Heterodox
142-559: Hyman Philip Minsky (September 23, 1919 – October 24, 1996) was an American economist , a professor of economics at Washington University in St. Louis , and a distinguished scholar at the Levy Economics Institute of Bard College . His research attempted to provide an understanding and explanation of the characteristics of financial crises , which he attributed to swings in a potentially fragile financial system. Minsky
284-528: A "very important" role in their lives, a proportion unusual among developed countries . However, similar to the other nations of the Americas. Many faiths have flourished in the United States, including both later imports spanning the country's multicultural immigrant heritage, as well as those founded within the country; these have led the United States to become the most religiously diverse country in
426-583: A 14% increase in the previous year and was due both to the recovery in equity markets during the year and an inflow of new funds. As of 2011 the US remained by far the biggest source of funds, accounting for around a half of conventional assets under management or some $ 36 trillion. The UK was the second-largest centre in the world and by far the largest in Europe with around 8% of the global total. The 3-P's (Philosophy, Process, and People) are often used to describe
568-579: A continuous presence in what is now the continental United States in 1565. Martín de Argüelles , born in 1566 in San Agustín, La Florida then a part of New Spain , was the first person of European descent born in what is now the continental United States. Virginia Dare , born in 1587 in Roanoke Island in present-day North Carolina , was the first child born in the original Thirteen Colonies to English parents. The Spaniards also established
710-414: A continuous presence in what over three centuries later would become a possession of the United States with the founding of the city of San Juan, Puerto Rico , in 1521. In the 2020 United States census, English Americans 46.5 million (19.8%), German Americans 45m (19.1%), Irish Americans 38.6m (16.4%), and Italian Americans 16.8m (7.1%) were the four largest self-reported European ancestry groups in
852-475: A hundred professional articles. Minsky's theories have enjoyed some popularity, but have had little influence in mainstream economics or in central bank policy. Minsky stated his theories verbally, and did not build mathematical models based on them. Minsky preferred to use interlocking balance sheets rather than mathematical equations to model economies: "The alternative to beginning one's theorizing about capitalist economies by positing utility functions over
994-402: A key mechanism that pushes an economy towards a crisis is the accumulation of debt by the non-government sector. He identified three types of borrowers that contribute to the accumulation of insolvent debt : hedge borrowers, speculative borrowers, and Ponzi borrowers. The "hedge borrower" can make debt payments (covering interest and principal) from current cash flows from investments. For
1136-443: A major influence in determining the performance of the economy. However, unlike the earlier epoch of finance capitalism, the emphasis was not upon the capital development of the economy but rather the upon the quick turn of the speculator, upon trading profits. Minsky noted that the rise of money management, trading huge multi-million dollar blocks every day, led to an increase in securities and people taking financial positions to gain
1278-552: A personal and business perspective. Greater money management can be achieved by establishing budgets and analyzing costs and income etc. In stock and futures trading , money management plays an important role in every success of a trading system. This is closely related with trading expectancy: “Expectancy” which is the average amount you can expect to win or lose per dollar at risk. Mathematically: Expectancy = (Trading system Winning probability * Average Win) – (Trading system losing probability * Average Loss) So for example even if
1420-514: A poor choice of benchmark. Meanwhile, it does not allow the separation of the performance of the market in which the portfolio is invested from that of the manager. The information ratio is a more general form of the Sharpe ratio in which the risk-free asset is replaced by a benchmark portfolio. This measure is relative, as it evaluates portfolio performance about a benchmark, making the result strongly dependent on this benchmark choice. Portfolio alpha
1562-524: A profit. They issued bills for commodities, essentially creating credit for the merchants and a corresponding liability to themselves, so in the case of unexpected losses they guaranteed to pay. When a credit contract was fulfilled, the credit was destroyed. Banks financed the inventories of merchant, but not capital stock ––this means that the primary source of profit was through trade, and not expanding production as in later periods. As Minsky explained, "commercial capitalism might well be taken to correspond to
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#17327798975101704-526: A profit. This positioning itself was financed by banks. Minsky noted that financial institutions had become so far removed from the financing of capital development at this point, but rather committed large cash flows to 'debt validation.' Further economists such as Charles Whalen and Jan Toporowski have discussed Minsky's periods of capitalism. Both suggest an intermediary stage between commercial and financial capitalism, what Whalen calls "industrial capitalism" and what Toporowski calls "classic capitalism." This
1846-681: A reaction to the prevailing European consensus that America's domestic originality was degenerate . Prevalent ideas and ideals that evolved domestically, such as national holidays , uniquely American sports , military tradition, and innovations in the arts and entertainment give a strong sense of national pride among the population as a whole. American culture includes both conservative and liberal elements, scientific and religious competitiveness, political structures, risk taking and free expression, materialist and moral elements. Despite certain consistent ideological principles (e.g. individualism , egalitarianism , faith in freedom and democracy ),
1988-424: A reasonable price (GARP), market neutral , small capitalisation, indexed, etc. Each of these approaches has its distinctive features, adherents, and in any particular financial environment, distinctive risk characteristics. For example, there is evidence that growth styles (buying rapidly growing earnings) are especially effective when the companies able to generate such growth are scarce; conversely, when such growth
2130-545: A region that was settled historically by the British. Overall, as the largest group, European Americans have the lowest poverty rate and the second highest educational attainment levels, median household income , and median personal income of any racial demographic in the nation, second only to Asian Americans in the latter three categories. According to the American Jewish Archives and
2272-411: A specialist bachelor's degree , with title in "Investment Management" or in "Asset Management" or in "Financial Markets". Increasingly, those with aspirations to work as an investment manager, require further education beyond a bachelor's degree in business, finance, or economics. There is much discussion as to the various factors that can affect the performance of an investment manager, including
2414-428: A three-factor model to describe portfolio normal returns ( Fama–French three-factor model ). Carhart (1997) proposed adding momentum as a fourth factor to allow the short-term persistence of returns to be taken into account. Also of interest for performance measurement is Sharpe's (1992) style analysis model, in which factors are style indices. This model allows a custom benchmark for each portfolio to be developed, using
2556-552: A total of 1,834,212 self-identifying individuals. Barack Obama , 44th President of the United States who is biracial- his mother is white (of English and Irish descent) and his father is of Kenyan birth- only self-identifies as being African American. According to the 2020 United States census, 8.4% or 27,915,715 Americans chose to self-identify with the "some other race" category, the third most popular option. Also, 42.2% or 26,225,882 Hispanic/Latino Americans chose to identify as some other race as these Hispanic/Latinos may feel
2698-405: A trading system has 60% losing probability and only 40% winning of all trades, using money management a trader can set his average win substantially higher compared to his average loss in order to produce a profitable trading system. If he set his average win at around $ 400 per trade (this can be done using proper exit strategy) and managing/limiting the losses to around $ 100 per trade; the expectancy
2840-653: Is a strategic technique to make money yield the highest interest-output value for any amount spent. Spending money to satisfy cravings (regardless of whether they can justifiably be included in a budget) is a natural human phenomenon. The idea of money management techniques has been developed to reduce the amount that individuals, firms, and institutions spend on items that add no significant value to their living standards, long-term portfolios, and assets. Warren Buffett , in one of his documentaries, admonished prospective investors to embrace his highly esteemed "frugality" ideology. This involves making every financial transaction worth
2982-442: Is also an option in the census and other surveys. The United States Census Bureau also classifies Americans as "Hispanic or Latino" and "Not Hispanic or Latino", which identifies Hispanic and Latino Americans as a racially diverse ethnicity that comprises the largest minority group in the nation. People of European descent, or White Americans (also referred to as European Americans and Caucasian Americans), constitute
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#17327798975103124-415: Is around: Expectancy = (Trading system Winning probability * Average Win) – (Trading system losing probability * Average Loss) Expectancy = (0.4 x 400) - (0.6 x 100)=$ 160 - $ 60 = $ 100 net average profit per trade (of course commissions are not included in the computations). Therefore, the key to successful money management is maximizing every winning trades and minimizing losses (regardless whether you have
3266-467: Is because equities are riskier (more volatile) than bonds which are themselves riskier than cash. Against the background of the asset allocation, fund managers consider the degree of diversification that makes sense for a given client (given its risk preferences) and construct a list of planned holdings accordingly. The list will indicate what percentage of the fund should be invested in each particular stock or bond. The theory of portfolio diversification
3408-513: Is indigenous to the Americas , originally migrated to the two continents between 10,000 and 45,000 years ago. These Paleoamericans spread throughout the two continents and evolved into hundreds of distinct cultures during the pre-Columbian era . Following the first voyage of Christopher Columbus , the European colonization of the Americas began, with St. Augustine , Florida becoming
3550-407: Is needed to pay off debt, a speculative euphoria develops, and soon thereafter debts exceed what borrowers can pay off from their incoming revenues, which in turn produces a financial crisis . As a result of such speculative borrowing bubbles, banks and lenders tighten credit availability, even to companies that can afford loans , and the economy subsequently contracts. This slow movement of
3692-453: Is now United States territory since the founding of San Juan, Puerto Rico (the oldest continuously inhabited settlement on American soil) in 1521 by Juan Ponce de León , and the founding of St. Augustine, Florida (the oldest continuously inhabited settlement in the continental United States) in 1565 by Pedro Menéndez de Avilés . In the State of Texas , Spaniards first settled the region in
3834-554: Is now the United States since before the Revolutionary War , relatively large waves of Chinese, Filipino, and Japanese immigration did not begin until the mid-to-late 19th century. Immigration and significant population growth continue to this day. Due to a number of factors, Asian Americans have been stereotyped as " perpetual foreigners ". As defined by the United States Census Bureau and
3976-418: Is obtained by measuring the difference between the return of the portfolio and that of a benchmark portfolio. This measure appears to be the only reliable performance measure to evaluate active management. we have to distinguish between normal returns, provided by the fair reward for portfolio exposure to different risks, and obtained through passive management, from abnormal performance (or outperformance) due to
4118-422: Is often used to refer to the management of investment funds , most often specializing in private and public equity , real assets , alternative assets , and/or bonds. The more generic term asset management may refer to management of assets not necessarily primarily held for investment purposes. Most investment management clients can be classified as either institutional or retail/advisory , depending on if
4260-404: Is plentiful, then there is evidence that value styles tend to outperform the indices particularly successfully. Large asset managers are increasingly profiling their equity portfolio managers to trade their orders more effectively. While this strategy is less effective with small-cap trades, it has been effective for portfolios with large-cap companies. Fund performance is often thought to be
4402-567: Is sometimes described as a post-Keynesian economist because, in the Keynesian tradition, he supported some government intervention in financial markets, opposed some of the financial deregulation of the 1980s, stressed the importance of the Federal Reserve as a lender of last resort and argued against the over-accumulation of private debt in the financial markets. Minsky's economic theories were largely ignored for decades, until
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4544-437: Is that the investment manager prefers a closer, more open, and honest relationship with a company's management team than would exist if they exercised control; allowing them to make a better investment decision. The national context in which shareholder representation considerations are set is variable and important. The USA is a litigious society and shareholders use the law as a lever to pressure management teams. In Japan, it
4686-598: Is the Asian American population, comprising 19,618,719 people in 2020, or 5.9% of the United States population. California is home to 5.6 million Asian Americans, the greatest number in any state. In Hawaii, Asian Americans make up the highest proportion of the population (57 percent). Asian Americans live across the country, yet are heavily urbanized, with significant populations in the Greater Los Angeles Area , New York metropolitan area , and
4828-557: Is the case when a large active manager sells his position in a company, leading to (possibly) a decline in the stock price, but more importantly a loss of confidence by the markets in the management of the company, thus precipitating changes in the management team. Some institutions have been more vocal and active in pursuing such matters; for instance, some firms believe that there are investment advantages to accumulating substantial minority shareholdings (i.e. 10% or more) and putting pressure on management to implement significant changes in
4970-422: Is to report the after-tax position of some standard taxpayer. Performance measurement should not be reduced to the evaluation of fund returns alone, but must also integrate other fund elements that would be of interest to investors, such as the measure of risk taken. Several other aspects are also part of performance measurement: evaluating if managers have succeeded in reaching their objective, i.e. if their return
5112-439: Is traditional for shareholders to be below in the 'pecking order', which often allows management and labor to ignore the rights of the ultimate owners. Whereas US firms generally cater to shareholders, Japanese businesses generally exhibit a stakeholder mentality, in which they seek consensus amongst all interested parties (against a background of strong unions and labor legislation ). Conventional assets under management of
5254-413: Is what investment management firms are paid for. Asset classes exhibit different market dynamics, and different interaction effects; thus, the allocation of money among asset classes will have a significant effect on the performance of the fund. Some research suggests that allocation among asset classes has more predictive power than the choice of individual holdings in determining portfolio return. Arguably,
5396-765: The Arab American Institute (AAI), Arab Americans have family origins in each of the 22 member states of the Arab League . Following consultations with MENA organizations, the Census Bureau announced in 2014 that it would establish a new MENA ethnic category for populations from the Middle East , North Africa , and the Arab world , separate from the "white" classification that these populations had previously sought in 1909. The groups felt that
5538-639: The Arab American National Museum , the first Middle Easterners and North Africans (viz. Jews and Berbers ) to arrive in the Americas landed in the late 15th to mid-16th centuries. Many fled ethnic or ethnoreligious persecution during the Spanish Inquisition ; a few were taken to the Americas as slaves. In 2014, the United States Census Bureau began finalizing the ethnic classification of people of Middle Eastern and North African ("MENA") origins. According to
5680-454: The CAPM , allowing a better description of portfolio risks and a more accurate evaluation of a portfolio's performance. For example, Fama and French (1993) have highlighted two important factors that characterize a company's risk in addition to market risk. These factors are the book-to-market ratio and the company's size as measured by its market capitalization. Fama and French-, therefore proposed
5822-629: The Creoles and Cajuns of Louisiana and the Hispanos of the Southwest and brought close contact with the culture of Mexico . Large-scale immigration in the late 19th and early 20th centuries from Eastern and Southern Europe introduced a variety of elements. Immigration from Africa , Asia , and Latin America has also had impact. A cultural melting pot , or pluralistic salad bowl , describes
Hyman Minsky - Misplaced Pages Continue
5964-483: The District of Columbia and the five inhabited U.S. territories have a non-white majority. The state with the highest percentage of non-Hispanic White Americans is Maine , while the state with the lowest percentage is Hawaii . Europe is the largest continent that Americans trace their ancestry to, and many claim descent from various European ethnic groups . The Spaniards were the first Europeans to establish
6106-574: The Kingdom of Kongo ). The first West African slaves were brought to Jamestown, Virginia in 1619. The English settlers treated these captives as indentured servants and released them after a number of years. This practice was gradually replaced by the system of race-based slavery used in the Caribbean . All the American colonies had slavery, but it was usually the form of personal servants in
6248-630: The Native American population and people from Alaska , Hawaii , Puerto Rico , Guam , Texas , and formerly the Philippines , who became American through expansion of the country in the 19th century; additionally, American Samoa , the United States Virgin Islands , and Northern Mariana Islands came under American sovereignty in the 20th century, although American Samoans are only nationals and not citizens of
6390-618: The Office of Management and Budget (OMB), an "American Indian or Alaska Native" is a person whose ancestry have origins in any of the original peoples of North, Central, or South America. 2.3 million individuals who are American Indian or Alaskan Native are multiracial; additionally the plurality of American Indians reside in the Western United States (40.7%). Collectively and historically this race has been known by several names ; as of 1995, 50% of those who fall within
6532-582: The Office of Management and Budget , the grouping includes individuals who self-identify as African American, as well as persons who emigrated from nations in the Caribbean and sub-Saharan Africa. The grouping is thus based on geography, and may contradict or misrepresent an individual's self-identification since not all immigrants from sub-Saharan Africa are "Black". Among these racial outliers are persons from Cape Verde , Madagascar , various Arab states, and Hamito-Semitic populations in East Africa and
6674-645: The Panic of 1907 and the Great Depression . Minsky opposed the deregulation that characterized the 1980s. It was at the University of California, Berkeley , that seminars attended by Bank of America executives helped him to develop his theories about lending and economic activity, views he laid out in two books, John Maynard Keynes (1975), a classic study of the economist and his contributions, and Stabilizing an Unstable Economy (1986), and more than
6816-525: The Sahel , and the Afrikaners of Southern Africa . African Americans (also referred to as Black Americans or Afro-Americans, and formerly as American Negroes ) are citizens or residents of the United States who have origins in any of the black populations of Africa. According to the 2020 United States census, there were 39,940,338 Black and African Americans in the United States, representing 12.1% of
6958-586: The San Francisco Bay Area . The United States census defines Asian Americans as those with origins to the countries of East Asia , South Asia , and Southeast Asia . Although Americans with roots in West Asia were once classified as "Asian", they are now excluded from the term in modern census classifications. The largest sub-groups are immigrants or descendants of immigrants from Cambodia, mainland China, India, Japan, Korea, Laos, Pakistan,
7100-581: The United Kingdom . Unlike migration from other countries, United States migration is not concentrated in specific countries, possibly as a result of the roots of immigration from so many different countries to the United States. As of 2016 , there were approximately 9 million United States citizens living outside of the United States. As the result of U.S. tax and financial reporting requirements that apply to non-resident citizens, record numbers of American citizens renounced their U.S. citizenship in
7242-473: The United States of America . The United States is home to people of many racial and ethnic origins ; consequently, American law does not equate nationality with race or ethnicity but with citizenship. The majority of Americans or their ancestors immigrated to the United States or are descended from people who were brought as slaves within the past five centuries, with the exception of
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#17327798975107384-460: The University of Chicago and went on to earn an M.P.A. and a Ph.D. in economics from Harvard University , where he studied under Joseph Schumpeter and Wassily Leontief . Minsky taught at Brown University from 1949 to 1958, and from 1957 to 1965 was an associate professor of economics at the University of California, Berkeley . In 1965 he became Professor of Economics of Washington University in St. Louis and retired from there in 1990. At
7526-579: The Virginia Statute for Religious Freedom , the framers of the Constitution rejected any religious test for office. The First Amendment specifically denied the federal government any power to enact any law respecting either an establishment of religion or prohibiting its free exercise, thus protecting any religious organization, institution, or denomination from government interference. European Rationalist and Protestant ideals mainly influenced
7668-570: The Western Hemisphere and beyond, including the District of Columbia, the seat of government of the United States. English is the unofficial national language . Although there is no official language at the federal level, some laws—such as U.S. naturalization requirements —standardize English. In 2007, about 226 million, or 80% of the population aged five years and older, spoke only English at home. Spanish , spoken by 12% of
7810-551: The flag of the United States – for example, typically a top hat with red and white stripes and white stars on a blue band, and red and white striped trousers. Columbia is a poetic name for the Americas and the feminine personification of the United States of America, made famous by African American poet Phillis Wheatley during the American Revolutionary War in 1776. It has inspired the names of many persons, places, objects, institutions, and companies in
7952-479: The neoclassical synthesis ' interpretation of The General Theory of Employment, Interest and Money . He also put forth his own interpretation of the General Theory , one which emphasized aspects that were de-emphasized or ignored by the neoclassical synthesis, like Knightian uncertainty . Americans This is an accepted version of this page Americans are the citizens and nationals of
8094-767: The northern states (north of the Mason–Dixon line ) had abolished slavery. However, slavery would persist in the southern states until the end of the American Civil War and the passage of the Thirteenth Amendment . Following the end of the Reconstruction era , which saw the first African American representation in Congress , African Americans became disenfranchised and subject to Jim Crow laws , legislation that would persist until
8236-597: The slavery era within the boundaries of the present United States. As an adjective, the term is usually spelled African-American . Montinaro et al. (2014) observed that around 50% of the overall ancestry of African Americans traces back to the Niger-Congo -speaking Yoruba of southwestern Nigeria and southern Benin (before the European colonization of Africa this people created the Oyo Empire ), reflecting
8378-670: The subprime mortgage crisis of 2008 caused a renewed interest in them. A native of Chicago, Illinois , Minsky was born into a Jewish family of Menshevik emigrants from Belarus . His mother, Dora Zakon, was active in the nascent trade union movement. His father, Sam Minsky, was active in the Jewish section of the Socialist party of Chicago . In 1937, Minsky graduated from George Washington High School in New York City . In 1941, Minsky received his B.S. in mathematics from
8520-442: The "speculative borrower", the cash flow from investments can service the debt, i.e., cover the interest due, but the borrower must regularly roll over, or re-borrow, the principal. The "Ponzi borrower" (named for Charles Ponzi , see also Ponzi scheme ) borrows based on the belief that the appreciation of the value of the asset will be sufficient to refinance the debt but could not make sufficient payments on interest or principal with
8662-479: The American culture has a variety of expressions due to its geographical scale and demographic diversity. Americans have migrated to many places around the world, including Argentina , Australia , Brazil , Canada , Chile , China , Costa Rica , France , Germany , Hong Kong , India , Japan , Mexico , New Zealand , Pakistan , the Philippines , South Korea , the United Arab Emirates , and
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#17327798975108804-526: The English language, legal system and other cultural inheritances, had a formative influence. Other important influences came from other parts of Europe, especially Germany , France , and Italy . Original elements also play a strong role, such as Jeffersonian democracy . Thomas Jefferson's Notes on the State of Virginia was perhaps the first influential domestic cultural critique by an American and
8946-508: The Massachusetts Bay Colony was established by English Puritans , Pennsylvania by Irish and English Quakers , Maryland by English and Irish Catholics , and Virginia by English Anglicans . Although some individual states retained established religious confessions well into the 19th century, the United States was the first nation to have no official state-endorsed religion. Modeling the provisions concerning religion within
9088-711: The North (where 2% of the people were slaves), and field hands in plantations in the South (where 25% were slaves); by the beginning of the American Revolutionary War 1/5th of the total population was enslaved. During the revolution, some would serve in the Continental Army or Continental Navy , while others would serve the British Empire in the Ethiopian Regiment , and other units. By 1804,
9230-598: The OMB definition prefer the term "American Indian", 37% prefer "Native American" and the remainder have no preference or prefer a different term altogether. Among Americans today, levels of Native American ancestry (distinct from Native American identity ) differ. Based on a sample of users of the 23andMe commercial genetic test, genomes of self-reported African Americans averaged to 0.8% Native American ancestry, those of European Americans averaged to 0.18%, and those of Latinos averaged to 18.0%. Native Americans, whose ancestry
9372-482: The Office of Management and Budget, Native Hawaiians and other Pacific Islanders are "persons having origins in any of the original peoples of Hawaii , Guam , Samoa , or other Pacific Islands ". Previously called Asian Pacific American , along with Asian Americans beginning in 1976, this was changed in 1997. As of the 2020 United States census, there are 622,018 who reside in the United States, and make up 0.2% of
9514-640: The Pacific also have large Pacific Islander populations such as Guam and the Northern Mariana Islands (Chammoro), and American Samoa (Samoan). The largest concentration of Native Hawaiians and other Pacific Islanders, is Honolulu County in Hawaii, and Los Angeles County in the continental United States . The United States has a growing multiracial identity movement. Multiracial Americans numbered 7.0 million in 2008, or 2.3% of
9656-521: The Philippines, Taiwan, Thailand, and Vietnam. Asians overall have higher income levels than all other racial groups in the United States, including whites, and the trend appears to be increasing in relation to those groups. Additionally, Asians have a higher education attainment level than all other racial groups in the United States. For better or for worse, the group has been called a model minority . While Asian Americans have been in what
9798-545: The US or BI-SAM in Europe) compile aggregate industry data, e.g., showing how funds in general performed against given performance indices and peer groups over various periods. In a typical case (let us say an equity fund ), the calculation would be made (as far as the client is concerned) every quarter and would show a percentage change compared with the prior quarter (e.g., +4.6% total return in US dollars). This figure would be compared with other similar funds managed within
9940-526: The United States and less so in Europe. However, as of 2019, the lines were becoming blurred. Money management is used in investment management and deals with the question of how much risk a decision maker should take in situations where uncertainty is present. More precisely what percentage or what part of the decision maker's wealth should be put into risk in order to maximize the decision maker's utility function . Money management can mean gaining greater control over outgoings and incomings, both in
10082-555: The United States census does not describe their European and American Indian ancestry as they understand it to be. A significant portion of the Hispanic and Latino population self-identifies as Mestizo , particularly the Mexican and Central American community. Mestizo is not a racial category in the United States census, but signifies someone who has both European and American Indian ancestry. Hispanic or Latino Americans constitute
10224-536: The United States constituting 62.4% of the population. However, the English Americans and British Americans demography is considered a serious under-count as they tend to self-report and identify as simply " Americans " (since the introduction of a new "American" category in the 1990 census) due to the length of time they have inhabited America. This is highly over-represented in the Upland South ,
10366-521: The United States has a high adherence level compared to other developed countries and a diversity in beliefs. The First Amendment to the country's Constitution prevents the Federal government from making any "law respecting an establishment of religion, or prohibiting the free exercise thereof". The U.S. Supreme Court has interpreted this as preventing the government from having any authority in religion. A majority of Americans report that religion plays
10508-545: The United States, refers to both a firm that provides investment management services and to the individual who directs fund management decisions. The five largest asset managers are holding 22.7 percent of the externally held assets. Nevertheless, the market concentration, measured via the Herfindahl-Hirschmann Index , could be estimated at 173.4 in 2018, showing that the industry is not very concentrated. The business of investment has several facets,
10650-419: The United States. Despite its multi-ethnic composition, the culture of the United States held in common by most Americans can also be referred to as mainstream American culture , a Western culture largely derived from the traditions of Northern and Western European colonists, settlers, and immigrants. It also includes significant influences of African-American culture . Westward expansion integrated
10792-429: The acid test of fund management, and in the institutional context, accurate measurement is a necessity. For that purpose, institutions measure the performance of each fund (and usually for internal purposes components of each fund) under their management, and performance is also measured by external firms that specialize in performance measurement. The leading performance measurement firms (e.g. Russell Investment Group in
10934-711: The adult population identifies as having no religious belief or no religious affiliation. According to the American Religious Identification Survey , religious belief varies considerably across the country: 59% of Americans living in Western states (the " Unchurched Belt ") report a belief in God , yet in the South (the " Bible Belt ") the figure is as high as 86%. Several of the original Thirteen Colonies were established by settlers who wished to practice their religion without discrimination:
11076-439: The benefit of investors . Investors may be institutions , such as insurance companies, pension funds, corporations, charities, educational establishments, or private investors, either directly via investment contracts/mandates or via collective investment schemes like mutual funds , exchange-traded funds , or Real estate investment trusts . Source: Venture the board includes expertly overseeing speculation portfolios for
11218-589: The benefit of clients to accomplish their monetary objectives. This incorporates key resource designation, developing broadened portfolios, and effectively observing execution while relieving gambles. Speculation administrators use exploration and examination to recognize valuable open doors and pursue informed choices, guaranteeing portfolios line up with client targets and hazard resilience. In addition, successful investment management requires adherence to ethical standards, compliance with regulations, and effective communication with clients. The term investment management
11360-467: The business. In some cases, institutions with minority holdings work together to force management change. Perhaps more frequent is the sustained pressure that large institutions bring to bear on management teams through persuasive discourse and PR. On the other hand, some of the largest investment managers—such as BlackRock and Vanguard —advocate simply owning every company, reducing the incentive to influence management teams. A reason for this last strategy
11502-504: The cash flow from investments; only the appreciating asset value can keep the Ponzi borrower afloat. These 3 types of borrowers manifest into a 3-phased system: If the use of Ponzi finance is general enough in the financial system, then the inevitable disillusionment of the Ponzi borrower can cause the system to seize up: when the bubble pops, i.e., when asset prices stop increasing, the speculative borrower can no longer refinance (roll over)
11644-583: The centrality of this West African region in the Atlantic slave trade . Zakharaia et al. (2009) found a similar proportion of Yoruba associated ancestry in their African American samples, with a minority also drawn from Mandinka populations (founders of the Mali Empire ), and Bantu populations (who had a varying level of social organization during the colonial era, while some Bantu peoples were still tribal, other Bantu peoples had founded kingdoms such as
11786-514: The client is an institution or private individual/ family trust . Investment managers who specialize in advisory or discretionary management on behalf of (normally wealthy) private investors may often refer to their services as money management or portfolio management within the context of " private banking ". Wealth management by financial advisors takes a more holistic view of a client, with allocations to particular asset management strategies. The term fund manager, or investment adviser in
11928-472: The companies in which they hold shares (e.g., to hold managers to account, to ensure Board's effective functioning). Such action would add a pressure group to those (the regulators and the Board) overseeing management. However, there is the problem of how the institution should exercise this power. One way is for the institution to decide, the other is for the institution to poll its beneficiaries. Assuming that
12070-441: The companies via the voting rights the shares carry and the consequent ability to pressure managements, and if necessary out-vote them at annual and other meetings. In practice, the ultimate owners of shares often do not exercise the power they collectively hold (because the owners are many, each with small holdings); financial institutions (as agents) sometimes do. Institutional shareholders should exercise more active influence over
12212-496: The decade from 2010 to 2020. In 2024 a new organization was created to lobby the U.S. Congress for relief from citizenship-based taxation that is often cited as the reason for the record renunciations. Money manager Investment management (sometimes referred to more generally as asset management ) is the professional asset management of various securities , including shareholdings, bonds , and other assets , such as real estate , to meet specified investment goals for
12354-765: The decision. Still, it was also a consequence of the pragmatic concerns of minority religious groups and small states that did not want to be under the power or influence of a national religion that did not represent them. The American culture is primarily a Western culture , but is influenced by Native American, West African, Latin American, East Asian, and Polynesian cultures. The United States of America has its own unique social and cultural characteristics, such as dialect , music , arts , social habits , cuisine , and folklore . Its chief early European influences came from English , Scottish , Welsh , and Irish settlers of colonial America during British rule. British culture , due to colonial ties with Britain that spread
12496-457: The earlier "white" designation no longer accurately represents MENA identity, so they successfully lobbied for a distinct categorization. This new category would also include Israeli Americans . The Census Bureau does not currently ask about whether one is Sikh , because it views them as followers of a religion rather than members of an ethnic group, and it does not combine questions concerning religion with race or ethnicity. As of December 2015,
12638-616: The employment of professional fund managers, research (of individual assets and asset classes ), dealing, settlement, marketing, internal auditing , and the preparation of reports for clients. The largest financial fund managers are firms that exhibit all the complexity their size demands. Apart from the people who bring in the money (marketers) and the people who direct investment (the fund managers), there are compliance staff (to ensure accord with legislative and regulatory constraints), internal auditors of various kinds (to examine internal systems and controls), financial controllers (to account for
12780-800: The expense: 1. avoid any expense that appeals to vanity or snobbery 2. always go for the most cost-effective alternative (establishing small quality-variance benchmarks, if any) 3. favor expenditures on interest-bearing items over all others 4. establish the expected benefits of every desired expenditure using the canon of plus/minus/nil to the standard of living value system. These techniques are investment-boosting and portfolio-multiplying. There are certain companies as well that offer services, provide counseling and different models for managing money. These are designed to manage grace assets and make them grow. Wealth management , where financial advisors perform financial planning for clients, has traditionally served as an intermediary to investment managers in
12922-721: The federal government. In addition to the United States, Americans and people of American descent can be found internationally. As many as seven million Americans are estimated to be living abroad, and make up the American diaspora . The United States is a diverse country, racially , and ethnically . Six races are officially recognized by the United States Census Bureau for statistical purposes: Alaska Native and American Indian, Asian, Black or African American, Native Hawaiian and Other Pacific Islander, White, and people of two or more races. "Some other race"
13064-512: The financial system from stability to fragility, followed by crisis, is something for which Minsky is best known, and the phrase " Minsky moment " refers to this aspect of Minsky's academic work. "He offered very good insights in the '60s and '70s when linkages between the financial markets and the economy were not as well understood as they are now," said Henry Kaufman , a Wall Street money manager and economist. "He showed us that financial markets could move frequently to excess. And he underscored
13206-468: The first permanent European settlement in the continental United States . From the 16th through the 19th centuries, the population of Native Americans declined in the following ways: epidemic diseases brought from Europe; genocide and warfare at the hands of European explorers, settlers and colonists, as well as between tribes; displacement from their lands; internal warfare, enslavement ; and intermarriage . Another significant population
13348-488: The flow of profits (i.e. investment finances itself. ) According to Minsky, the Keynesian deficit spending of post-depression economies guaranteed the flow of profits, and allowed for the return of firms financing themselves out of profits (something that hadn't been widespread since the first period of capitalism.) Management in firms became more independent on the investment banker and the shareholder, leading to longer time horizons in business decisions, which Minsky believed
13490-479: The global fund management industry increased by 10% in 2010, to $ 79.3 trillion. Pension assets accounted for $ 29.9 trillion of the total, with $ 24.7 trillion invested in mutual funds and $ 24.6 trillion in insurance funds. Together with alternative assets (sovereign wealth funds, hedge funds, private equity funds, and exchange-traded funds) and funds of wealthy individuals, assets of the global fund management industry totalled around $ 117 trillion. Growth in 2010 followed
13632-577: The heart of the investment management industry are the managers who invest and divest client investments. A certified company investment advisor should conduct an assessment of each client's individual needs and risk profile. The advisor then recommends appropriate investments. The different asset class definitions are widely debated, but four common divisions are cash and fixed income (such as certificates of deposit), stocks , bonds and real estate . The exercise of allocating funds among these assets (and among individual securities within each asset class)
13774-622: The hedge borrower. McCulley also points out that human nature is inherently pro-cyclical, meaning, in Minsky's words, that "from time to time, capitalist economies exhibit inflations and debt deflations which seem to have the potential to spin out of control. In such processes, the economic system's reactions to a movement of the economy amplify the movement – inflation feeds upon inflation and debt-deflation feeds upon debt-deflation." In other words, people are momentum investors by nature, not value investors . People naturally take actions that expand
13916-515: The high and low points of cycles. One implication for policymakers and regulators is the implementation of counter-cyclical policies, such as contingent capital requirements for banks that increase during boom periods and are reduced during busts. Though Minsky's research in the 1980s depended on Keynesian analysis, he thought that changes in the structure of the US economy by then required new analysis, and for this he turned to Schumpeter. Both Schumpeter (and Keynes), Minsky argued, believed that finance
14058-539: The importance of the Federal Reserve as a lender of last resort ." Minsky's model of the credit system, which he dubbed the "financial instability hypothesis" (FIH), incorporated many ideas already circulated by John Stuart Mill , Alfred Marshall , Knut Wicksell and Irving Fisher . "A fundamental characteristic of our economy," Minsky wrote in 1974, "is that the financial system swings between robustness and fragility and these swings are an integral part of
14200-410: The influence of the business cycle. This can be difficult however and, industry-wide, there is a serious preoccupation with short-term numbers and the effect on the relationship with clients (and resultant business risks for the institutions). One effective solution to this problem is to include a minimum evaluation period in the investment management agreement, whereby the minimum evaluation period equals
14342-566: The institution (for purposes of monitoring internal controls), with performance data for peer group funds, and with relevant indices (where available) or tailor-made performance benchmarks where appropriate. The specialist performance measurement firms calculate quartile and decile data and close attention would be paid to the (percentile) ranking of any fund. It is probably appropriate for an investment firm to persuade its clients to assess performance over longer periods (e.g., 3 to 5 years) to smooth out very short-term fluctuations in performance and
14484-414: The institution polls, should it then: (i) Vote the entire holding as directed by the majority of votes cast? (ii) Split the vote (where this is allowed) according to the proportions of the vote? (iii) Or respect the abstainers and only vote the respondents' holdings? The price signals generated by large active managers holding or not holding the stock may contribute to management change. For example, this
14626-413: The institutions' own money and costs), computer experts, and "back office" employees (to track and record transactions and fund valuations for up to thousands of clients per institution). Key problems include: Institutions often control huge shareholdings. In most cases, they are acting as fiduciary agents rather than principals (direct owners). The owners of shares theoretically have great power to alter
14768-485: The investment manager's investment horizon. An enduring problem is whether to measure before-tax or after-tax performance. After-tax measurement represents the benefit to the investor, but investors' tax positions may vary. Before-tax measurement can be misleading, especially in regimens that tax realised capital gains (and not unrealised). It is thus possible that successful active managers (measured before tax) may produce miserable after-tax results. One possible solution
14910-408: The largest ethnic minority in the United States . They form the second largest group in the United States, comprising 62,080,044 people or 18.7% of the population according to the 2020 United States census. Hispanic and Latino Americans are not considered a race in the United States census, instead forming an ethnic category. People of Spanish or Hispanic and Latino descent have lived in what
15052-454: The late 1600s and formed a unique cultural group known as Tejanos . Uncle Sam is a national personification of the United States and sometimes more specifically of the American government , with the first usage of the term dating from the War of 1812 . He is depicted as a stern elderly white man with white hair and a goatee beard, and dressed in clothing that recalls the design elements of
15194-454: The linear combination of style indices that best replicate portfolio style allocation, and leads to an accurate evaluation of portfolio alpha. However, certain research indicates that internet data may not necessarily enhance the precision of predictive models. At the undergraduate level, several business schools and universities internationally offer "Investments" as a subject within their degree; further, some universities, in fact, confer
15336-517: The majority of the 331 million people living in the United States, with 191,697,647 people or 57.8% of the population in the 2020 United States census . They are considered people who trace their ancestry to the original peoples of Europe, the Middle East, and North Africa. Non-Hispanic Whites are the majority in 45 states. There are five minority-majority states : California , Texas , New Mexico , Nevada , and Hawaii . In addition,
15478-548: The manager's qualifications. Some conclude that there is no evidence that any particular qualification enhances the manager's ability to select investments that result in above-average returns. But see also Chartered Financial Analyst § Efficacy of the CFA program re related research. Money management is the process of expense tracking, investing, budgeting, banking and evaluating taxes of one's money, which includes investment management and wealth management . Money management
15620-413: The manager's skill (or luck), whether through market timing , stock picking , or good fortune. The first component is related to allocation and style investment choices, which may not be under the sole control of the manager, and depends on the economic context, while the second component is an evaluation of the success of the manager's decisions. Only the latter, measured by alpha, allows the evaluation of
15762-515: The manager's true performance (but then, only if you assume that any outperformance is due to the skill and not luck). Portfolio returns may be evaluated using factor models. The first model, proposed by Jensen (1968), relies on the CAPM and explains portfolio returns with the market index as the only factor. It quickly becomes clear, however, that one factor is not enough to explain the returns very well and that other factors have to be considered. Multi-factor models were developed as an alternative to
15904-414: The mortgage market: a hedge borrower would have a traditional mortgage loan and is paying back both the principal and interest; the speculative borrower would have an interest-only loan , meaning they are paying back only the interest and must refinance later to pay back the principal; and the ponzi borrower would have a negative amortization loan, meaning the payments do not cover the interest amount and
16046-468: The nation's total population. 14% of the population have at least a bachelor's degree , and 15.1% live in poverty , below the poverty threshold . As compared to the 2000 United States census, this population grew by 40%; and 71% live in the West ; of those over half (52%) live in either Hawaii or California , with no other states having populations greater than 100,000. The United States territories in
16188-486: The notion of rewarding risk and produced the first performance indicators, be they risk-adjusted ratios ( Sharpe ratio , information ratio) or differential returns compared to benchmarks (alphas). The Sharpe ratio is the simplest and best-known performance measure. It measures the return of a portfolio over above the risk-free rate, compared to the total risk of the portfolio. This measure is said to be absolute, as it does not refer to any benchmark, avoiding drawbacks related to
16330-583: The passage of the Civil Rights Act of 1964 and Voting Rights Act due to the civil rights movement . According to United States Census Bureau data, very few African immigrants self-identify as African American. On average, less than 5% of African residents self-reported as "African American" or "Afro-American" on the 2000 U.S. census. The overwhelming majority of African immigrants (~95%) identified instead with their own respective ethnicities. Self-designation as "African American" or "Afro-American"
16472-497: The population at home, is the second most common language and the most widely taught second language. Some Americans advocate making English the country's official language, as it is in at least twenty-eight states. Both English and Hawaiian are official languages in Hawaii by state law. While neither has an official language, New Mexico has laws providing for the use of both English and Spanish, as Louisiana does for English and French. Other states, such as California, mandate
16614-703: The population. Black and African Americans make up the third largest group in the United States, after White and European Americans, and Hispanic and Latino Americans. The majority of the population (55%) lives in the South ; compared to the 2000 United States census, there has also been a decrease of African Americans in the Northeast and Midwest . Most African Americans are the direct descendants of captives from Central and West Africa , from ancestral populations in countries like Nigeria , Benin , Sierra Leone , Guinea-Bissau , Senegal , and Angola , who survived
16756-408: The population; by the 2020 census the multiracial increased to 13,548,983, or 4.1% of the total population. They can be any combination of races (White, Black or African American, Asian, American Indian or Alaska Native, Native Hawaiian or other Pacific Islander, "some other race") and ethnicities. The largest population of Multiracial Americans were those of White and African American descent, with
16898-446: The principal even if able to cover interest payments. As with a line of dominoes , collapse of the speculative borrowers can then bring down even hedge borrowers, who are unable to find loans despite the apparent soundness of the underlying investments. Economist Paul McCulley described how Minsky's hypothesis translates to the subprime mortgage crisis . McCulley illustrated the three types of borrowing categories using an analogy from
17040-429: The principal is actually increasing. Lenders only provided funds to ponzi borrowers due to a belief that housing values would continue to increase. McCulley writes that the progression through Minsky's three borrowing stages was evident as the credit and housing bubbles built through approximately August 2007. Demand for housing was both a cause and effect of the rapidly expanding shadow banking system , which helped fund
17182-419: The process that generates business cycles ." Disagreeing with many mainstream economists of the day, he argued that these swings, and the booms and busts that can accompany them, are inevitable in a so-called free market economy – unless government steps in to control them, through regulation , central bank action and other tools. Such mechanisms did in fact come into existence in response to crises such as
17324-501: The proliferation of stocks and bonds in security markets. As competition between firms could lead to a decline in prices, threatening their ability to fulfill existing financial commitments, investment banks started promoting a consolidation of capital by facilitating trusts, mergers and acquisition. The Stock Market Crash of 1929 ended their dominance of the economy. Relying on the profit theory of Michal Kalecki , Minsky argues that level of investment determines aggregate demand and thus
17466-501: The publication of Spanish versions of certain government documents. The latter include court forms. Several insular territories grant official recognition to their native languages, along with English: Samoan and Chamorro are recognized by American Samoa and Guam , respectively; Carolinian and Chamorro are recognized by the Northern Mariana Islands; Spanish is an official language of Puerto Rico. Religion in
17608-453: The reals and production functions with something labeled K (called capital) is to begin with the interlocking balance sheets of the economy." Consequently, his theories have not been incorporated into mainstream economic models, which do not include private debt as a factor. Minsky's theories, which emphasize the macroeconomic dangers of speculative bubbles in asset prices, have also not been incorporated into central bank policy. However, in
17750-471: The reasons why the manager can produce above-average results. Ethical or religious principles may be used to determine or guide the way in which money is invested. Christians tend to follow the Biblical scripture . Several religions follow Mosaic law which proscribed the charging of interest . The Quakers forbade involvement in the slave trade and so started the concept of ethical investment . At
17892-509: The refinancing that accompanied changes in the control of firms. In addition to selling the equities that led to the change in control, the manager of money were buyers of the liabilities (bonds) that came out of such a refinancing. The independence of operating corporations from the money and financial markets that characterized the managerial capitalism was thus a transitory stage. The emergence of return and capital-gains-oriented blocks of managed money resulted in financial markets once again being
18034-449: The sampling strata for the new MENA category includes the Census Bureau's working classification of 19 MENA groups, as well as Iranian , Turkish , Armenian , Afghan , Azerbaijani , and Georgian groups. In January 2018, it was announced that the Census Bureau would not include the grouping in the 2020 census. Black and African Americans are citizens and residents of the United States with origins in sub-Saharan Africa . According to
18176-409: The second-largest group and are 18.7% of the United States population. African Americans constitute the country's third-largest ancestry group and are 12.1% of the total U.S. population. Asian Americans are the country's fourth-largest group, composing 5.9% of the United States population. The country's 3.7 million Native Americans account for about 1%, and some 574 native tribes are recognized by
18318-417: The shift to more lending of the speculative and ponzi types, through ever-riskier mortgage loans at higher levels of leverage . This helped drive the housing bubble, as the availability of credit encouraged higher home prices. Since the bubble burst, we are seeing the progression in reverse, as businesses de-leverage, lending standards are raised and the share of borrowers in the three stages shifts back towards
18460-639: The skill of a successful investment manager resides in constructing the asset allocation, and separating individual holdings, to outperform certain benchmarks (e.g., the peer group of competing funds, bonds, and stock indices). It is important to look at the evidence on the long-term returns to different assets, and to holding period returns (the returns that accrue on average over different lengths of investment). For example, over very long holding periods (e.g. 10+ years) in most countries, equities have generated higher returns than bonds, and bonds have generated higher returns than cash. According to financial theory, this
18602-447: The structure of finance when production is by labor and tools , rather than by machinery and labor." The industrial revolution put more importance on employing machinery in production, and the non-labor costs that came with it. This required 'durable assets' and so brought about the corporation as an entity, with limited liability for investors. The main source of financing shifted from commercial banks to investment banks, especially with
18744-523: The time of his death he was a Distinguished Scholar at the Levy Economics Institute of Bard College . He was a consultant to the Commission on Money and Credit (1957–1961) while at Berkeley. Minsky proposed theories linking financial market fragility, in the normal life cycle of an economy , with speculative investment bubbles endogenous to financial markets. Minsky stated that in prosperous times, when corporate cash flow rises beyond what
18886-514: The wake of the financial crisis of 2007–2010 there has been increased interest in policy implications of his theories, with some central bankers advocating that central bank policy include a Minsky factor. Hyman Minsky's theories about debt accumulation received revived attention in the media during the subprime mortgage crisis of the first decade of this century. The New Yorker has labelled it "the Minsky Moment". Minsky argued that
19028-418: The way in which generations of Americans have celebrated and exchanged distinctive cultural characteristics. The United States currently has 37 ancestry groups with more than one million individuals. White Americans with ancestry from Europe , the Middle East , or North Africa form the largest racial and ethnic group at 57.8% of the United States population. Hispanic and Latino Americans form
19170-410: The way markets capitalized on income, the value of equity in indebted firms was higher than conservatively financed ones. This led to a shift, as explained by Minsky, A market in the control of firms developed: the fund managers whose compensation was based on the total returns earned by the portfolio they managed were quick to accept the higher price for the assets in their portfolio that resulted from
19312-476: The world. The United States has the world's largest Christian population . The majority of Americans (76%) are Christians , mostly within Protestant and Catholic denominations; these adherents constitute 48% and 23% of the population, respectively. Other religions include Buddhism , Hinduism , Islam , and Judaism , which collectively make up about 4% to 5% of the adult population. Another 15% of
19454-451: Was characterized by the traditional capitalist-entrepreneur, the full proprietor of their firm whose was particularly focused on the expansion of production through developing capital assets. Whalen contrasts this expansion with the consolidation of capital under Financial Capitalism. Toporowski links money manager capitalism to current trends in globalization and financialization . In his book John Maynard Keynes (1975), Minsky criticized
19596-399: Was highest among individuals from West Africa (4%–9%), and lowest among individuals from Cape Verde, East Africa and Southern Africa (0%–4%). African immigrants may also experience conflict with African Americans. According to the 2020 United States census, there are 2,251,699 people who are Native Americans or Alaska Natives alone; they make up 0.7% of the total population. According to
19738-413: Was originated by Markowitz (and many others). Effective diversification requires management of the correlation between the asset returns and the liability returns, issues internal to the portfolio (individual holdings volatility), and cross-correlations between the returns. There is a range of different styles of fund management that the institution can implement. For example, growth , value, growth at
19880-482: Was potentially beneficial. He offsets this, however, by pointing out that firms became bureaucratized, lacking the dynamic efficiency of earlier capitalism, such that they became "prisoners of tradition." Government spending decisions shifting to underwriting consumption rather than the development of capital assets also contributed to stagnation, although stable aggregate demand meant there was an absence of depressions or recessions. Minsky argues that due to tax laws and
20022-527: Was sufficiently high to reward the risks taken; how they compare to their peers; and finally, whether the portfolio management results were due to luck or the manager's skill. The need to answer all these questions has led to the development of more sophisticated performance measures, many of which originate in modern portfolio theory . Modern portfolio theory established the quantitative link that exists between portfolio risk and returns. The capital asset pricing model (CAPM) developed by Sharpe (1964) highlighted
20164-531: Was the engine of investment in capitalist economies, so the evolution of financial systems, motivated by profit-seeking, could explain the shifting nature of capitalism across time. From this, Minsky split capitalism into four stages: Commercial, Financial, Managerial and Money Manager. Each is characterized by what is being financed and who is doing the financing. Minsky's first period correlated to Merchant Capitalism . In this period, banks use their privileged knowledge of distant banks and local merchants to gain
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