Session 5: End Game Closure and First Steps on Risk

We started the class by wrapping up the question of at the end game in business, and why I (and you dont have have to) still trust markets, over managers and expert panels. Markets have no ego, and if allowed to play out, will devise corrections to almost every over reach in business, whether it be managers taking advantage of shareholders, borrowers ripping off lenders, companies lying to markets or creating large social costs. My view is that companies should run to maximize value, but that will involve accepts selfconstraints on behavior, and even if the market does not recognize it right away, but that managers need to consider the messages in stock prices. We then moved on to risk and some of you may be regretting the shift from the soft stuff, but trust me that it is still fun. . If it is not, keep telling yourself that it will become fun. Anyway, here are a few thoughts about today s class. The Essence of Risk: There has been risk in investments as long as there have been investments. If you h