Department Renames the Value Investing Program after Benjamin Graham

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The Economics Department is delighted to announce the renaming of its undergraduate Value Investing Program after the field’s pre-eminent pioneer, Benjamin Graham. With the concurrence and encouragement of Mr. Graham’s son, Dr. Benjamin Graham, Jr., the program will now be known as the Benjamin Graham Value Investing Program.

Benjamin Graham, widely known as the “father of value investing,” graduated from Columbia University at age 20. He began a storied career on Wall Street, eventually founding the Graham-Newman Partnership, where he employed Warren Buffett. Mr. Graham also took up teaching positions at Columbia University and later at UCLA. He wrote two of the founding texts in neoclassical investing: Security Analysis (1934) with David Dodd, and The Intelligent Investor (1949). Benjamin Graham’s investment philosophy stressed investor psychology, minimal debt, buy-and-hold investing, fundamental analysis, concentrated diversification, buying within the margin of safety, activist investing, and contrarian mindsets.

“We are thrilled that our Program will now be linked with the legendary Benjamin Graham,” said Adjunct Professor and Program co-founder William E. Simon, Jr. “As it happens, our classes take place in the same building where Benjamin Graham taught here, and knowing this reinforces our commitment to honor his legacy, especially his dedication as a teacher.”

Undergraduates in the Benjamin Graham Value Investing Program learn to evaluate investment opportunities as well as to direct capital to enhance value. The program’s industry-based curriculum prepares students through applied research projects, financial modeling, and group projects in four core concentration courses: Introduction to Value Investing, History of Financial Crises, Applied Value Investing, and Special Projects in Investing. To complete the concentration, students must also select two additional courses from: History of Capitalism in the American Economy; Corporate Finance; Pricing and Strategy; Investments; Real Estate Finance and Investment; Development of Economic Institutions in Western Europe; and Financial Statement Analysis. Upon completing the program, students understand the full set of fundamental economic and strategic forces that favor or disfavor a particular investment opportunity from both a theoretical and practical perspective.

The Program, co-founded by Andrew Atkeson, Stanley M. Zimmerman Professor of Economics and Finance, together with Professor Simon, offers students significant industry exposure from experts in the field. Distinguished guest lecturers serve as “Investors in Residence” who share their experience as chief investment officers and portfolio managers. In addition, students have the opportunity to work closely with the buy-side industry through an honors-level, applied investment project. Private equity firms, hedge funds, mutual funds, pension funds, and endowments submit “Requests for Project Proposals” which are then assigned to teams of three to five students. Each student group is expected to attend and participate in all class meetings with the hosting professor, while engaging with their firm liaison on a regular basis. The course culminates with the submission of a comprehensive research report and a student presentation on campus delivered to the participating firm and its management team.

Students are admitted to the Benjamin Graham Value Investing Program by application only. The application for the 2020-2021 concentration will launch in spring 2020 for fall enrollment, which will be limited to 40 students. To learn more about the Benjamin Graham Value Investing Program, please contact Professor Atkeson (andy.atkeson@gmail.com), Professor Simon (Simon@law.ucla.edu), Humberto Merino-Hernandez (founding manager of the Program, hmhernandez@econ.ucla.edu) or Tony Winston (Program Manager, twinston@econ.ucla.edu).

UCLA Economics Programs Now Classified as STEM

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Beginning with the Fall 2019 graduating class, our Economics and Business Economics Bachelors, Master of Applied Economics, and Economics PhD programs will be officially classified as STEM (CIP code 45.0603).  The STEM designation signifies the analytical rigor of our classes, which trains students in statistics and programming but also teaches them to see the world through the lens of economics.  It opens up more job placement and grant opportunities for our students and we are looking forward to seeing how this will continue to develop our program offerings.

 

STEM (CIP Code 45.0603): A program that focuses on the systematic study of mathematical and statistical analysis of economic phenomena and problems. Includes instruction in economic statistics, optimization theory, cost/benefit analysis, price theory, economic modeling, and economic forecasting and evaluation.

 

David DeWolf

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David DeWolf

We often hear the classic phrase, “Bruin born, Bruin bred, Bruin til the day I’m dead.” Even our first experience at orientation–that almost baptismal dip into the inverted fountain–is meant to reinforce such adages. Tens of thousands can say they attended UCLA as an undergraduate, but far fewer alumni can also claim UCLA attendance for their graduate education. David DeWolf is a Bruin through and through, and his journey to Westwood began in high school when the academic reputation and in-state tuition swayed him to enroll at the Westwood campus. 

David always wanted to run his own business and felt UCLA would give him the best opportunity to do so. He found no shortage of academic opportunities, but David also wanted a school that offered a vibrant social community and world-renowned athletics program. In 1989, he made the trip from San Diego and officially became a Bruin.

The Rose Bowl and Pauley Pavilion were routine stomping grounds for him during his time in Westwood, but he never lost sight of his utmost priority: finding challenges in the classroom. He entered UCLA as an Economics major with an eye towards the Business Economics program. Through this academic track, he became exposed to Professor David Ravetch, one of the school’s most popular and recognized professors. Ravetch, who also sports two degrees from UCLA, brought to life a seemingly monotonous field in accounting. At the time, it turned out over half the CEOs governing Fortune 500 companies held CPA certifications and had backgrounds in the field.

For a 19 year-old student with little career direction, that single statistic was enough for David to focus his studies in Business Economics. He joined the Student Accounting Society and went on to take four classes with Professor Ravetch. In 1993, David  graduated from UCLA with a Bachelor of Arts in Business Economics, thrusting himself into the workforce.

His first employment opportunity was at the accounting firm Price Waterhouse, which he discovered through on-campus recruiting. David still credits much of his exposure to professor Ravetch, who still campaigns for professional recruitment on campus. David earned his CPA license, and wanting to use his accounting work to explore other fields, found a position at 20th Century Fox in international finance. After only a year, he received an offer to work at Fox Sports, who had recently acquired NFL broadcasting rights.

As he continued his professional endeavours, David weighed going back to school versus a job opportunity at Sand Hill Capital, a financial services company that provided debt and equity solutions to venture capital backed start-ups. Two years after leaving Sand Hill, David returned to Westwood by enrolling at the Anderson School of Management.

In 2005, David graduated with his Master of Business Administration and co-founded Quantum Wealth Management with fellow Anderson graduate, Dr. Darius Gagne, who had also earned his PhD in quantum physics from UCLA. Their firm sought to understand how the principles behind quantum physics could provide elegant solutions to complex problems, and merge those underlying principles with financial planning. Through financial planning, David and his group provided select clients with personal wealth management, using elegant solutions to manage capital resources and maintain client peace of mind while transitioning through various phases of life. The key to their success? Following uncomplicated, common sense management strategies, to achieve the desired financial position of their clients.

In 2012, Quantum merged to form Abacus Wealth Partners, where David currently sits as Chief Financial Officer and a partner of the firm. Abacus is a Certified B Corporation, prioritizing community improvement, workplace benefits, and legal accountability to balance profit and purpose–business as a force for good. David’s firm donates five percent of its profits to charity, creates charitable grants, and guarantees six months of paid parental leave.

“The proof is in the pudding,” David said. “Abacus has  taken a lot of steps to exemplify a firm who is authentically trying to make a difference.”

David says the biggest challenges in private wealth management tend to be internal, such as finding ways to grow from 20 to 70 employees. Client development, he says, comes from hard work.

“There’s no secret to client development, to bring in clients,” Dewolf said. “If there was an easy way, everyone would do it. Sometimes it just boils down to hard work and proving to people you’re an expert in your field and can be trusted.”

Abacus currently operates in Los Angeles, San Francisco Bay Area, and Philadelphia, and David’s firm manages over 2.5 billion dollars in private wealth. But this success did not come immediately out of college, and one of the most important pieces of advice he can communicate is to remain patient.

“Take the time, be patient, and spend a few years exposing yourself to the business world that’s out there,” David said. “Then you can zero in on what you’re passionate about.”

David’s other piece of advice for young Bruins? Learn to make sacrifices for your long-term future. Instead of trying to maximize the amount of parties you can attend in four years, you should focus on your professional development, which will yield better long run returns. 

“What’s more important? Sacrificing a little fun for four years that can make the next 80 better, or be miserable for the next 84 years? Lay that foundation for the next 30 years of your career.”

 

Written by Andreas Papoutsis

Immigration and Labor Markets

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Ariel Burstein

Economists have been studying the labor-market consequences of immigration for over three decades. The vast literature that has emerged has brought new theoretical perspectives to labor economics and new empirical approaches to modeling labor-market. What the literature has not produced is consensus about how labor markets respond to immigrant inflows. Which types of workers lose from immigration and which types gain? How have different regions faired in response to the arrival of large numbers of foreign-born workers?

Estimates of the impact of immigration on the wages of native-born workers appear to depend on how one defines the geographic scope of labor markets, skill groups within these labor markets, and the interchangeability of native- and foreign-born workers on the job. This variation in results suggests that there are features of regional or national labor markets that condition how they adjust to inflows of immigrant workers. Without a deeper understanding of these adjustment mechanisms, we cannot say how immigration affects regional or national labor-market outcomes.

Professors Ariel Burstein and Jonathan Vogel contribute to research on the labor-market consequences of immigration by marrying theoretical insights from international trade with empirical methods from labor economics. In a paper entitled “Tradability and the Labor-Market Impact of Immigration: Theory and Evidence from the U.S.,” they show empirically and theoretically how differences in the tradability of occupational services—think software programmers or manufacturing assembly-line workers as being on the tradable end, and dentists or janitors as being on the non-tradable end—create variation both within and between regions in how labor markets respond to an influx of immigrant workers. The more specialized a regional economy is in tradable activities, the more that economy can absorb an inflow of immigrant labor without creating strong pressures on local wages. For example, Silicon Valley can use the arrival of foreign-born engineers to expand its exports of IT services, the region may see only modest changes in its average wages following an immigration-induced increase in local labor supply.

As a result, native-born workers will vary in their exposure to immigration according how specialized their skills are in the occupations that attract foreign-born labor. A worker in construction, a sector with high immigrant presence, is likely to be more exposed to immigration inflows than is a worker in mail distribution, a sector with low immigrant presence. Burstein and Vogel’s project involve theoretical modeling of the U.S. economy, empirical estimation of the model using data on U.S. local labor markets, and quantitative modeling that characterizes impacts by region and occupation of counterfactual changes in U.S. immigration policy.

Mark Spindel

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Board of Visitors

Mark Spindel
Founder and Chief Investment Officer
Potomac River Capital LLC

In 2007, Mr. Spindel launched Potomac River Capital LLC, a Washington-based, registered investment adviser. His firm specialized in managing global macro hedge funds with a specific focus on the intersection of macro-economics, central bank policy and capital markets. The firm’s assets peaked near $800m and after a decade has been wound down to focus on personal investments, economic policy and political analysis.

Prior to launching Potomac River, Mr. Spindel spent nearly ten years at the World Bank where he was Deputy Treasurer and CIO of the International Finance Corporation managing $15bn in reserves. Mr. Spindel was simultaneously a member of the Board of Trustees of the World Bank’s $14bn pension fund where he helped oversee strategic asset allocation across all investment classes. Before the World Bank, Mr. Spindel helped establish ABN AMRO’s UK Asset Management company and prior to that, began his career at Salomon Brothers where he was ultimately a senior portfolio manager in their asset management subsidiary.

Mr. Spindel continues to advise pension funds, financial institutions, hedge funds and central banks on a variety of investment, asset-liability and quantitative risk management issues. He is among the most experienced investors in inflation-linked bonds and speaks regularly on portfolio management issues. His research on the Federal Reserve has culminated in his award-winning book with Professor Sarah Binder (George Washington University / Brookings) about the relationship between Congress and the Fed (The Myth of Independence, Princeton University Press, 2017).

He received his BS degree from Cornell University in Operations Research and Industrial Engineering (1987).

David Moradi

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Board of Visitors

David Moradi

David Moradi
Founder and CEO, Sero Capital

David Moradi is an entrepreneur, investor and advisor to numerous market-leading technology companies.  He is Founder and CEO of Sero Capital, LLC, a private investment firm that focuses on growth opportunities in the technology sector. David is also Co-Founder and Executive Chairman of First Contact Entertainment Inc., a leading virtual reality (VR) video game development studio. David spent 10 years as Founder and CEO of Anthion Management, a technology focused fund which grew to $1B of assets. In 2013, Anthion was converted to a family office investing in various asset classes including early stage technology companies, public equities, corporate debt and real estate.

Prior to founding Anthion in 2008, David was a Portfolio Manager at Pequot Capital Management and an analyst and Portfolio Manager for Soros Fund Management. David started his career as a special situations analyst for Imperial Capital LLC in 2000.

David graduated with a B.A. in psychology from the University of California, Los Angeles in March of 2000. He is Founder and Chairman of the David Moradi Foundation, a charitable foundation supporting education and veterans.

Jim Ardell

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Board of Visitors

Jim Ardell
Jim Ardell
Vice President, Corporate Real Estate and
Chief Procurement Officer

Jim oversees the purchasing activities for over $4 billion in annual spend for such diverse categories as IT services, hardware and software, telecom, business process outsourcing, print, marketing, advertising and media, freight, facilities, capital expenditures, legal, temporary labor, recruitment, and consulting. His organization also manages Anthem Vendor Management, Software Asset Management, Telecom Accounting, Front-end claims and correspondence, Accounts Payable and the Corporate Travel and Events Office.

Jim manages both the company’s real estate and facilities activities, including long-term planning, lease administration and facilities management, the scope of which includes Anthem’s 8.5 million square feet spread across the US and also internationally. In addition, Jim is responsible for the company’s business continuity program, including its enterprise-wide methodology, standards, infrastructure, responsibilities, authority and resources for business continuity planning, emergency management, and response and recovery, covering all critical business processes of the business and corporate support units.

Jim joined Anthem in March 2005 after serving as a consultant to Anthem for four years as a senior vice president at JLL. Most recently, he was vice president shared services and financial operations at Anthem. His previous roles include various positions within the investment management group for JLL, the audit department at KPMG Peat Marwick and the Corporate Finance Group at Oppenheimer.

Jim holds a Masters of Business Administration from Stanford Graduate School of Business and earned a Bachelor of Arts in Business Economics from the University of California, Los Angeles, graduating magna cum laude and as a member of Phi Beta Kappa.

Racial Bias in Policing

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Professor Felipe Goncalves

In January 2017, Attorney General nominee Jeff Sessions was asked about federal oversight of policing during his confirmation hearing before the Senate. He responded, “I think there is concern that good police officers and good departments can be sued by the Department of Justice when you just have individuals within a department who have done wrong. These lawsuits undermine the respect for police officers and create an impression that the entire department is not doing their work consistent with fidelity to law and fairness.”

The debate over whether misbehavior in policing is widespread or the product of a few individuals is a crucial question for public policy. This issue is particularly important when addressing the potential presence of racial discrimination in policing. If discrimination is concentrated among a few individuals, the best policy may be a targeted intervention of training or discipline. But if discrimination is widespread, department-wide policies may be more effective.

In a study titled “A Few Bad Apples? Racial Bias in Policing,” Professor Felipe Goncalves and coauthor Steve Mello (NYU) study traffic enforcement and, in particular, the degrees to which individual police officers practice discrimination. In many states, the punishment for speeding jumps discontinuously at certain speeds. A jump may involve not only a higher fine, but also a mandated court appearance or lasting mark on the driver’s record. Officers are free to choose what speed to charge, and it is thus a common practice for officers to reduce the written speed on a driver’s ticket to right below a jump in the fine schedule. For example, in most counties in Florida, drivers are fined $135 for driving 9 MPH above the speed limit but fined $205 for driving 10 MPH or more above the speed limit.  In response, an officer may give a driver a “break” by writing a ticket for 9 MPH over when the driver was stopped at more than 10 MPH over the limit.

Using data from the Florida Highway Patrol, Goncalves and Mello show that, while officers regularly give breaks for speeding drivers in order to avoid these discrete fine jumps, minority drivers are significantly less likely to receive a break than white drivers. This disparity in treatment cannot be explained by differences in underlying speeding or other driver characteristics (e.g., that minority drivers are more likely to have previous traffic tickets), indicating that, on average, officers are discriminating against minority drivers. Because each officer writes hundreds of tickets for very similar infractions, Goncalves and Mello are able to identify each individual officer’s degree of discrimination, documenting significant heterogeneity across the police force. While all demographic groups of police appear to discriminate on the basis of drivers’ race, minority officers and female officers are less discriminatory on average. Forty percent of officers exhibit some amount of discrimination.

The estimates of discrimination in this study are useful for evaluating different proposed policies for targeting discrimination. Goncalves and Mello find that policies that increase minority and female officers or fire the right tail of most discriminatory officers are unlikely to cause meaningful reductions in the overall disparity in ticketing. However, because of the significant heterogeneity in behavior across officers, changes to how officers are assigned to neighborhoods of different racial compositions can substantially mitigate the impact of discrimination. This study contributes a novel method for understanding how discrimination varies across criminal justice agents and how such discrimination determines the appropriate policy response.

Mark Kingdon

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Mark Kingdon

If you took a student from a painting class, and dropped him into a venture capital firm, you probably would expect him to struggle. After all, fine arts and economics seemingly have very few similarities, and their educational paths could not be any more different. But for Mark Kingdon, one of his strongest skills as an investor lies in his artistic background that he began nurturing from a young age.

Mark hails from Northern California and grew up in a household wholly supportive of his artistic endeavors. Before matriculating at UCLA, Mark studied fine arts at UC Santa Barbara under the creative and philosophical guidance of Bill Rohrbach. But his desire for autonomy and the quest to expand his horizons led him to the Parson’s School of Design in New York City, where he sought to apply his creativity to a field that would presumably return a stable income.

Mark’s exploration of design came to an end shortly after discovering it wasn’t the field for him. His search for a new professional direction led him to Westwood, where he began his studies at UCLA’s Department of Fine Arts. Mark loved the arts, and continues to do so today, but he encountered a fork in the road when assessing whether or not he could financially sustain himself in the field. He worried that pursuing a career in the arts would force him to sacrifice his artistic autonomy. This pivotal period of contemplation led to his enrollment in the economics department, where he could utilize his analytical skills in a field of study characterized by math and social sciences.

In addition to his studies at UCLA, Mark served as the classified line manager at the Daily Bruin, overseeing advertisements placed in the campus’ newspaper. Finding new avenues of funding allowed Mark to expand the breadth of his entrepreneurial abilities that would complement his love for analyzing patterns. 

Mark graduated from UCLA in 1986 with a degree in economics, and immediately entered the M.B.A. program at Wharton. Following his second graduation, he went to work for Coopers & Lybrand (which later became PwC) as a strategy consultant focused on helping companies develop new digital channels (even before the advent of the commercial internet).  Mark moved up the ranks to partner and ultimate joined the global senior leadership team, leading pre-merger planning and post-merger integration when Coopers & Lybrand merged with Price Waterhouse in the largest merger in the history of professional services. But late in the 1990s, the internet beckoned and Mark joined Idealab!, one of the first internet incubators where he reviewed investment opportunities by working with ecommerce startups. Throughout, he was driven by his ambition of becoming the CEO of a publicly traded company before the age of 40, and worked hard to achieve this dream.

Mark shortly got his chance at Organic (NASDAQ: OGNC), a firm known for placing the first banner ad in internet history. The internet bubble had burst, the company was losing tens of millions of dollars and revenue was dropping, so, he took the publicly listed company private with private equity money and executed an aggressive and painful turnaround —  cutting the staff by 85% and eliminating over $100 million in real estate liabilities. In addition to his structural reforms, he refocused the company on digital innovation, becoming one of the first companies to place advertisements on MySpace and Facebook. During his tenure, he started investing his own money in promising Internet startups. When he felt he’d finished his work at Organic (industry leading company in terms of market perception and profitability) he left to become CEO of Second Life, the online virtual world. 

Mark had been making investments since 2006, and in 2010, left Second Life and founded his own private investment firm now named Quixotic Ventures. The word “quixotic” roughly translates to “exceedingly idealistic; unrealistic and impractical”. It may seem naive to sport an “exceedingly idealistic and impractical” mindset in an industry with significant financial risk, but Mark found success through his own unique and innovative approach.

“People laughed at me when I invested in Twitter,” Mark said. 

Twitter wasn’t the only objectionable investment he made. His optimism in RealReal, a luxury clothing resale company, also provoked disapproval. “People told me there was no market for used clothing. Well it turns out a lot of people will buy a used Chanel handbag,” Mark added.

Those people were wrong, and over the years, Mark has amassed an investment portfolio whose companies have a created a combined market value of more than 32 billion dollars. His analytical skills, artistic background, and “quixotic” approach to investments allowed him to forge his own financial independence and an ability to sponsor the arts. He is currently a Board Trustee for the New World Symphony, an orchestral academy that prepares music graduates for leadership roles in professional orchestras and ensembles. Mark also currently collects art, but primarily expresses his artistic abilities through gardening, and has a budding collection of rare palms. 

His artistic upbringing proves to be one of his most essential skills in identifying investment opportunities. The visual analytics he refined in his fine arts studies enables him to be visually critical when viewing consumer apps seeking his investment. It allows him to properly gauge which interfaces will gain the most traction with consumers. The distantly related field of art gave Mark the skills that separated him from other investors in financial industries.

Mark still fondly reflects on his time at UCLA, and has very valuable advice for current Bruins: “You’re going to be working for the rest of your life and you have to be doing something that you love. You don’t want to do something boring. If your passions change, then you shouldn’t be afraid to find a new direction.”

Mark never feared the uncertainty of a new career path, and implores all current Bruins to pursue their ambitions with the same mentality.

“I’ve made three major career changes in my life… leaving something very certain behind for something very uncertain in the future. Every time I did that, it paid off enormously.”

 

Written by Andreas Papoutsis.

Jay Lu awarded NSF Grant

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We’d like to congratulate Assistant Professor Jay Lu for being awarded a National Science Foundation (NSF) grant for his research on the economic theory of human decision-making. The first part of this project will address common everyday situations where individuals make choices repeatedly over time. In many of these cases, people’s preferences over various goods may change from day to day. In other words, their preferences are stochastic. This research will propose a new theoretical model to help us understand how these stochastic preferences affect choice behavior. People’s preferences to consume earlier or later would be an important factor. The second part of this project will study the welfare implications of stochastic preferences. When preferences change over time, it is unclear whether policy interventions would be beneficial and help improve individual well-being. This research will provide new tools and methodologies that will inform public policy for stochastic preferences. In general, results from this project will ultimately aid researchers in developing new insights for businesses, government agencies and other institutions that will benefit the U.S. public.

Award Details

 

The NSF funds research and education in most fields of science and engineering.  It does this through grants, and cooperative agreements to more than 2,000 colleges, universities, k-12 school systems, businesses, informal science organizations and other research organizations throughout the United States. The Foundation accounts for about one-fourth of federal support to academic institutions for basic research. NSF receives approximately 40,000 proposals each year for research, education and training projects, of which approximately 11,000 are funded. Source