The Courage to Innovate
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The Courage to Innovate. Rating Agencies, Indexes and Your Portfolio. Your portfolio is built on stale and unreliable credit ratings Even your S&P 500 index fund S&P and Moody ’ s use issuer pay business model. What We Hear. “ I hate S&P! Those guys are crooks!

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The Courage to Innovate

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The courage to innovate

The Courage to Innovate


Rating agencies indexes and your portfolio

Rating Agencies, Indexes and Your Portfolio

Your portfolio is built on stale and unreliable credit ratings

Even your S&P 500 index fund

S&P and Moody’s use issuer pay business model


What we hear

What We Hear

“I hate S&P!

Those guys are crooks!

Have you read ‘The Big Short’?”

-Premier Wealth Manager


Government studies

Government Studies

  • Financial Crisis Inquiry Commission

  • Senate Permanent Committee on Investigations: Credit Ratings

  • SEC Credit Ratings Firms Summary Report - 2008


Academic and industry studies

Academic and Industry Studies

  • CFA Institute

  • “Issuer Pays Ratings Model and Ratings Inflation

  • “Does the Bond Market Want Informative Credit Ratings?”

  • “Does Regulatory Certification Affect Information Content of Credit Ratings?”

  • “Credit Rating Firms Have Historically Been Harder on Sovereign Debt Than Corporate Debt”


Lehman brothers 2008

Lehman Brothers - 2008

Lehman Files for Bankruptcy

September 14th 2008


Lehman brothers 20081

Lehman Brothers - 2008

AAA

AA+

AA

AA-

A+

A

BBB+

BBB

BBB-

BB+

BB

BB-

B+

B

B-

CCC+

CCC

CCC-

CC

C

D

5/28/08

9/23/08


Credit rating age indexes

Credit Rating Age Indexes


Number of companies in average

Number of Companies in Average


Questions

Questions?


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