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Bloomberg Markets Magazine

Bloomberg Markets Magazine September 2015

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Bloomberg Finance LP
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in this issue

1 min
goldman and the unicorns

GOLDMAN SACHS HAS been called many things, but “hip” isn’t usually one of them. That may change. Katrina Brooker shows how the quintessential Wall Street investment bank has quietly become a force in Silicon Valley (“GOLDMAN IN VENTURELAND,” page 24). Goldman, it turns out, has financed more than 100 private tech companies since 2009, including Uber, Pinterest, Dropbox, and 12 other so-called unicorns—startups that are valued at more than $1 billion. Whether or not Goldman is hip, the firm is widely considered to be smart, especially when it comes to making money. And these days, tech is where the money is, not to mention the talent, energy, and ideas. Joining Goldman in the rush west are other East Coast stalwarts, including T. Rowe Price, Fidelity, and Tiger Global Management. “Being on…

2 min

TWEETS “Krugman Battles the Austerians” (July/August 2015) was shared by Michael Roston, senior staff editor for science at the New York Times: And from Robert Litan, a nonresident senior fellow at the Brookings Institution, a note on “And Then There Were Two” (July/August 2015): CORRECTION Regarding the timeline featured in “God’s New Bankers” (June 2015), we should have stated that the 1945 smuggling of looted gold to the Vatican Bank by Croatia’s pro-Nazi regime hasn’t been definitively proven. UPDATES Stopping Tainted Tungsten In May, 20 months after Bloomberg Markets reported that tungsten illegally mined by Colombia’s FARC guerrilla group was used by some of the world’s best-known companies, government troops seized the Tiger Hill mine we wrote about. The site generated about $1.7 million a month for FARC, formally known as the Revolutionary Armed Forces of Colombia.…

3 min
marginal behavior

WHAT’S GONE WRONG in the Chinese stock market? There are plenty of causes to consider, but a good one-word summary would be: margin. As the Shanghai Composite Index soared more than 150 percent in the 12 months leading up to its peak in mid-June, margin accounts ballooned faster. Total margin lending to participants in mainland China’s two big markets, Shanghai and Shenzhen , jumped more than 450 percent in that period, peaking at 2.27 trillion yuan ($365 billion) on June 18. “A market led by leverage isn’t going to last very long” says Andy Xie , an independent economist in Shanghai who previously worked for the World Bank and Morgan Stanley . He says Chinese stocks were being driven higher by young and inexperienced speculators—people who were not in the market when…

4 min
investment upstarts

SINCE 2007, only one segment of the wealth management industry has boosted its market share every year: independent advisory firms. They’ve more than doubled their assets in that time, overseeing about $2.7 trillion as of 2014. And there’s room for growth. According to an estimate by Boston Consulting Group, a total of $46 trillion in private wealth is up for grabs in the U.S. We asked several independent investment advisers, many of them former brokers, about setting out on their own. Here’s their advice. MARGARET COLLINS 1 Don’t get sued. When Hugh Anderson was plotting his exit from Merrill Lynch in 2012, he didn’t even tell his own children. He was trying to meticulously follow broker protocol rules , which govern how to leave a firm without getting sued. If you’re subject to…

2 min
greece is a bailout junkie

“Germany is the single best example of a country that, throughout its history, has never repaid its external debt.” Economist Thomas Piketty Source: Die Zeit (translation by The Wire) KONSTANTINOS DRAKAKIS, born in Greece but living in Ireland , is a mathematician who writes algorithms to predict prices for Probability Dynamics , a hedge fund in Dublin . While his company doesn’t invest in Ireland or Greece, he has endeavored to make himself an expert on the Greek economic fiasco. Drakakis heads an expat group, the Hellenic Community of Ireland , and has found the topic comes up often. “Everyone kept asking me about it, so I had to educate myself.” The explanation Drakakis has settled on is more generous to his adopted country than his native land and nearer the views…

3 min
a new baron in bordeaux

Vino Visuals The works of dozens of prestigious artists, including Chagall, Picasso, and Keith Haring, at right, have appeared on Mouton Rothschild’s labels since 1945. PHILIPPE SEREYS DE ROTHSCHILD likes to call himself a financier in a family of artists. In October, after the death of his mother, Baroness Philippine de Rothschild, he became chairman of the supervisory board of Baron Philippe de Rothschild SA, which oversees first-growth Château Mouton Rothschild and other brands in France (including best-selling Mouton Cadet), Chile (Almaviva), and the U.S. (Opus One). His brother, Julien de Beaumarchais, and sister, Camille Sereys de Rothschild, are co-owners. When I interviewed him, Rothschild, 52, had just returned to Bordeaux from the Cannes Film Festival, where the Mouton Cadet Wine Bar is always a popular hangout and where he hit the…