.

 

The discussion is broken into two parts. The first deals with the world as it was before 1929 with its unregulated, unstructured, and highly inefficient markets. The second part explores the world after the Great Crash, where a confluence of forces – economic, demographic, institutional, and intellectual – supported the procurement and distribution of a new set of financial theories that promised to explain away uncertainty and guide the allocation of risk in the pursuit of profits.

 

As inheritors of this new world, we cannot help but function under the fallacies of its paradigms. One of these fallacies is the notion that economies are independent phenomena that operate, by and large, according to a certain set of physical laws. Most people will acknowledge that our economic and financial models are imperfect, but most people also think of them as being somewhat analogous to models developed in the natural sciences. Because of this false comparison to physics (equilibrium) and nature (normal distributions), people often remain unaware of the centrality of politics in theories of the economy. Economies are not independent phenomena that answer only to the laws of nature. They are political and social phenomena that exist within a political system. Theories of the economy that do not take into account the system within which they operate are flawed...in some cases, significantly so.

 

Austrian theories of money and credit, for example, are better at describing how the banking system operates in a laissez-faire society, whereas Modern Monetary Theory is better at describing how it works in our current, fiat-based system of unrestrained credit growth. What often happens is that devotees of these different schools are actually advocating for a specific set of policies, under the pretense that their views are scientific and that their policies derive logically from some objective view of how an ideal economy operates, when in fact, they are based on political values and societal ideals. The MMT school is full of progressive social-democrats who want governments to play a larger role in the economy, whereas the Austrian school is full of conservative libertarians who want less government. This sorting along political lines is not a coincidence. Investment theories operate rather differently than theories about the economy, in that there is no argument in the investment world about what matters most. It’s profits.

 

In light of this fact, the discrepancies between various investment theories require alternative explanations that do not rely on political ideology or moral sentiment. It would seem sufficient to declare that the widespread adoption of theories like Modern Portfolio Theory (MPT), the Efficient Market Hypothesis (EMH), Capital Asset Pricing Model (CAPM), etc., was enabled by the growth of a large middle class with excess income available for investment that had not directly experienced the boom and bust of the Roaring 20’s and accelerated by the Employee Retirement Income Security Act (ERISA) of 1974. Entrepreneurially minded financial industry professionals saw an opportunity, but this opportunity required a more streamlined approach to investing and one that would put themselves, and their clients, at ease.

 

The need to bring order to the chaotic world of prices has encouraged the adoptions of systematic investment strategies that claimed the ability to quantify risk. When it comes to investing other people’s money, having a more coherent, easy-to-understand theory that provides the illusion of control is a very valuable tool. From an evolutionary point of view, it is no wonder how theories purporting to quantify risk and target reward proliferated so quickly. It was in everyone’s interest that they do so.

 

How these theories came together to form the dominant, ideological template of risk-adjusted-return measured against exposure to the broader market is the essence of today’s episode. Its significance can be found in the implications associated with equating diversification with correlation: trading idiosyncratic risk for systemic risk and what happens when everyone is doing it.

 

Producer & Host: Demetri Kofinas

Editor & Engineer: Stylianos Nicolaou

Join the conversation on Facebook, Instagram, and Twitter at @hiddenforcespod

Daniel Peris, Ph.D., CFA, is Senior Vice President and Senior Portfolio Manager at Federated Investors, Inc., in Pittsburgh. Before transitioning into asset management, Peris was a historian focused on modern Russian history. He is the author of two prior books on investing, The Strategic Dividend Investor, and The Dividend Imperative, as well as a study of early Soviet history.

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Investing
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Special Episode
Featuring Howard Marks
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Special Episode
Featuring Howard Marks
In this Christmas Day special, Demetri shares twenty-five minutes of never-before-heard audio from his conversation with Howard Marks, but not before announcing the long-awaited-for launch of the Hidden Forces subscription. Subscribers can gain access to overtime segments, transcripts, and rundowns from each and every episode.

In this Christmas Day special, Demetri Kofinas shares twenty-five minutes of never-before-heard audio from his conversation with Howard Marks, but not before announcing the long-awaited-for launch of the Hidden Forces subscription service. Subscribers can gain access to overtime segments, transcripts, and rundowns from each and every episode. Subscriptions require creating a Patreon account, but can be accessed directly through the Hidden Forces website via subscription tabs located within any particular episode.

 

Producer & Host: Demetri Kofinas

Editor & Engineer: Stylianos Nicolaou

Join the conversation on Facebook, Instagram, and Twitter at @hiddenforcespod

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Morbi interdum mollis sapien. Sed ac risus. Phasellus lacinia, magna a ullamcorper laoreet, lectus arcu pulvinar risus, vitae facilisis libero dolor a purus. Sed vel lacus. Mauris nibh felis, adipiscing varius, adipiscing in, lacinia vel, tellus. Suspendisse ac urna. Etiam pellentesque mauris ut lectus. Nunc tellus ante, mattis eget, gravida vitae, ultricies ac, leo. Integer leo pede, ornare a, lacinia eu, vulputate vel, nisl.

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Tesla
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Tesla
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Episode 62
Featuring Lawrence Fossi
Lawrence Fossi started writing about Tesla three years ago under the pseudonym Montana Skeptic. As one of Tesla’s most thoughtful critics, his identity was eventually discovered and used by Elon Musk to phone his boss and threaten legal action unless Montana was silenced. This is Montana’s first public appearance, on-camera.

In Episode 62 of Hidden Forces, Demetri Kofinas speaks with Lawrence Fossi, known by his pen name as Montana Skeptic. Lawrence is the portfolio manager for a family office with over one billion dollars under management. A graduate of Yale Law School, he has 30 years of experience as a commercial trial attorney. Fossi started writing about Tesla three years ago under the pseudonym Montana Skeptic. He quickly developed a reputation as one of Tesla’s most thoughtful critics until earlier this year, when he was "doxed" and his identity discovered. Elon Musk used this information to phone his boss, threatening a lawsuit unless Montana was silenced. This is the first time that Lawrence Fossi has appeared on camera for an interview on this subject or any other. 

 

It was announced yesterday afternoon that the Securities and Exchange Commission has charged Elon Musk, CEO and Chairman of Silicon Valley-based Tesla Inc., with securities fraud for a series of false and misleading tweets about a potential transaction that would have taken Tesla private. The SEC’s complaint alleges that “in truth, Musk had not discussed specific deal terms with any potential financing partners, and he allegedly knew that the potential transaction was uncertain and subject to numerous contingencies.” Steven Peikin, Co-Director of the SEC’s Enforcement Division, was quoted as saying: “Corporate officers hold positions of trust in our markets and have important responsibilities to shareholders. An officer’s celebrity status or reputation as a technological innovator does not give license to take those responsibilities lightly.”

 

It has been reported that Elon Musk turned down a settlement offer by the SEC that would have included a 2-year ban on serving as Tesla chairman, a fine for both Musk and Tesla, and a requirement that Tesla adds two new independent directors. Musk would not have been required to admit wrongdoing, and he could have remained CEO. In a statement to CNBC, Musk said, “This unjustified action by the SEC leaves me deeply saddened and disappointed. I have always taken action in the best interests of truth, transparency, and investors. Integrity is the most important value in my life and the facts will show I never compromised this in any way.”

 

A statement issued late Thursday from Tesla and its Board states that “Tesla and the board of directors are fully confident in Elon, his integrity, and his leadership of the company, which has resulted in the most successful U.S. auto company in over a century. Our focus remains on the continued ramp of Model 3 production and delivering for our customers, shareholders, and employees.”

 

In their conversation, Lawrence Fossi and Demetri Kofinas explore the insanity that has become the Tesla story. According to Lawrence, Tesla cannot be understood as a business enterprise it must be understood as the new religion of our day. Elon Musk is the minister of this great church and his congregation is deeply faithful. Unless you acknowledge that there is a religious aspect to this where we are saving the earth and we are engaged in a Manichean struggle with these evil fossil fuel companies you are going to have a hard time understanding Tesla.

 

Difficult as it may be to understand Elon Musk and the religious cult that has become Tesla, we must try anyway. There are many lessons to be learned from how millions of people were so easily led to believe that missions to Mars, hyperloops, and electric semis could be commanded into existence by nothing less than the fantastical pronouncements of a modern day carnival barker.

 

As always, this episode of Hidden Forces is for informational purposes only and should not be relied upon as the basis for financial decisions. All views expressed by Demetri Kofinas and podcast guests are solely their own opinions and should not be construed as financial advice.

 

Producer & Host: Demetri Kofinas

Editor & Engineer: Stylianos Nicolaou

Join the conversation on Facebook, Instagram, and Twitter at @hiddenforcespod

Lawrence Fossi, known by his pen name, Montana Skeptic, breaks his silence for the first time on camera after having been forced to terminate his twitter handle on account of legal threats made by none other than Elon Musk. The impetus for Elon’s threats were Fossi’s critical writings about the company going back to November of 2015, as well as his growing popularity on social media, among a community of skeptics and short sellers. A graduate of Yale Law School, Lawrence has 30 years of experience as a commercial trial attorney and is currently the portfolio manager for a family office with over one billion dollars under management.

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Sed egestas, ante et vulputate volutpat, eros pede semper est, vitae luctus metus libero eu augue. Morbi purus libero, faucibus adipiscing, commodo quis, gravida id, est. Sed lectus. Praesent elementum hendrerit tortor. Sed semper lorem at felis. Vestibulum volutpat, lacus a ultrices sagittis, mi neque euismod dui, eu pulvinar nunc sapien ornare nisl. Phasellus pede arcu, dapibus eu, fermentum et, dapibus sed, urna.

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Morbi interdum mollis sapien. Sed ac risus. Phasellus lacinia, magna a ullamcorper laoreet, lectus arcu pulvinar risus, vitae facilisis libero dolor a purus. Sed vel lacus. Mauris nibh felis, adipiscing varius, adipiscing in, lacinia vel, tellus. Suspendisse ac urna. Etiam pellentesque mauris ut lectus. Nunc tellus ante, mattis eget, gravida vitae, ultricies ac, leo. Integer leo pede, ornare a, lacinia eu, vulputate vel, nisl.

Suspendisse mauris. Fusce accumsan mollis eros. Pellentesque a diam sit amet mi ullamcorper vehicula. Integer adipiscing risus a sem. Nullam quis massa sit amet nibh viverra malesuada. Nunc sem lacus, accumsan quis, faucibus non, congue vel, arcu. Ut scelerisque hendrerit tellus. Integer sagittis. Vivamus a mauris eget arcu gravida tristique. Nunc iaculis mi in ante. Vivamus imperdiet nibh feugiat est.

Elon Musk and the Fall of the Church of Tesla | Montana Skeptic
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Episode 53
Featuring Gillian Tett
Gillian Tett shares stories about her experience at the Financial Times and explains how her background in anthropology has helped her identify financial bubbles in technology and the economy. Topics include corporate debt, unicorns, ETFs, EMEs, volatility, dollar carry-trade, protectionism, interest rates, populism, and geopolitics.

“It's tough to make predictions, especially about the future,” said the famous Yankee captain, Yogi Berra, and yet, this hasn’t stopped us from trying. Attempting to predict the future is a sport as old as civilization itself. Oracles and wishing wells litter the landscape of humanity’s past. Yet, in a world whose outcomes are no longer determined by the forces of nature, ordaining the future has become a matter of market introspection. Learning how to cultivate a sense of objectivity, empathy, and cultural awareness can be the difference between staying ahead of the curve or falling far behind it.

 

Gillian Tett has managed well by this measure. The Managing Editor of the Financial Times US is trained as a cultural anthropologist who applies her knowledge of human cultural practices, values, and norms towards trying to identify key trends in finance and the economy. In this almost hour-long conversation with Demetri Kofinas, Gillian shares stories about her experience covering financial markets, as well as how her background as a cultural anthropologist has helped her to spot financial bubbles in technology and the economy.

 

Prior to the crisis, Gillian Tett and her team of capital markets reporters were some of the only financial journalists to cover the arcane world of credit derivatives. Since 2008, she has been one of the most important journalistic voices in all of economics and finance, moderating panels and conducting interviews at the most prestigious conferences and private gatherings around the world.

 

Our conversation begins in Tajikistan, where Gillian studied local wedding rituals as part of her doctorate in cultural anthropology. She would later draw a useful comparison between Tajik wedding rituals and what she was seeing in the space of credit derivatives (specifically, the innovations happening at JP Morgan). The conversation quickly shifts to the 2008 financial crisis, and what the now managing editor of the Financial Times learned from her experience covering the panic of ’08-’09. This was a period in which central banks engaged in extraordinary measures aimed at shoring up the global financial system for fear that if they did not, a banking collapse would ensue. Fortunately, the system survived, but not without leaving some lasting scars…

 

The rest of Demetri’s conversation with Gillian Tett is an exploration of the current financial landscape. Where have the risks accumulated post-2008? Much of today’s investment capital has accumulated in technology stocks and in technology-related companies. Private placements have boomed, and pre-IPO valuations have skyrocketed. Unicorns like Uber, Theranos, and a litany of cryptocurrency ICO’s have shot straight to the moon. The growth of wealth and income inequality since 2008 can be seen in these sky-high valuations.

 

Sovereign balance sheets have also exploded as a legacy of the crisis, but little has been discussed about the growth in corporate debt over the last six to eight years. Not only is the amount of corporate debt important, but the form that debt has taken is telling. Hampered by new regulations, as well as the memory of the last crisis, banks have curbed back their lending only to see bond make up the difference, buying up new offerings across the risk curve. Emerging markets have been a big beneficiary, not only of the appetite for high-yield debt but also, of loose monetary policy. The dollar carry-trade has become a powerful funding mechanism for emerging market economies and companies, which are now at risk of a dangerous snap back as the Fed continues to tighten, raising interest rates and shrinking the size of its balance sheet. Volatility remains low, but with prices having made all-time highs across various asset classes, geopolitical tensions between the United States, Russia, and China may prove the straw that breaks the market’s back. Additionally, the developing trade war with China, as well as the protections measures taken against Canada and Europe may finally create the type of consumer price inflation that the Fed has been begging for. You know what they say? Be careful what you wish for…

 

Producer & Host: Demetri Kofinas

Editor & Engineer: Stylianos Nicolaou

Join the conversation on Facebook, Instagram, and Twitter at @hiddenforcespod

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Episode 6
Featuring Joan Freese
Episode 6
Featuring Joan Freese

Gillian Tett serves as US managing editor, leading the FT’s editorial operations in the region across all platforms. She writes weekly columns for the Financial Times, covering a range of economic, financial, political and social issues throughout the globe.

 

Tett previously served as assistant editor, US managing editor from 2010-2012, and prior to this as the assistant editor responsible for the FT’s markets coverage. Her other roles at the FT have included capital markets editor, deputy editor of the Lex column, Tokyo bureau chief, Tokyo correspondent, London-based economics reporter and a reporter in Russia and Brussels.

 

Tett’s latest book The Silo Effect, published by Simon & Schuster in September 2015, looks at the global economy and financial system through the lens of cultural anthropology.

 

Most recently in 2016, Tett received honorary degrees from the University of Exeter in July and the University of Miami in May; and in 2015, an honorary doctorate from Lancaster University in the UK, one of the top ten British universities. In 2014, Tett was named Columnist of the Year in the British Press Awards, with judges describing her column as “provocative, revealing, often counter-intuitive” and commending her for covering “a gloriously eclectic range of themes”. She also received the 2014 Royal Anthropological Institute Marsh Award, which recognizes an individual who works outside academia and has used anthropology or anthropological ideas to contribute to a better understanding of the world’s problems. In 2012, she received a Society of American Business Editors and Writers (SABEW) Award for best feature article, “Madoff Spins his Story.” Her other awards include a President’s Medal by the British Academy (2011), being recognized as Journalist of the Year (2009) and Business Journalist of the Year (2008) by the British Press Awards, and as Senior Financial Journalist of the Year (2007) by the Wincott Awards.

 

She is the author of New York Times bestseller Fool’s Gold: How Unrestrained Greed Corrupted a Dream, Shattered Global Markets and Unleashed a Catastrophe (Little Brown, UK and Simon and Schuster, US) published in May 2009, and Saving the Sun: A Wall Street Gamble to Rescue Japan from its Trillion Dollar Meltdown (Harper Collins,2003). Fool’s Gold won Financial Book of the Year at the Spear’s Book Awards in 2009.

 

Before joining the Financial Times in 1993, Tett was awarded a PhD in social anthropology from Cambridge University based on fieldwork in the former Soviet Union. While pursuing the PhD, she freelanced for the FT and the BBC. She is a graduate of Cambridge University.

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Social Media
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Social Media
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Episode 40
Featuring Jeremy Heimans & Henry Timms
Recently, our world has borne witness to a dramatic shift in power. Control no longer rests in the hands of the wealthy and powerful. It rests in the hands of the crowd and in those who know how to inspire the viral masses. Here, Jeremy Heimans and Henry Timms explore crowdsourcing, new power, and how the dynamics of control are changing.

There is no question that our world is experiencing a dramatic shift in power. On the surface, this is to be expected. After all, to quote Friedrich Nietzsche, power is "a sea of forces flowing and rushing together, eternally changing." Yet, for nearly all of human history, power was held and jealously guarded by a select minority of individuals. Although control could be seized by new parties through uprisings, such attempts have only been successful when made by nobles or military leaders. Real power has been out of the reach of the vast majority of people since time immemorial.


Today, this is no longer true.


Thanks to the rapid advancements being made in science and technology, the locus of power is shifting faster than ever before, and it is undergoing a fundamental transformation that has never before been witnessed. Power, in the modern age, is becoming open and distributed. Power is now being allocated to the crowd.


We see this fact nearly everywhere we look. Crowdsourcing and crowdfunding methods such as Indiegogo and Kickstarter are replacing traditional, centralized methods of sourcing materials and raising funds. But the best example of this crowdfunding can be seen in the growth of cryptocurrencies and the recent surge in ICOs (initial coin offerings). Likewise, political conversations and the various social changes that spring from them are increasingly being driven by the demands of the crowd. Campaigns such as the Arab Spring, Black Lives Matter, and #Metoo have all found their roots in social media, where supporters spontaneously organized, act, and then dissolved back into the voluminous crowd. Of course, not all the examples are positive ones. Terrorist organizations now also use crowdsourcing methods to get new recruits from countries that they cannot otherwise travel to or access.


Yet, for good or ill, the tide of this new kind of power is sweeping over all of us.


So, how is this battle between old and new power shifting who governs us, altering how we work, and revising how we think and feel? And what can the distribution of power in the 21st century tell us about how the future is going to unfold? In their book, “New Power: How Power Works in Our Hyperconnected World and How to Make It Work for You,” Jeremy Heimans and Henry Timms explore these questions. Throughout the narrative, they investigate the nature of modern power and try to help readers understand this new world and our role in it. In this episode, Heimans and Timms join host Demetri Kofinas for a timely exploration of these topics.

 

Ultimately, this conversation is an attempt to better understand whether or not our newfound ability to mobilize the mass of humanity is a net positive development for the aims of egalitarianism and progress.

 

Producer & Host: Demetri Kofinas

Editor & Engineer: Stylianos Nicolaou

Join the conversation on Facebook, Instagram, and Twitter at @hiddenforcespod

Jeremy Heimans is the co-founder and CEO of Purpose, an organization specializing in building social movements around the world. In 2005, he co-founded GetUp!, an Australian political organization with more members than all of Australia’s political parties combined. He is a co-founder of the now 45-million strong global campaigning organization Avaaz and the LGBT rights platform All Out. He received the Ford Foundation’s 75th Anniversary Visionary Award for his work as a movement pioneer. He has been named one of Fast Company’s Most Creative People in Business and chaired the World Economic Forum’s global council on civic participation.

 

@JeremyHeimans


Henry Timms is president and CEO of 92nd Street Y, a cultural and community center that creates programs and movements that foster learning and civic engagement. Under his leadership, the 144-year-old institution was named to Fast Company’s “Most Innovative Companies” list. He is the co-founder of #GivingTuesday, a global philanthropic movement that engages people in close to 100 countries that has generated hundreds of millions of dollars for good causes. He is a Visiting Fellow at Stanford University’s Center on Philanthropy and Civil Society.

 

@HenryTimms

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Business
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Episode 38
Featuring Charley Grant
Tesla brought green cars to the forefront of our collective consciousness and put electric vehicles on the path to widespread adoption. However, financial troubles and production issues plague the company, and there may be no escape. Here, Charley Grant discusses whether or not Tesla can avoid an inexorable spiral towards bankruptcy.

Tesla is a kind of wonderchild. It entered the stage in the summer of 2003 with the aim of accelerating the arrival and adoption of electric vehicles. The company was founded by several Silicon Valley luminaries, most notably Elon Musk. Since its founding more than fifteen years ago, the company has transformed the way the world thinks about energy and electric cars. Despite the fact that electric vehicles have yet to see widespread adoption, they have become surrounded by a level of fanfare that is enjoyed by few other innovations.

 

Yet, the road ahead of Tesla is becoming increasingly uncertain and difficult to navigate.

 

The availability of cheap financing is showing signs of tightening amid an environment of rising interest rates. This has put a strain on companies like Tesla, which have relied heavily on credit markets to support their cash-intensive businesses. In fact, according to Stanphyl Capital’s Mark Spiegel, “Tesla’s interest expense is now at a run-rate of nearly $600 million a year, which in Q4 amounted to $4,884 per car sold.” This means that fully one-third of the company’s gross profit goes towards servicing its debt.

 

But more to the point, the willingness of debtors to continue to fund these losses looks increasingly doubtful, leaving equity markets as the next best source from which Tesla is likely to raise capital.

 

Yet, problems of funding remain. The company’s stock price has dropped more than twenty-five percent in less than a month. The volatility of Tesla’s stock makes the question of how many new shares Tesla can afford to issue less clear by the day.

And if Tesla’s financial woes were not enough, the broader equity markets may be in the processes of peaking (or may have already peaked), adding additional roadblocks to the electric car maker’s ability to raise capital.

 

Time, in other words, is not on Elon's side. As such, at this stage, the single most important question any investor in Tesla must be able to answer is, “what is the path towards profitability?” Charley Grant, a columnist for the Wall Street Journal who has been writing critically about Tesla since 2015, thinks there isn't one. In this episode, Grant joins host Demetri Kofinas to discuss why he thinks Tesla may be on the inexorable road towards bankruptcy.

 

As always, this episode of Hidden Forces is for informational purposes only and should not be relied upon as the basis for financial decisions. All views expressed by Demetri Kofinas and podcast guests are solely their own opinions and should not be construed as financial advice.

 

Producer & Host: Demetri Kofinas

Editor & Engineer: Stylianos Nicolaou

Join the conversation on Facebook, Instagram, and Twitter at @hiddenforcespod

Charley Grant is a Heard on the Street columnist based in New York, where he covers U.S. health care and industrial companies. Charley previously was a reporter at Grant's Interest Rate Observer. He is a CFA charterholder.


@CGrantWSJ

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Real Estate
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Market Forces
Featuring Ben Friedland
Demetri speaks with Ben Friedland, Vice Chairman & Co-Head of Alternative Investments Practice for CBRE. Ben advises the world’s top hedge funds and PE companies and is in a unique position to provide insight into how the forces of technology and globalization are changing this age-old, multi-trillion-dollar industry in the 21st century.

In this Market Forces segment of Hidden Forces, host Demetri Kofinas speaks with Ben Friedland, Vice Chairman and Co-Head of CBRE’s Alternative Investments Practice (AIP), an industry-specific practice group focused on advising private equity firms, hedge funds, and other Alternative Investment companies on their real estate strategies throughout New York City and around the world.

 

Throughout his 18+ years with CBRE, Ben has distinguished himself by developing exclusive relationships with many of the world’s most prestigious financial services companies. Partnering closely with his clients, he shapes and implements creative real estate strategies that align with their goals, helping them further efficiencies and achieve significant savings.

 

Ben has consistently been recognized as one of CBRE’s top producers globally and is in a unique position to provide insight into how the forces of technology and globalization are changing this age-old, multi-trillion-dollar industry for the 21st century. 

 

Producer & Host: Demetri Kofinas

Editor & Engineer: Stylianos Nicolaou

Join the conversation at @hiddenforcespod

 

 

Ben Friedland serves as Vice Chairman and Co-Head of CBRE’s Alternative Investments Practice (AIP), an industry-specific practice group focused on advising private equity firms, hedge funds and other Alternative Investment companies on their real estate strategies throughout New York City and around the world. Additionally, Ben provides advisory services to firms in the Alternative Investments sector on real estate needs within their investment portfolios.

 

Ben is recognized as an industry expert and valued for his client-centric focus. Throughout his 18+ years with CBRE, he has distinguished himself by developing exclusive and unbroken relationships with many of the world’s most prestigious financial services companies. Partnering closely with his clients, he shapes and implements creative real estate strategies that align with their goals, further efficiencies and achieve significant savings. Ben has consistently been recognized as one of CBRE’s top producers globally.

 

Ben is looked to for his insights and has been quoted in the WSJ, New York Times, and many leading industry publications.

 

@BenFriedland

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Transportation
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Transportation
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Market Forces
Featuring Hubert Horan
Demetri Kofinas speaks with transportation industry analyst, Hubert Horan about the ridesharing company Uber. With roughly $7 billion of cash on hand, along with an untapped $2.3 billion credit facility, Demetri thinks that "Uber could be the biggest financial blow-up in the history of private placements.”

Demetri Kofinas speaks with transportation industry veteran and analyst, Hubert Horan about the ridesharing company Uber, which may not have the ability to survive more than 2 years without raising additional capital or selling part or all of its remaining assets. As Demetri Kofinas has said in a prior discussion with Evan Lorenz of Grant’s Interest Rate Observer, "This could be the biggest financial blow-up in the history of private placements.”

 

With roughly $7 billion of cash on hand, along with an untapped $2.3 billion credit facility, Uber may not have the financing available to survive more than 2 years without raising additional capital or selling part or all of its remaining assets. As Demetri Kofinas has said in a prior discussion with Evan Lorenz of Grant’s Interest Rate Observer, "This could be the biggest financial blow-up in the history of private placements.”

 

Producer & Host: Demetri Kofinas

Editor & Engineer: Stylianos Nicolaou

Join the conversation at @hiddenforcespod

 

Hubert Horan began his aviation career in the early 1980s as a consultant with the firms of Cresap, McCormick and Paget and Mercer Management Consulting (formerly Strategic Planning Associates/Temple Barker & Sloane). Clients included Qantas, Air New Zealand, Phillipine Airlines, Lufthansa, Alitalia, Air Canada, Canadian Airlines, TWA, United, USAirways, Pan American, People Express, Frontier, PSA, AirCal, and Amadeus.

 

Between 1991 and 2002 he held Network and Strategic Management positions with Northwest, America West, Swissair and Sabena. Since 2002 he has been an independent consultant based in Phoenix, Arizona. Clients in recent years have included ATA, Hawaiian Airlines, United, the Pension Benefit Guarantee Corporation, SN Brussels Airlines, Virgin Express, and Air Macau. He has also worked with investor groups to develop business plans for both Low Cost Airlines and airport privatization projects.

 

In the 1980s he developed the original plan for the TWA-Ozark merger and participated in the USAir–Piedmont and Continental-People Express mergers. He worked on a series of projects with Lufthansa and Alitalia to help them prepare for liberalization within Europe, and prepared the original plan for a Qantas-Australian-Air New Zealand merger. He has also led major cost-reduction projects across the entire range of airline marketing and operations functions, including Maintenance, Flight Operations, In-Flight Service, Sales and Distribution, Station Operations, Charter Operations and Revenue Management.

 

He had a front row seat for the 1990s industry downturn, leading the massive restructuring of Northwest’s international route network that was the key to Northwest’s financial turnaround. In a one year period, Mr. Horan cancelled over 80,000 miles of unprofitable routes, including uncompetitive hubs in Seoul, Boston and Guam, and reallocated flying to powerful hubs in Detroit, Minneapolis and Tokyo, and helped Northwest achieve industry leading profit margins only three years after a near-collapse into bankruptcy.

 

Mr. Horan developed and implemented the business and fleet plan America West used to successfully emerge from bankruptcy in the mid 90s. That plan significantly repositioned America West in the marketplace, established their current coast-to-coast network, dramatically reduced its direct competitive exposure to Southwest Airlines, and profitably increased their fleet and operations by 25%.

 

He is one of the world’s leading experts on the international airline alliances, having been responsible for the original development of the KLM-Northwest alliance network. Within 18 months Mr. Horan increased flying between Amsterdam and NWA’s hubs from 2 to 9 daily flights, which turned Northwest into the most profitable US airline on the North Atlantic. The intense hub-to-hub links that Mr. Horan helped pioneer continue to drive the success of all of the North Atlantic alliance networks.  He spent four years in Zurich grappling with Swissair-Sabena, Europe’s first cross-border merger, and managing North Atlantic alliances from the European perspective, including the transition of Swissair’s alliance from Delta to American.

 

While his alliance innovations on the North Atlantic were highly profitable, he also moved aggressively to kill alliances that did not create any competitive or financial value. His work led to eventual termination of the America West-Continental alliance, and he also helped halt development of the Qualiflyer alliance between Swissair, Sabena, Austrian, TAP, Turkish, and a number of other European carriers.

 

As Swissair/Sabena management knew that the SAir Group’s conglomerate strategy was doomed to fail, Mr. Horan led an internal effort to develop restructuring plans for both carriers. His plan to reorganize Swissair around its historical brand and longhaul product strengths was rejected in favor of a plan to create a totally new brand under the management of its regional subsidiary, a plan that cost Swiss taxpayers US$4 billion and nearly led to the total liquidation of the airline. His even more extreme proposal for restructuring Sabena into a carrier strictly focused on local traffic led to the successful creation of SN Brussels Airlines which became profitable only three years after the demise of Sabena. More recently Mr. Horan helped developed the plan for merging SN Brussels and Virgin Express.

 

He has been actively involved in the evolution of Chinese airline competition, developing a detailed financial restructuring plan for Air Macau, and designing network plans for three startup carriers, and network plans for Shanghai Pudong operations under a proposed China Eastern-Shanghai Airlines merger. He has worked extensively on fleet planning projects, including a recent major fleet upgrade at Air Pacific.

 

Recently, he has been active as an opponent of radical airline industry consolidation, and other efforts to undermine the benefits of liberal, market-based competition. Given his personal involvement with the original, successful North Atlantic alliances, and his experience with airline network competition and merger activity on four continents, he has provided expert analysis on several antitrust immunity cases, testified before Congress on both the Delta-Northwest and United-Continental mergers, and published a detailed article on the competitive impacts of recent antitrust immunity cases in the Transportation Law Journal.

 

He has been heavily involved with recent airline bankruptcy reorganizations. In addition to internal work at Northwest, America West and Sabena, he developed the restructuring plan for Hawaiian Airlines’ bankruptcy emergence, which included the original plan for the development of Hawaiian's Asian opertaions. He also worked for creditor groups on the United and USAirways bankruptcies, helped develop the Southwest-ATA codesharing alliance that provided the basis for ATA’s restructuring. and worked on the American Airlines reorganization, including the original plan to merge American and USAirways.

 

Mr. Horan graduated from Wesleyan University in 1976 with B.A., and Honors in Economics. In 1980 he graduated from Yale University’s  graduate School of Management with an MPPM (MBA) degree.

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Morbi interdum mollis sapien. Sed ac risus. Phasellus lacinia, magna a ullamcorper laoreet, lectus arcu pulvinar risus, vitae facilisis libero dolor a purus. Sed vel lacus. Mauris nibh felis, adipiscing varius, adipiscing in, lacinia vel, tellus. Suspendisse ac urna. Etiam pellentesque mauris ut lectus. Nunc tellus ante, mattis eget, gravida vitae, ultricies ac, leo. Integer leo pede, ornare a, lacinia eu, vulputate vel, nisl.

Suspendisse mauris. Fusce accumsan mollis eros. Pellentesque a diam sit amet mi ullamcorper vehicula. Integer adipiscing risus a sem. Nullam quis massa sit amet nibh viverra malesuada. Nunc sem lacus, accumsan quis, faucibus non, congue vel, arcu. Ut scelerisque hendrerit tellus. Integer sagittis. Vivamus a mauris eget arcu gravida tristique. Nunc iaculis mi in ante. Vivamus imperdiet nibh feugiat est.

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Sed egestas, ante et vulputate volutpat, eros pede semper est, vitae luctus metus libero eu augue. Morbi purus libero, faucibus adipiscing, commodo quis, gravida id, est. Sed lectus. Praesent elementum hendrerit tortor. Sed semper lorem at felis. Vestibulum volutpat, lacus a ultrices sagittis, mi neque euismod dui, eu pulvinar nunc sapien ornare nisl. Phasellus pede arcu, dapibus eu, fermentum et, dapibus sed, urna.

Morbi interdum mollis sapien. Sed ac risus. Phasellus lacinia, magna a ullamcorper laoreet, lectus arcu pulvinar risus, vitae facilisis libero dolor a purus. Sed vel lacus. Mauris nibh felis, adipiscing varius, adipiscing in, lacinia vel, tellus. Suspendisse ac urna. Etiam pellentesque mauris ut lectus. Nunc tellus ante, mattis eget, gravida vitae, ultricies ac, leo. Integer leo pede, ornare a, lacinia eu, vulputate vel, nisl.

Suspendisse mauris. Fusce accumsan mollis eros. Pellentesque a diam sit amet mi ullamcorper vehicula. Integer adipiscing risus a sem. Nullam quis massa sit amet nibh viverra malesuada. Nunc sem lacus, accumsan quis, faucibus non, congue vel, arcu. Ut scelerisque hendrerit tellus. Integer sagittis. Vivamus a mauris eget arcu gravida tristique. Nunc iaculis mi in ante. Vivamus imperdiet nibh feugiat est.