ALL POSTS BY: Colleen Mackey

A new study came out that the Washington Post featured about traders, exposure to testosterone while in the womb and it's effect on the risky trades they took. Not surprisingly the article goes on to say that the more testosterone the riskier, and sometimes more successful, the trader. However, as we all are keenly aware, the bigger the risk, the bigger the loss – the article even lists testosterone as one of the culprits for the subprime mortgage mess.

Sadly, Thanksgiving break is over and we’re back to school. The break this year was very different from last year – last year I was in NYC going on informational interviews trying to secure an internship before heading home to VA. This break I got a full week in VA relaxing and doing a lot of nothing. Ahhh, the life of a second-year.

Like most students, undergrad/law/med/etc., we usually come back to a lot of work. I have two papers and two finals looming ahead. As a finance concentrator I’m happy to have two papers, though. Usually it’s many more finals. In both HC Innovation and Negotiation I have final papers. For HC Innovation my paper is going to be about a company, US Oncology, and the innovation they have used and will use in the future. I still find my experience this summer incredibly useful and easy to apply to schoolwork. I was able to work with and research many companies, and learn what factors and data are important to look at to asses companies in different sectors of health care. It definitely makes an assignment like this paper easier to tackle and one less thing to worry about in the final weeks of Mod 2.

I spent my fall break doing our healthcare immersion program – spending a week in various facilities across Nashville to get an idea and a feel of what our healthcare system is about, what’s working, and what’s not working. Some of those activities were:

Spending a morning in the OR watching surgery
Spending a night in the PICU
Visiting a dialysis center
Going on rounds with nurses and doctors
Visiting the Vanderbilt billing office
Going to a minute clinic

…and the list goes on. It was a great week – I learned a lot, was able to experience things I will never have the chance to sit-in on again, got to talk to and hear the views of many different players in the space and was able to see many of the discussions and theories I learned this past year actually enacted. This will definitely be one of my top experiences at Owen. It was one of the most exciting and hands-on learning experiences I’ve ever had, and it was truly a novel and exciting way to learn – Owen took advantage of being part of Vanderbilt and the Nashville area and has come up with a great way for Healthcare students to get a taste of the industry. It’s opportunities like these where I think my tuition is justified and it again confirmed why I’m going to Owen, a school that takes the time to come up with such an exciting opportunity for students.

Well, it seems as though the old model of investment banking has seen it’s last days. On Sunday, both Morgan Stanley and Goldman Sachs decided to become “bank holding companies”. What does this mean? It means they’re becoming a little more like BofA. They’ll take deposits, decrease their leverage, not take on as much risk, etc. GS Bank of USA anyone?

The change in title and it’s effect on the industry has yet to be seen. But let’s look at some of the differences it will bring, or at least what I think is important.

1. Leverage – MS is around 30x. GS is around 23x. BofA? Around 15x. Bank holding companies have different restrictions and regulations put on them from the Fed, and are not allowed to go above a certain leverage, unlike big investment banks. This leverage and risk-taking helped banks pull in some of their most astronomical profits. It is also what led to their demise. Without being able to do this, the model of investment banking will change. A lot depends on how these companies are run, how well they separate the commercial bank from the investment bank and so on. But they’ve definitely got to find a new way to do business.

John Mack has to be pissed. Not only does he release earnings a day early, he releases pretty damn good earnings for these times. The numbers were above estimates and for one of the hardest Q3′s Wall Street has seen in awhile, they were fairly impressive. Along with the AIG bailout (we’ll get to that in another post) and Goldman’s fairly decent earnings, you think this would calm the market down. But as we’ve seen, Wall Street is a changing place and the market is behaving completely irrationally.

As of this post, Morgan is down 38% (!!!) and the spreads on their 5-year credit default swaps are now at 750 basis points. As we all know by now, (first-years, Jacob Sagi should have laid down the law about this by now since he is the man), the higher the spread, the riskier it is. Why do investors think Morgan’s debt is so risky it needs to be insured at 750 bps above the base? I have no idea. Neither does John Mack I’m sure (what does the man have to do to make ya’ll believe?!). In a statement released to employees he seems to agree with me as who is to blame here – investors. Short-selling, rumors and fear are ruling these markets – facts are paid no heed anymore, leaving what seems to be liquid and solvent companies, like Morgan, in trouble they don’t deserve.