The Institute of Chartered Financial Analysts was formed in 1959. It was the first professional organization of financial analysts. Thus, few years later, financial analysts had to retool in order to meet the increasing demand of investors. Treynor, as new editor of the Financial Analysis Federation after the death of Nicholas Molodovsky, highlighted the fact that science would be the future of the profession instead of craft. This shift was possible thanks to computers, who inaugurated new investment analysis methods. He also emphasized the need for financial analysts to focus on institutional investors (mutual funds or pension funds).
Treynor worked with Fischer in order to rally to his cause the support of old guard to something new in financial analysis. Their relationship led to a lifelong partnership. Indeed, Treynor employed his experience into “ideas in the rough” and Fischer processed them. But, if Treynor and Fischer were apparently both supporting a particular model and analytical approach, they were defending the worldview that model had crystallized for them many years before.
A for Jamon.
ReplyDeleteThe flip side of Treynor's assertion that now one could evaluate financial managers is that the background volatility of stocks was so large that, without the care Treynor was taking, anyone could say anything about their performance. We are still in this position with the stories that non-professional investors tell each other.
CFA's are not everywhere - there's only 1 in southwestern Utah (Neil Walter in St. George).
Treynor was editor of Financial Analysts Journal. The Federation is the group.
Extra credit to the first person to post a follow-up comment to this one explaining why Treynor chose the pseudonym he did.
Extra credit to the first person to post a follow-up comment to this one explaining Black's reference to Virginia in the title of his paper.
I am not quite sure, but I believe that Treynor chose this pseudonym for the position and the fame that Walter Bagehot known among economists.
ReplyDeleteIndeed, Walter Bageho was an English businessman, essayist, and journalist who wrote extensively about literature, government, and economic affairs. In 185, he founded the National Review. Then became editor-in-chief of The Economist.
If I am write I think, that pseudonym helped to have more impact among the readers.
That also would help its articles to be considered at first, as Walter Bagehot also shared a wide knowledge on baking business.
ReplyDeleteNice try Tom - the content is good enough for extra credit, but I can't give that to you because of the spelling and grammatical errors.
ReplyDelete