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                          USD Financial Management

                                                                                                  A U G U S T     2 0 0 8

•   Our Accom-
    plishments for
    Year 2007-
                      2007-08: A Superior Year for A Superior Chapter
                      The 2008-
•   Meeting with
    Mr. Buffett
                      2009 school
                      year marked
•   Art Volk          the seventh
    Symposium         year in which
    by Stephen        the University
                      of South Da-
                      kota’s Chapter
                      of the Finan-
                      cial Manage-
                      ment Associa-
                      tion received
                      the “Superior
                      Chapter” des-

INSIDE                For the 2007-
THIS ISSUE:           2008 aca-
                      demic year,
Q&A with          2   USD’s FMA
Mr. Buffett           Chapter
                      brought 11
Speed of          6   speakers to
Trust                                    Lunch at Piccolo Pete’s with Mr. Buffett
                      campus to talk
Information       8   to students and to give the stu-
                                                         ance), Marlon Young (President    braska Furniture Mart and Bor-
on FMA                dents some ideas about their
                                                         of HSBC's American Opera-         sheim’s Jewelry, both of which
                      company. The following is a
                                                         tions), Ben Kyte (Citigroup in    are Berkshire companies. It
                      list of speakers : Sam Theobald
                                                         Sioux Falls), and Greg            was a great experience for all
                      and Kristine Chung
                                                         Schmielding (Vice President of    participants. During the lunch-
                      (Northwestern Mutual Finan-
                                                         Global Sales for Manpower’s       eon with Mr. Buffett, Brett
                      cial), Gary Ellis (CFO of Med-
                                                         IBM). We are thankful to these    Halverson, the former Presi-
                      tronic), Jessica Alvey, Christi
                                                         speakers for sharing their in-    dent of the USD’s FMA Chapter,
                      Berglin and Christi Hartman
                                                         sights and providing USD stu-     presented Mr. Buffet with a
                      (the Office of the Comptroller
                                                         dents with real world knowl-      plaque as our Outstanding Fi-
                      of the Currency), Patrick J.
                                                         edge of their companies and       nancial Executive of the Year
                      Leger (Steginsky Capital, LLC.),
                                                         their operating environments.     2008.
                      Joseph Soukup (Fidelity in Bos-
                      ton), Tammy Otten (South Da-       On April 25, 2008, a large con-   Congratulations on a great
                      kota Investment Council),          tingent of FMA members had        year, and hopefully the next
                      Stephen M.R. Covey (who gave       an exclusive meeting with Mr.     year, we will build upon the
                      the first Beacom School of Busi-   Warren Buffet, CEO of Berk-       successes of the past .
                      ness Seminar on Ethical Lead-      shire Hathaway. These student
                                                                                           By Seth Schonewill, President
                      ership and Corporate Govern-       members also visited the Ne-
    PAGE     2

                       A Few Questions for Mr. Warren Buffett

“What we want

 the most from

  this group is
                       Rock, Paper, Scissor
 that they love
                       On April 25, 2008, fifty stu-   tion pertains to how Mr.             way. However, if that’s the
  the business         dents and five faculty mem-     Buffett can find and place           case, it’s not going to work to
                       bers assembled in the Busi-     the person to manage the             have these individuals con-
 that they will                                                                             tinue operating the company.
                       ness School’s parking lot for   many companies owned by
tap dance their        a one-day trip to Omaha to      Berkshire Hathaway.                  Often, we come across man-
                       meet with Mr. Warren Buf-                                            agers who, having once
  way to work                                          As per Warren Buffett--Our           owned the firm, have no idea
                       fett, the oracle of Omaha and
                                                       hope is that we’ll be able to        how much salary they should
    each day.”         the richest man in the world.
                                                       retain a company’s incum-            be paid.
                       On this trip, the group also
                                                       bent management team.
                       toured Nebraska Furniture                                            USD [Kerry Roling]: When
                                                       What we want the most from
                       Mart and Borsheim’s Jeweler.                                         Berkshire acquires a com-
                                                       this group is that they love
                       The most significant event                                           pany, you like to retain
                                                       the business that they will
                       for the day was the Q&A ses-                                         current management to
                                                       tap dance their way to work
                       sion with Mr. Buffett. MBA                                           run the company. What
                                                       each day. What is important
                       students from the Ohio State                                         factors or events, however,
                                                       is not to take the love from
                       University and USD students                                          might cause you to inter-
                                                       these managers. The key
                       took turns asking Mr. Buffett                                        vene with the management
                                                       question for this group is:
                       questions. The following                                             of one of Berkshire’s com-
                                                       what do they love more: is it
                       contains a sample of the                                             panies, or what would be
                                                       money or the business that
                       questions posed to Mr. Buffet                                        the defining point between
                                                       they’re in? Is their passion
                       during the Q&A session, and                                          letting them work the
                                                       still there? It’s fine if it’s the
                       it does not represent the                                            situation out and you inter-
                                                       money and perks that they’ll
                       exact words of Mr. Buffet.                                           vening?
                                                       get from the sale of their
                       Ohio State University ques-     company to Berkshire Hatha-

        USD       FINANCIAL    MANAGEMENT               ASSOCIATION                   NEWSLETTER
                                                                                                                                  PAGE        3

A Few Questions for Mr. Warren Buffett (cont.)
As per Warren Buffett--We’re reluctant          nected. I really don’t see that with tech-     As per Warren Buffett--Paul Volker was
to make such changes. There’s no re-            nological companies. With Pharma and           interviewed by Charley Rose in which he
tirement policy at Berkshire Hathaway.          health care…people will spend a lot to         said the Fed has overstepped their limit
It’s always the worst thing in the world        stay healthy and it is hard to predict         of authority on the Bear Stearns deci-
having to fire a person. These are man-         which companies will have a successful         sion. I disagree in that I felt that the Fed
agers/entrepreneurs who have given              new drug. We do have a position in             did the right thing. If Bear Stearns had
the best years of their lives to the firms      companies such as Johnson & Johnson.           declared bankruptcy, the counter par-
we acquired. Often, again, it’s an isue of                                                     ties to the derivatives contracts with
                                                OSU: During a person’s career, peo-
whether the “fire in the belly” is there.                                                      Bear Sterns would have to liquidate
                                                ple are faced with difficult choices
It’s my job to have to make changes                                                            their positions in the following days
                                                that they have to make. Which diffi-
when they have to be made. I’m guilty                                                          which would have led to absolute chaos
                                                cult choices have you had to make?
often of giving the benefits of the doubt                                                      and a disaster. The speed of the run on
to the managers, and hence tend to put          As per Warren Buffett -- I was lucky. I        investment banks would be fast, and it
this decision off a little longer at least a    knew what I always wanted to do, and           would have been similar to the bank
year late. Remember, too, that there are        then I was able to find the perfect per-       runs at the onset of the Depression in
extenuating circumstances such as the           son to help me do that when I was 21           the 1930s. There would have also been
home construction industry (e.g. Acme           and she was 19. I’m still doing what I         a chain reaction of bankruptcies. If I ran
Brick, Shaw, etc) which are doing terri-        want to do in allocating capital. Women,       the Fed, I would have done the same as
bly right now. I don’t see that as the          in particular, get short-ended on so           Bernanke did. I faced a similar situation
fault of the managers especially when           many fronts. When I was starting out,          when I was working for Salomon Broth-
their competitions are having the same          things went really well at home and with       ers and got Nicolas Brady to reverse
difficulties. We once had a manager             the kids because of Susan. We never            [something] as Secretary of Treasury on
who developed Alzheimer’s that I had to         had to face the difficult circumstances        a Sunday afternoon. Give the Fed a lot of
do something about.                             that many families have to. If you get a       credit for being gutsy.
                                                chance, go to Charley Rose’s www site
USD [E.J. Bouwman]: Over the last 15                                                           USD [Jerry Kyte]: Do you think that
                                                and bring up the interview he did with
years, there has been an increased                                                             the benefits of Sarbannes Oxley 404
                                                her on television. It’s one of the only
emphasis on technology and health-                                                             outweigh their costs?
                                                interviews she ever did and you’ll find
care. Do you find it difficult to find
                                                out about the good, the bad and the ugly       As per Warren Buffett--I go back and
solid businesses in these fields that
                                                when it comes to me. More than any-            forth on that one especially when I deal
are knowable and understandable?
                                                thing, being successful doesn’t mean           with Berkshire Hathaway’s auditing
As per Warren Buffett -- The answer is          putting in 70 hour workweeks. I could          costs! For a well run company, their
yes. I do find it difficult if I don’t under-   do what I do in just an hour a day in          corporate governance structure already
stand where they will be in ten years           allocating capital. Being a woman, again,      encompasses most of the requirements
compared to their competition. I mean           is really difficult. Mr. Buffett also talked   of Sarbannes-Oxley, and so it is not nec-
where Google will be in ten years. I            about Borsheim’s CEO, Susan Jacques,           essary. However, all of us have to put
don’t have much conviction with re-             who began as a $4.50 an hour sales as-         Sarbannes Oxley in perspective. In
gards to technological companies.               sociate and the stresses she faces as a        2002, we had a $20 trillion dollar stock
Think about Coca Cola, Snickers bars            mother.                                        market in which people were losing
and Gillette. There’s a certain promise                                                        confidence because of scandals such as
                                                USD [David Remme]: What is your
all of us get when we open their prod-                                                         Enron and WorldCom. SOX restored
                                                opinion of the Federal Reserve’s
ucts. We know what Coke or that Snick-                                                         that confidence so it is worth what I’m
                                                loans to Bear Stearns to help JPMor-
ers Bar will taste like or what that Gil-                                                      paying for in auditing bills, etc.
                                                gan Chase purchase go through
lette razor will do for a male every
                                                smoothly? The Fed has a chance to              OSU question focuses on Warren Buf-
morning. How many substitutes will
                                                make money on this deal. Do you                fett’s personal philosophy on philan-
people be enthusiastic about in the way
                                                think the residual value the Fed has           thropy.
of store or generic brands with regards
                                                claimed to amounts to what is basi-
to Coca Cola or for that matter that                                                           As per Warren Buffett--I’m not a big
                                                cally transaction similar to purchas-
snickers bar. These are products that                                                          believer in corporate philanthropy.
                                                ing equity?
have a steady growth as the world                                                              Anytime we acquire a company, I tell the
grows and becomes more intercon-                                                               management of that company that what-
      PAGE      4

                          Questions for Mr. Buffett (cont.)
                          ever you did in the past is       The Justice Department was        that does not reward behav-
                          fine with me. Berkshire           making it difficult for all of    ior that you don’t want.
                          Hathaway has an interesting       us. He (Joseph Brandon)
                                                                                              USD [Michael Schelling]:
                          program that allows share-        opted to resign, having been
                                                                                              Are the shares of Berkshire
                          holders to designate bona         a victim of circumstances.
                                                                                              -Hathaway currently trad-
                          fide non-profit organizations     He’s a tremendous person,
                                                                                              ing at fair value?
                          to which the company would        and it’s something I’m really
                          donate. The overwhelming          sad about. That said, we          As per Warren Buffett--I
                          nonprofit sector that this        have very good candidates to      won’t comment on the issue
                          payment was made to in-           follow me. Our problem is         of fair value. Berkshire
                          volved churches or syna-          not finding people. The           Hathaway is pretty much in a
                          gogues. I believe that corpo-     problem is me and that I’ll be    zone of reasonable values.
                          rations shouldn’t be giving       in the way five years after       You don’t need to know the
                          away a shareholder’s money.       I’ve been buried. This isn’t      exact weight to know if
                          In terms of me personally, I      significant from the perspec-     someone is fat. More than
                          want to focus on items or         tive of Berkshire. We’re for-     anything, we don’t want
                          areas that have social signifi-   tunate because we have            Berkshire Hathaway to be
                          cance but which otherwise         really good businesses. The       selling at the highest price.
                          wouldn’t receive money from       job will likely be split into     That’s crazy. We now live in
 “You can’t listen        government or United Way          two parts, i.e., CEO and Chair-   a world in which information
                          type of funding. Philan-          man.                              is so easy to obtain. It used
to and be bogged
                          thropy, for me, should tackle                                       to be so difficult to get. Citi-
                                                            OSU question focuses on
       down by a          society’s toughest problems.                                        bank has a guide which pub-
                                                            the impact of ethics on
                          I made a decision after Suzi’s                                      lishes once every six months
        thousand                                            business school curricu-
                          death that our wealth would                                         is a useful source of informa-
                          go to improve the lives of                                          tion.
 different voices.
                          people, without regard to         As per Warren Buffett--I’ve
                                                                                              OSU Question discussed
To be successful,         color or gender, who are in       been lucky since I’ve never
                                                                                              the currency markets in
                          predicaments that would not       been tested in a real sense. I
a person needs to                                                                             view of a weak dollar and if
                          get funded by “normal”            think about what a person
                                                                                              Mr. Buffett has some ideas
                          sources. Again, you’re talk-      would do if they had a child
   read a lot and                                                                             on how to strengthen the
                          ing to someone who was very       in need of an operation that’s
  then be able to         lucky in life.                    beyond their means. I would
                                                            tell anybody not to trade         As per Warren Buffett--
         reflect.”        USD [Yunlin Zheng]: Jo-
                                                            reputation for money. Prior       Historically, I’ve never paid
                          seph Brandon, former
                                                            to taking any action, think       much attention to the cur-
                          chairman of General RE,
                                                            about how you would feel if a     rency markets. Current US
                          was once considered the
                                                            Page One exposé was done          policies most certainly led to
                          leading candidate to re-
                                                            by a newspaper reporter           a weak dollar. The United
                          place you at the helm of
                                                            who was hostile to you. Eve-      States is shoving dollars to
                          Berkshire Hathaway, so
                                                            rybody needs to think about       the rest of the world at an
                          what's the impact to you
                                                            the impact this expose would      accelerated pace, and it is
                          and Berkshire Hathaway
                                                            have on one’s family and          like force feeding. The US is
                          because of his resignation?
                                                            other loved ones. There’s         consuming more than it pro-
                          Who will be your next lieu-
                                                            something patently wrong if       duces, and is selling a tiny
                          tenant, and why?
                                                            you do something because          piece of itself to pay for it.
                          As per Warren Buffett--           everyone else is doing it.        Currency movements are
                          Joseph Brandon came out to        Earnings forecasts are also       essentially tied to the big
                          see him three Saturdays ago       contributing to this problem.     picture.
                          because of this controversy.      We need to build a system

           USD       FINANCIAL     MANAGEMENT                ASSOCIATION                NEWSLETTER
                                                                                             PAGE   5

Questions for Mr. Buffett (cont.)
USD [Bradee Christensen]:
How much impact has the Mid-
west and operating out of
Omaha had on your success
and does it keep you from get-
ting caught up in all the Wall
Street madness?

As per Warren Buffett--It’s been a
real plus. One has to have a tem-
perament that ignores the rest of
the world. You can’t listen to and
be bogged down by a thousand
different voices. To be successful,
a person needs to read a lot and
then be able to reflect. Omaha is
really good for being able to do
that. I live an efficient life in
Omaha which contributes to my
making rationale decisions.

The Q&A session ended with the
last question from Bradee, and
Mr. Buffett invited everyone to
have lunch at Piccolo Pete’s.
                                      Briefing by Susan Jacques, CEO of Borsheim’s Jewelry

By Stephen Johnson

                                      Attentive audience
 PAGE      6

                     The Speed Of Trust
                     Stephen Covey wrote an in-          cation.” It has great value in       bilities and results are exter-
                     spiring book, The Speed of          our lives as students. We need       nal.
                     Trust, which I read before          to trust both our professors
                                                                                              Because of my tennis back-
                     attending the Mr. Covey’s           and our fellow classmates. We
                                                                                              ground, I could relate to the
                     presentation in Slagle Hall.        want “trust dividends” in our
                                                                                              example he gave on integrity.
                     Although Mr. Covey spoke            education as opposed to “trust
                                                                                              Andy Roddick told a line judge
                     about the same issues in his        taxes” and also in our personal
                                                                                              that a call, which would have
                     presentation as he does in his      relationships. Trust has great
                                                                                              given Roddick the match point,
                     book, I am glad that I read the     value that one needs to estab-
                                                                                              was wrong. Ironically, Roddick
                     book and also attended the          lish, grow, extend, and restore.
                                                                                              was defeated in the match.
                     lecture. The book went in
                                                         I agreed with Mr. Covey’s            Despite the unfavorable out-
                     greater depth on the 13 be-
                                                         equation of trust: As trust goes     come, it is the ethically correct
                     haviors and has more stories
                                                         down, speed decreases and            thing to do. The story was
                     to illustrate his points. How-
                                                         costs increase. He used the          inspiring to me, not only on
                     ever, attending the presenta-
                                                         time it took to fly out of home      the tennis court but also in
                     tion enhances my understand-
                                                         airport before and after 9/11        everyday situations.
                     ing of the concepts discussed
                                                         as an example. I see the work-
                     in the book.                                                             In conclusion, I was very glad
                                                         ing of this equation in many
                                                                                              that I read the book and at-
                     The presentation was moving         real life examples as well. Mr.
                                                                                              tended the presentation.
                     because it provides a visual to     Covey provided an interesting
                                                                                              There are many aspects to
                     what I have read. I particularly    statistic that is worth repeat-
                                                                                              trust that are very important
                     enjoyed the different DVD           ing: “High trust organizations
                                                                                              to both our personal relation-
                     clips and the Saturday Night        outperform low trust organiza-
                                                                                              ships and to our business rela-
“Trust is the        Live clips as those clips were      tions by 286% on total return
                                                                                              tionships. Leadership is about
                     not mentioned in the book. I        to shareholders.” This is a
 currency of                                                                                  trust, and companies will not
                     learned a lot about myself          staggering percentage of
                                                                                              succeed without trusted lead-
                     when Mr. Covey made each            “outperformance”. Initially, it
education.”                                                                                   ers. Many of the people at-
                     person pick a behavior from         may not seem as though trust
                                                                                              tending the presentation were
                     each category and try to im-        will have a significant impact
                                                                                              business students who will be
                     prove on that. It was beneficial    on profits; it will just increase
                                                                                              the next generation of busi-
                     to talk with someone sitting        goodwill. However, in the long
                                                                                              nesspeople. I know that I want
                     next to me to get their inputs      run it will actually in one’s
                                                                                              to work for someone whom I
                     on what they needed to work.        profitability.
                                                                                              can trust as well as I want the
                     Covey’s book makes learning
                                                         The difficult part is how to         people who work under me to
                     more personal by having read-
                                                         turn a trust tax into a tax divi-    trust me. The same goes for
                     ers fill in personal quizzes
                                                         dend. Mr. Covey discussed the        my personal relationships: I
                     about where we are with rela-
                                                         waves of trust starting with         want to trust my friends and
                     tionships in terms of trust. This
                                                         self trust and credibility, rela-    family, and I want them to
                     type of learning is the best
                                                         tionship trust and behavior,         trust me. I was very impressed
                     format. These are most effec-
                                                         organizational trust, market         with Stephen Covey’s presen-
                     tive when applied to personal
                                                         trust, and finally societal trust.   tation, and I am grateful that
                     experience, and as such, my
                                                         He talked about how we need          the business school brought
                     learning experience is taken to
                                                         integrity, intent, capabilities,     him to Vermillion to speak
                     a higher level.
                                                         and results. We cannot have          with us.
                     One of the most important           trust without all four compo-
                     points Mr. Covey made is that       nents. Integrity and intent are
                     “Trust is the currency of edu-      more internal whereas capa-          By Jessica Burchill

      USD       FINANCIAL      MANAGEMENT                 ASSOCIATION                   NEWSLETTER
                                                          PAGE         7

More Photos from Spring Reception and Talks
                                      (Left Picture): Professor
                                      Lynn Muller was inducted
                                      into FMA Professional Honor

                                      (Below Picture): Talk by Mr.
                                      Ben Kyte, Treasury Depart-
                                      ment of Citibank, Sioux Falls.

                                (Left Picture): Talk by Jessica
                                Alvey and Christi Berglin of the
                                Office of the Comptroller of the
                                                   As a chapter, our mission is to expose USD’s Finance
                                                   and Business majors to as many facets of the world of
                                                   finance as possible. We travel to places such as Chicago
                                                   and New York every year to garner hands-on experi-
                                                   ence in the different areas of finance. During these field
University of South Dakota                         trips, we have the opportunities to ask practicing profes-
                                                   sionals on what they look for in new employees and
Beacom School of Business
                                                   where to look for good opportunities in a financial insti-
414 E. Clark Street                                tution. We also bring speakers to campus to talk to stu-
Vermillion, SD 57069                               dents on various careers in finance and operations of
                                                   corporate America. Our chapter is among a select
Phone: 605-677-5455                                group of student FMA chapters. We have been awarded
Fax: 605-677-5058                                  the Superior Chapter rating for EVERY year since 2000!
                                                   Less than 10% of student FMA chapters receive this
                                                   prestigious designation each year.

Why Join FMA?
Members can benefit from:
  •   Speakers
  •   Leadership
  •   Field Trips
  •   Meetings & Networking
  •   Banquets & Receptions
  •   Chapter Newsletter Publica-
  •   Chapter Web Site
  •   Seminars & Workshops
  •   Business / Career Fair
  •   Social Gatherings
  •   Community Service Projects
                                       From left to right: Angela Olson, Angeline Lavin, Warren Buffett, Kumoli
  • Plus Much More!
                                       Ramakrishnan, and Yewmun Yip
How Do You Join FMA?
  •   Go to orientation meetings at
      the beginning of each semes-     Contact FMA Advisors:
      ter.                                 Dr. Angeline Lavin, Professor of Finance
  •   Get recruitment information          Dr. Kumoli Ramakrishnan, Associate Professor of Finance
      from the FMA bulletin board
      in Patterson Hall.                   Dr. Yewmun Yip, Assistant Professor of Finance
  •   Fill out a membership appli-
      cation and turn into Dr. Lavin
      with payment.
  •   Contact the FMA president,
      Seth Schonewill for more