Latest news with #RossSchoolofBusiness
Yahoo
4 days ago
- Business
- Yahoo
Tech guru Erik Gordon says investors will 'suffer' far more from the AI boom than the dot-com crash
The AI boom will go bust and dwarf the dot-com crash because of its greater scale, Erik Gordon said. AI startups such as CoreWeave threaten greater investor losses than the likes of he said. The business professor has previously warned that AI is an "order-of-magnitude overvaluation bubble." A company's stock plunge shows how the financial fallout of the AI boom stalling will be much greater than the dot-com bust, tech guru Erik Gordon told Business Insider. Gordon, an entrepreneurship professor who researches financial markets and technology at the University of Michigan's Ross School of Business, has previously called the AI boom an "order-of-magnitude overvaluation bubble." Some investors have said tech stocks surging on AI bullishness will crash like dot-com companies in the early 2000s, but others, such as Kevin O'Leary, have dismissed the comparison. Gordon contrasted the market values of the online pet-supplies retailer that became what he called the "poster bozo" of dot-com mania, and CoreWeave, an AI infrastructure startup that went public in March. Nvidia-backed CoreWeave's shares have fallen 33% over the last two days, wiping about $24 billion from its market cap, showing how "more investors will suffer than suffered in the dot-com crash, and their suffering will be more painful" in a bursting AI bubble, Gordon said. The fall came after the company's latest earnings showed widening losses and infrastructure constraints. backed by Amazon and several renowned VC firms, secured a market value of $410 million at its peak in February 2000. But within the next 12 months, the company declared bankruptcy and said it would liquidate its assets, and its stock was delisted. "If you assume all $410 million was lost, the loss was tiny compared to what we might see in AI," Gordon said. CoreWeave shows how sudden and significant losses can be for shareholders, Gordon said. The loss to its market cap is almost 60 times peak market cap. CoreWeave stock still closed at around $100 a share on Thursday, more than double its listing price of $40. "It takes a hype-driven tech stock to instantly destroy $20 billion in wealth," Gordon said. CoreWeave didn't immediately respond to a request for comment from Business Insider. CEO Michael Intrator said in a statement accompanying the earnings that they showed "continued momentum across every dimension of our business." The collapse of the dot-com bubble saw the S&P, including dividends, drop by around 9% in 2000, 12% in 2001, then 22% in 2002. Scores of startups filed for bankruptcy, and thousands of tech workers lost their jobs. Tech titans make up a large chunk of the US stock market's value, and their profits and market dominance have made them mainstays of retirement portfolios and pension funds. In 2022, Gordon told Business Insider that more people were invested in AI than in dot-com companies 25 years ago. He predicted there would be "more bowls of spaghetti" after the AI boom burst, as people who got burned by the slump would cook at home to save money and cut costs wherever possible. Speaking to Business Insider last week, O'Leary said the AI boom wasn't the "same hype that the internet bubble was, because today, you actually can see the productivity and measure it on a dollar-by-dollar basis." Read the original article on Business Insider
Yahoo
06-08-2025
- Business
- Yahoo
What Business School Is Missing
In this podcast, Motley Fool contributor Rich Lumelleau and Motley Fool analyst Dave Meier talk with Andy Hoffman, a professor at University of Michigan's Ross School of Business and School of Sustainability. He's the author of 14 books, including his most recent, Business School and the Noble Purpose of the Market. The conversation covers a motley array of topics including: Business and sustainability. Business school. ESG funds. Heresy to dogma. Sectors to watch. To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. When you're ready to invest, check out this top 10 list of stocks to buy. A full transcript is below. Trump's Tariffs Could Create $1.5 Trillion AI Gold Rush The Motley Fool's analysts are tracking a massive shift in U.S. tech. Over $1.5 trillion is already flowing into infrastructure, AI, and advanced manufacturing… and the number keeps climbing. Following a major tariff policy shift, a new AI Gold Rush is taking shape, and we think . It builds the tech infrastructure that Apple, OpenAI, and others suddenly can't live without. We just released a full write-up on this under-the-radar stock — and why now might be the exact moment to move. Continue » *Stock Advisor returns as of August 4, 2025 This podcast was recorded on July 26, 2025. Andy Hoffman: We are now altering systems of the Earth. These aren't environmental issues. These are systems breakdowns. To fix the system's breakdown, you have to fix the system that's causing it. That's capitalism, that's the market. I am arguing that we need to start to rethink some of the tenets of the market. I'm not arguing for socialism. Don't worry. But I'm arguing that my sphere of influence is business education so we need to teach business students to be stewards of the market to recognize this is how the market works. This is what it does. This is where it may not work quite so well, and this is how you can play a role in getting it in the right direction. Mac Greer: That was Andy Hoffman, professor at University of Michigan's Ross School of Business and School of Sustainability. He's the author of 14 books, including his most recent Business School and the Noble Purpose of the Market. Now, recently, Motley Fool contributor Rich Lumelleau and Motley Fool analyst Dave Meier talked with Hoffman about sustainability and business. Rich kicked things off by asking Hoffman about his background. Rich Lumelleau: Obviously, there's a lot of ground to cover here, but I thought what we'd do is open things up, maybe give us a little bit on your background, including your career path and how that led to this focus on sustainability and then obviously, how it impacts the business and the environment. Andy Hoffman: Lauren, Loy, how do I make that a short story? Rich Lumelleau: Take as much time as you need. Dave Meier: You don't? Andy Hoffman: I got interested in environmental issues when I was an undergrad. It's interesting because I was a chemical engineering undergrad and environmental issues really weren't a thing so I said I want to do an environmental minor, which basically meant wastewater engineering. The concerns we have today just didn't exist then. I did that. I worked for the EPA for a couple of years, didn't really like. Became a house builder and I built custom homes for five years, some very large custom homes the largest was 29,000 square feet. Went back to grad school. Environmental issues were starting to get much more interesting. Business was doing it because they saw a reason to do it and they were an ally in it rather than an opponent. When I was at the EPA, I was an inspector. I just showed up at people's doors and ruined their day by doing an inspection. Now companies were actually focusing on these issues in a constructive way because at the end of the day, something that animates my work is that if we're going to solve these problems, they have to be solved by the market. Market is the most powerful institution on Earth, business is most powerful entity within it. If they're not solving it, it won't be solved so that's why I focus on business and sustainability. I got my PhD in 1995 at a time where again, this really wasn't a central aspect. I love to tell people that when I was trying to get business school professors to be on my committee, almost all of them, told me, What are you doing here has nothing to do with business. Go to a school of government. Now those very same professors, sustainability is one of the areas of expertise, and the schools that I went to and many others list sustainability as a central focus. The world has changed a lot, and I cannot say that I caused it, but I can say I was just lucky enough to be right at the wave as it was starting to take off. Dave Meier: I thought we would maybe jump into the book. I thought we would do it like this. Before I joined the Molly Fool, I was an engineer and I was working up doing more business related work at General Electric, the Titan of corporations. I got my MBA because they said, Hey, you're doing a good job. Would you like to do it? I said, Sure. In 2000 and 2002. Where have I gone wrong? Use the book and tell me where did they fail me? You will not hurt my feelings because I actually think I've grown a little bit since then. Andy Hoffman: Well, first of all, just to find a little anecdote, the first house I was a carpenter on was Jack Welch's on [inaudible]. You might find that back in the 80s. Dave Meier: He's an interesting character. I'll say that. Andy Hoffman: He certainly was. But I think what I would say to you is that the MBA you got in 2002 probably didn't differ a lot from the MBA you couldn't got in 82, 92, 2012 or even 2022. The degree is ossified so you learned a lot about the how of business, but very little coverage of the why of business. Why are you doing this? What is the role of business in society? While that may not have been a hugely pressing concern than it is today so I just think that students need to be taught more about what is the role of business in society? What is their role as manager? How are they going to address the issues that society faces? Because at the end of the day, the original purpose of Business School, Rakesh Khurana from Harvard University has a book called From Higher Aims to Hired Hands he likes to point out that when business schools were first proposed in the early 1900s, universities said, No, this isn't an area of academic inquiry. They said, No, we're going to teach the titans of industry how to run commerce and services of society. We're going to teach them, like we teach doctors to serve society. The point of his book is that we've lost that mandate so my book is a call to say, Let's get it back. FEMALE_1: We've grown up surrounded by beauty ideals that promised confidence but often delivered shame. In a special episode of A Millennial Mind, I sat down with Nikola Adams to explore how appearance based compliments and body talk shape our self worth without us realizing it. In partnership with the Dove self esteem project, we unpack the tools to change the conversation for ourselves and for future generations. Listen now and download the free body confidence journal at Dave Meier: One of the fortunes that I've had working with the Motley Fool is I actually worked in our asset management business, manage money for clients as opposed to in a publishing way. One of the things that I saw about 10 years ago was the rise in popularity of ESG type funds. Not only was there a framework to say, Hey, you can actually evaluate a management team this way, but there were people who were raising capital to put it in the fund structure. One, how did that impact the way you were thinking about things? Two, was that a good sign? Meaning that capitalism was actually starting to facilitate this? Based on your experience and what you've researched, how has it gone from there? Andy Hoffman: Well, certainly monetizing it is the way to get it into the market so investing finance is certainly one way to do it. We can talk about the stumbling that's happened since then. But I would add one thing and we can talk about this more, but another avenue through which these issues are getting monetized is insurance, and that's happening right now. Insurance rates in this country are going up. Across the board. Not just LA where there's a wildfire or Florida where there's a hurricane, but the Midwest, where what they call secondary perils, ordinary events that are now extraordinary. We now have a new vocabulary for atmospheric rivers. These cost insurance companies a lot of money, and so they're reducing coverage, they're raising deductibles, they're limiting coverage. They're even withdrawing from some markets, and that will ripple through the economy. That will change real estate markets. But back to finance ESG became a lightning rod because perceiving this as favoring some companies more than others and not serving their clients well, BlackRock and State Street and others. There was what was Alan Greenspan's term, irrational exuberance a lot of the mantra that doing good by doing well, I think is the way it was phrased some people weren't as critical. I would also add though, that a lot of the pushback particularly from state attorney generals, is coming from states where their domestic industries are going to be harmed by a shift, for example, away from fossil fuels. That is part of the push. Do we have to get off fossil fuels if we're going to address climate change? Yes. Is it going to cost certain economies on a local scale money? Yes. Are they going to push back? Yes, so that's what we're dealing with. But I just think that we need to become much more sophisticated in how we think about sustainability in finance. When does it actually impact your investments? Think about it carefully. Don't just make a bottom line assumption that it's good for the environment, it's good for my bottom line. Because I would also the pendulum is swung. Because now you've got some investment funds that are anti woke investment funds, and they are doing the same thing on the other end of the spectrum. The Wall Street Journal just had a story about this last week saying, some of these anti woke funds, one of them they looked at it was 85% S&P 500, and they're charging huge management fees, and then they're not doing anything special. Really think carefully about how issues like climate change impact certain sectors. If you rely on water, if you're on the coast, if you're in agriculture, climate change is something you better be focusing on very, very carefully. Dave Meier: That's a very good point because I moved from the Northern Virginia area to the coast. I live just south of Myrtle Beach, and my latest Escrow assessment said, Hey, you're paying about $200 a month more. I'm like, What's going on sure enough, it was because my insurance for my house went up because it's near to the coast so I totally get it. Andy Hoffman: That can bring up opportunities for innovation. Building codes have been very slow to change. But in Florida, there's a development called Babcock Ranch that actually became a haven during the last hurricane because it was designed to withstand the storms that were coming that used to be 100 year storms that are now happening with much more frequency. They have a lot of wetlands to absorb the storm blow. They kept buildings low. They made them stronger. They buried all the utilities. This is smart investing. Rich Lumelleau: Andy, as I mentioned at the outset, you have written 14 books, countless articles, been referenced thousands of times. You were writing about this back in the early 2000, from From Heresy to Dogma. You talked about in how environmentalism entered, corporate America. I don't know if you would consider that Sustainability 1.0 back then or 0.1 or whatever you want to call it. But how are things evolved? What did things look like then versus what they look like now? Andy Hoffman: Well for your listeners, the metaphor of From Heresy to Dogma, I did my dissertation. Part of it was at the Amoco Corporation. Remember the Amoco Corporation? The vice president for EH&S Environmental Health and Safety told me a story where he was at a senior directors meeting and the CEO at the time said, we expect environmental constraints to become more stringent both here and abroad, environmentally progressive company like Amoco, we expect this to provide strategic advantage. The head of UK operations leaned over to the gentleman's name is Wally Quanstrom hope he's listening. He said, How does it feel hear your heresy become dogma? That was the metaphor of issues of the environment in particular entering the market and influencing corporate strategy in way that companies thought in their interests to address these kinds of problems. That I see a sustainability 1.0. I would teach this, I would give talks to business audiences saying, you don't even need to see that climate change is real. If your insurance companies care about it, if your investors care about it, your customers, government, you reframe it in the language of business, it's regulatory compliance, it's consumer demand, it's operational efficiency, and you will address it. In Sustainability 2.0, it's recognizing that while this is good, it will not solve the problem. It will slow down the velocity at which we're running into a brick ball, but it won't reverse course. We are now at a place where without getting too existential about this, a place where human beings have not been before. We start to think about issues like climate change or other issues of the Anthropocene, whether it's species extinction, ocean acidification, fresh water availability, nitrogen, phosphorus in the natural environment. We are now altering systems of the Earth. These aren't environmental issues, these are systems breakdowns. To fix the system's breakdown, you have to fix the system that's causing it. That's capitalism that's the market. I am arguing that we need to start to rethink some of the tenets of the market. I'm not arguing for socialism, don't worry. But I'm arguing that my sphere of influence is business education, so we need to teach business students to be stewards of the market to recognize this is how the market works. This is what it does. This is where it may not work quite so well, and this is how you can play a role in getting it in the right direction. Mac Greer: That was University of Michigan Professor Andy Hoffman. His book again is Business School and the Noble Purpose of the Market. As always, people on the program may have interest in the stocks they talk about, and the Motley Fool may have formal recommendations for or against so don't buy or sell stocks based solely on what you hear. All personal finance content follows Motley Fool editorial standards and is not approved by advertisers. Advertisements are sponsored content and provided for informational purposes only. To see our full advertising disclosure, please check out our show notes or the Motley Fool Money Team. I'm Mac Greer. Thanks for listening. See you tomorrow. David Meier has no position in any of the stocks mentioned. Mac Greer has no position in any of the stocks mentioned. Rich Lumelleau has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. What Business School Is Missing was originally published by The Motley Fool Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Globe and Mail
12-05-2025
- Business
- Globe and Mail
Owning Senators, or any sports team, beats public market investments
Last month, Ottawa Senators owner Michael Andlauer sold the logistics business where he made his fortune for $2.2-billion, after more than tripling the company's value in the past six years. Pro sports is likely to be an even more lucrative investment for Mr. Andlauer, a self-made billionaire and beer-league hockey goalie. Set aside what you've heard about frothy valuations on hockey, baseball, basketball and football teams. Owning a franchise such as the National Hockey League's Senators is a proven approach to making serious money, according to a study run by the University of Michigan's Ross School of Business and private equity firm Arctos Partners LP. For all the talk of sports investing being driven by the greater fool theory – with one deep-pocketed fanboy justifying buying a team on expectations of eventually selling to an even wealthier frustrated jock – there are solid economics behind the lofty prices that teams command. Over the past 20 years, owning a stake in a team from one of the four major North American leagues – the NFL, NBA, MLB and NHL – provided an impressive 12.3-per-cent annual return, according to the Ross-Arctos Sports Franchise Index. That's significantly better than the performance of any public market benchmark, such as equities, fixed income or commodities. Decades of double-digit returns, along with the leagues' recent liberalization of rules to allow institutional investors into ownership groups, explain why asset managers are now lining up to put money into sports. Pension plans and private equity funds put a priority on assets that turn in predictable results regardless of market conditions, or what the Street calls 'uncorrelated returns.' The institutional investor crowd also gets worked up about businesses with rising profit margins, which the NHL, NBA and NFL currently enjoy. Legacy media business, such as television networks, continue to pay up for the rights to games. At the same time, deep-pockets streaming platforms such as Inc., Apple Inc. and Netflix Inc. are starting to bid. So broadcast revenues in leagues with salary caps, giving teams the ability to control costs that come from paying players. The NHL, NBA and NFL all recently announced new broadcast deals that guarantee billions in revenues for more than a decade. University of Michigan academics Emory Kaplan and Jon Grossman said in a report that 'institutional investor interest is rising thanks to this long-term revenue and cost certainty.' All of this is music to the ears of Rogers Communications Inc., which will eventually bring in partners at Maple Leaf Sports & Entertainment, parent to Toronto's pro teams. And it's ancient history to institutional investors such as the Ontario Teachers' Pension Plan, which made serious money as MLSE's former owner. Team owners such as Mr. Andlauer, a 60-year-old who previously owned a stake in his hometown Montreal Canadiens, aren't just investing because they are fans. Over the past five years, Mr. Andlauer earned an 11.5-per-cent annual return on Andlauer Healthcare Group Inc., which he founded in 1991 and took public in 2019 at $15 a share. In late April, Atlanta-based United Parcel Service Inc. agreed to buy the transport company for $55 a share. While this is heady performance, the Ross-Arctros Index did even better, rising 14.4 per cent annually over the past five years. Over the past 12 months, franchise values jumped by 17.3 per cent, driven by deals such as the US$6.1-billion sale of the NBA's Boston Celtics. In 2023, Mr. Andlauer led a consortium that set a new high-water mark for the value of NHL franchises when they bought the Senators for US$950-million. The ownership group also includes former Farm Boy co-chief executive officer Jeff York and Ottawa real estate developer Bill Malhotra. If Mr. Andlauer cares about the economics of his investment, and billionaires typically care deeply about economics, a 17.3-per-cent-plus gain on the Senators means his group is already up about US$165-million. The Senators stand to become even more valuable as a new $11-billion, 12-year broadcast contract kicks in next year with Rogers Communications Inc., and the team potentially moves to a downtown arena. It took Mr. Andlauer 34 years to make his first billion by selling his logistics business. The surging economics of pro sports may make it far easier to make his second billion at the Senators, while potentially bringing home a Stanley Cup.
28-04-2025
- Business
'Trump Coins' lauds Trump for soaring gold prices. Experts point to economic uncertainty
A marketing email distributed this month by Trump Coins, a commemorative coin venture launched last year by President Donald Trump, attributes the soaring value of gold and other metals in recent weeks to the president's "return to the spotlight." "President Trump's bold stance on tariffs, American industry, and economic protection is pushing investors out of risky fiat and back into safe-haven metals," the marketing email reads. "Confidence in strong U.S. leadership is driving real demand." But some experts assert that the sudden surge in gold reflects not "strong U.S. leadership" or "Trump's ongoing momentum," as Trump Coins frames it -- but instead a consequence of financial uncertainty inspired by Trump's erratic economic policies, including his commitment to impose widespread tariffs on nearly all U.S. trading partners. The premise that rising gold prices evince a thriving U.S. economy runs "completely contrary to reality," said Paolo Pasquariello, a finance professor at the Ross School of Business at the University of Michigan. Experts who ABC News spoke with said that the value of gold often rises in times of economic turmoil, particularly during trade wars or anticipated inflation. "The fact that gold prices are going up right now sends as strong a message of displeasure with President Trump's economic policies as I can think of," Pasquariello said. In the weeks since Trump's self-styled "Liberation Day" -- when he announced a sweeping set of tariffs -- gold has notched several record highs. This week, the price of gold surpassed $3,500 per ounce for the first time. Meanwhile, markets have tumbled in recent weeks, and the International Monetary Fund warned Tuesday that "escalating trade tensions" have dimmed "both short-term and long-term growth prospects." On April 16, when Trump Coins sent the marketing email lauding "another new record" for gold, it said the reason "isn't just economic -- it's political." "Trump's return to the spotlight is reigniting belief in real value and asset-based security," the email said. "Central banks are stockpiling, buyers are doubling down, and Trump's ongoing momentum keeps pushing metals forward." But experts said that skyrocketing gold prices have often been linked to periods of instability -- offering the 2008 financial crisis and, more recently, Russia's invasion of Ukraine as examples. Despite its volatility, gold is "the quintessential safe-haven asset" in times of economic uncertainty, said Campbell Harvey, a professor of finance at Duke University's Fuqua School. Another explanation cited by experts for the precipitous rise in gold is that Trump's policies have shaken confidence in some of the top alternative safe-haven assets: the U.S. dollar and U.S. Treasury bonds. Depreciation in the value of the U.S. dollar and volatility in Treasury yields have made gold more attractive as investors look for a safe haven, experts said. Trump Coins frames itself as "the only medallions authorized and endorsed/designed by President Trump himself." The commemorative coins, which include gold and silver busts of Trump, emerged during the 2024 presidential campaign as one of several merchandising ventures Trump profited from -- a list that also included watches, sneakers, bibles and guitars. After his 2024 triumph, Trump unveiled a one-ounce "Victory Gold Medallion" -- with the president's face and signature pressed in solid gold -- for $3,645.47, a thousand-dollar upcharge compared to the price of an ounce of gold at the time. The "Victory Gold Medallion" now retails for more than $4,628, an increase of nearly $1,000 since late November and more than $1,300 higher than the current market price of an ounce of gold. Details about the terms of Trump's agreements with the merchandise company that sells his coins, JBCZ Group LLC, are not public. But experts said Trump has likely profited handsomely from this venture in light of gold's precipitous rise. As an investment strategy, experts say that other forms of gold may perform better in the long-run than Trump-branded coins. "If you want to invest in gold, it's best to actually use an ETF," said Harvey, referring to a security that allows investors to invest in an underlying asset without purchasing that asset. In contrast, solid gold bars -- or Trump Coins -- are more difficult to sell, Harvey explained, and "that means when you sell, you sell it at a discount."
