On the other side of town

One of the greatest things about Haas is not what goes on within, but what happens just a stone’s throw outside of campus.   I came to Haas to switch careers, with the goal of moving from consulting to technology.  There are plenty of ways to explore new fields, understand industry trends, and make alumni connections.  I’ve joined the Haas Technology Club and the Digital Media & Entertainment Club (DMEC), enrolled in speaker series, and plan to take classes in the Management of Technology (MOT) program. 

But let’s not forget that the Silicon Valley is in our backyard. And last Friday was a great reminder of this. With the Bay Bridge closed, a bunch of Haas students braved the crowded BART trains to the Virtual Goods Summit. The summit brought together leaders in this emerging space for conversations about the state of the virtual goods ecosystem as well discussed growth opportunities. Projected to be an $1B US industry this year, it’s growing at an incredible pace.

Having walked into the conference with only a general knowledge about the space, I felt as if I was drinking from a fire hose.   I realized that much of what we discuss in class: demand curves, willingness to pay, price discrimination, and… even statistics are being used real-time by companies trying to monetize on digital content. The key difference is that shifts in policy don’t take months, years to bring change; change can take place in a matter of hours.  To dip into the pool of insight, check out a presentation from Bill Grosso, CTO and SVP of Product, Live Gamer.

I left the summit with a head full of information and had the opportunity to network with thought leaders in the industry.   Most importantly, the energy from learning about such a kinetic and growing industry made the 20 minute BART ride home seem to flicker by in 20 seconds.

Haas @ Virtual Goods Summit 2009

—Vince

Striped Shirts

Professor Steve Tadelis in our Micro Econ core class is well known for two things: 1) his unconventional way of teaching economics is highly appreciated and praised by many first years at Haas; and 2) his wardrobe consists entirely of striped shirts.

In order to improve the quality of our learning environment today, someone in my cohort decided to organize a Wear Your Striped Shirts Day. It was quite a scene when I stepped into the classroom and felt that I was in the photo shoot of a Brooks Brother/Banana Republic commercial. It was also the the first time in my life when I just couldn’t stop smiling in an econ class.

Wait, you’re wondering why Steve always wear striped shirts? I guess you’ll just have to enroll in the Haas MBA Program to find out =)

Cheers,
Eugene

—Eugene Lin

Revisiting Oil Speculation – New Data

Last time I quoted a NPR interview with Haas professor, Severin Borenstein , regarding speculators. It behooves me to point out an article in today’s WSJ that sheds new light on this:

Data emerging on players in the commodities markets show that speculators are a larger piece of the oil market than previously known, a development enlivening an already tense election-year debate about traders’ influence.

Everything is still not cut and dry though and that’s what makes this interesting:

The array of opinions about how speculation is affecting energy prices comes about in part because of the tricky task of determining what, exactly, is pure speculation and what is so-called commercial trading, in which companies hedge risks involved with using, selling, or processing physical commodities in their everyday businesses.

Many Wall Street investment banks, private-equity firms and hedge funds have invested in physical assets such as storage terminals, pipeline and distribution companies, power plants and oil and gas properties.

That dual role potentially puts them in the position of being both hedgers and speculators.

May be the first years will get to ask this question directly in their Microeconomics class.

—Rags

Speculators are Chasing the Oil Prices

NPR interviewed Haas Professor, Severin Borenstein who also heads the UC Energy Institute on whether the current high oil prices are driven by speculators.

Not everyone is convinced that speculators are to blame for rising oil prices. The Bush administration has downplayed their role. And Severin Borenstein, who heads the University of California Energy Institute, argues that speculators are chasing high prices, not causing them.

“There is no evidence that the current price of oil is being driven by speculators or hedge fund activity, or by anything else that’s going on on the financial side,” Borenstein said. “Every day, real supply and real demand are meeting in the physical oil market and trading at prices of $130 a barrel. It’s hard to see how financial traders could be causing that to happen.”

I tend to agree. Another logical reasoning against speculators was given by Krugman who said, “If it is speculation, then where is the inventory build up?.”

If demand meets supply at a price then everything produced is consumed with no inventory. If the price is artificially driven up then the excess supply must show up as inventory. It is not.

On a side note for the class of 2010, I think Borenstein is teaching Microeconomics for two cohorts of the class of 2010. He is also the author of the Strategy game we played as part of MBA299.

—Rags