The Ram Street Journal - Issue 1 - December 2023

ISSUE1

December 2023

THE OFFICIAL RAMAZ UPPER SCHOOL BUSINESS INVESTMENT JOURNAL Year-to-Date:

NASDAQ

3.95% 37.1%

S&P 500

19.9%

DJIA

9.0%

NIKKEI

24.3%

OIL

US Debt Ceiling Hits All-Time High & Almost Defaults Fisher Angrist, '24

0.8%

GOLD

10.9%

BTC

161.6%

Contents WHAT'S NEWS

Stock Market US Debt Ceiling Hits All-Time High & Almost Can Tesla Move Higher?

Defaults Navigating Interest Rates and Inflation Regulation vs. Freedom: Striking the Economic Balance Auto Workers Strike Triple Witching The Arm IPO Explained History of Finance Panic of 1819 Black Monday 1987 2008 Financial Crisis Environment Governments’ Involvement in Businesses’ ESG

In May, tensions escalated between the Democrats and Republicans, with a looming deadline of June 1st to reach an agreement and avoid default. The United States has a cap on its allowable debt, known as the debt ceiling, which was set at approximately $32 trillion. Treasury Secretary Janet Yellen was adamant that the U.S. would not default on its debt, and if no deal was reached, the debt ceiling would be increased.

While the urgency of reaching a deal might seem crucial for the government's stability, in reality, it's a relatively routine occurrence. Over the past four decades, the government has raised the debt ceiling 45 times.

So, how did we reach this situation?

The only way to avoid raising the debt ceiling is for Democrats and Republicans to collaborate on a compromise. Such an agreement would necessitate cuts to some of their respective government funding projects. The then-Speaker of the House, Kevin McCarthy, engaged in THE RAM STREET JOURNAL

extensive discussions with Yellen in an attempt to find common ground, but unfortunately, no compromise materialized.

The United States ultimately failed to reach a compromise and didn't raise the debt ceiling. Instead, they suspended it for two years, essentially removing any debt ceiling restrictions. This allows the United States to fund projects without concern for the debt ceiling.

The suspension of the debt ceiling has led many to question the necessity of having a debt ceiling at all. If it can be suspended, why have it? The argument in favor of the debt ceiling is that, despite frequent increases, it serves a practical purpose and helps maintain fiscal discipline. Without a debt ceiling, government debt could rapidly spiral out of control, so it's in place to keep the government's budgetary activities in check.

Practices Difference Between Risk-Driven and EthicsDriven ESG Practices Crypto What is the Blockchain and How Does It Work?

Benefits and Downsides of Crypto Mining Real Estate Is There a Limit to Americans’ Self-Storage Addiction?

Airbnb Takeover Entrepreneurship ChatGPT and Its Effect on Businesses How To Come Up With a Business Idea The Impact of COVID on Company Bankruptcies Business of Sports Lionel Messi’s Affect on Inter Miami’s Ticket Revenue and Apple TV Season Pass Discrepancy in Quarterbacks’ and Running Backs’ Salary Taylor Swift's Impact on NFL

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Navigating Interest Rates and Inflation Seth Abraham, '25

To understand interest rates and their movement, it is first essential to know how important interest rates are to the economy. In simplest terms, an interest rate is the amount that a lender charges a borrower for borrowing a sum of money. For example, if I want to borrow $10,000 from a bank, the bank will charge me a rate for using that money (let's use 5% in this example).

So, I will owe the bank the original amount I borrowed, $10,000 + 5% per year. Mortgages, student loans, car loans, loans to start a business, etc., all carry an interest rate. Interest rates are significant as lower interest rates imply a cheaper cost of debt, and a more affordable cost of debt leads to a more robust economy. When interest rates are low, businesses and households have a larger incentive to borrow money (because the cost is lower than before) and increase their purchases or expand their business. Evidently, interest rates touch virtually every person in the economy.

Who Sets Interest Rates?

The Federal Reserve Bank is the primary force behind interest rates. The Federal Reserve, also known as the "central bank" of the United States, was set up by Congress in 1913 to "foster the stability, integrity, and efficiency of the nation's monetary, financial, and payment systems so as to promote optimal macroeconomic performance."

One of the most important tools the Federal Reserve uses to maintain economic stability in the United States

is influencing the increase or decrease of interest rates. The Federal Reserve moves interest rates by adjusting a critical and specific interest rate called the "Federal Funds Rate." The Federal Funds rate is the rate that is used to borrow and lend between banks and is used as a benchmark for most other commercial interest rates. When the Federal Reserve raises the Federal Funds Rate, banks, in turn, will increase their rates for mortgages, car loans, student loans, business loans, etc. The new rate will affect everyone in the economy – individual consumers and businesses alike. When interest rates are low, consumers and businesses are likelier to borrow money and spend!

When interest rates are higher, people and businesses are more reluctant to borrow money because it is more expensive to pay for that loan.

Inflation in the United States: 20222023 Inflation is a key economic force and refers to a general increase in prices for goods over time. There are two main reasons to explain why inflation can increase: either increased demand for products or the cost of producing products increases (as companies face

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rising prices on their input, they will, in turn, raise prices for their output, and so on). Why is high inflation considered harmful? Because, in most cases, while prices for goods and services increase, salaries do not. Therefore, the "purchasing power" of the consumer declines as inflation increases.

Historically, the United States has consciously tried to maintain low inflation (averaging just 3.30% from 1914 to 2023). After COVID-19, the United States experienced a surge in inflation that had not been seen in a very long time (primarily led by a surge in demand for online products), and by midJune 2022, it was as high as 9%!

Inflation and Interest Rates Inflation and interest rates have a directly correlated inverse relationship as one goes up, the other goes down. The reason for this relationship relates to the incentives behind economic demand.

Post-COVID, extremely high consumer demand led to historically high levels of inflation. The most potent tool the Federal Reserve can use to lower inflation is increasing interest rates. An increase in the Federal Funds rate would, in turn, increase the cost of borrowing across the board for all consumers and borrowers. These higher interest rates would lower demand, and eventually, companies will lower their prices to entice buyers to purchase, thereby lowering inflation. If inflation rises because of an increase in the cost of producing goods, the lower demand will also reduce demand and, therefore, supply and lower prices and inflation.

Jerome Powell and the Federal Funds Rate Jerome Powell is the Chair of the Federal Reserve. In 2022, to rein in inflation, he led the Federal Reserve on a program of increasing interest rates after many years of lowering rates and keeping them very low. Over seven moves in 2022, the Federal Funds rate went from 0.25% to 4.5%. In 2023, the Federal THE RAM STREET JOURNAL

December 2023

Reserve increased it a further 1% to 5.5%. What does this mean for the consumer? Well, mortgage rates were about 3% in 2021 and are now about 7.5% to 8%. The housing market has cooled off, as has consumer spending.

But the real question is, has inflation been tamed? Does the Federal Reserve deserve kudos for cooling off the economy and lowering inflation, or are they pushing us into a recession?

The Verdict For the most part, Powell and the Federal Reserve have successfully brought down inflation by increasing the Federal Funds rate. Inflation today is down to 3.7%, and the economy has not slid into a recession as people had feared. I think that rates were held too low for too long, and people were not serious enough about their borrowing and spending habits, leading to an overcorrection that had been some time coming. The rate increase did cause (directly or indirectly) two banks to fail, Silicon Valley Bank and Sovereign Bank, but the FDC came to the rescue of depositors in both cases.

Inflation can have an extremely destructive impact on a country, and the Federal Reserve is tasked with the delicate balance of figuring out the exact interest rate that will keep inflation at its most optimal level to ensure a healthy and growing economy.

Everyone likes to second-guess Powell and the Federal Reserve. However, they have demonstrated their skill in ensuring we continue to prosper economically during these challenging and unusual times.

Regulation vs.

Freedom: Striking the Economic Balance Olivia Saar, ‘27

In the bustling landscape of the United States, we are active participants in the act of commerce, buying and selling with remarkable freedom and minimal government intrusion. Our economic engine thrives on the fusion of a mixed market, where the forces of consumer supply and demand collide with the guiding hand of government regulation. This partnership between the government and the natural rhythms of our economy is vital, yet beneath this cooperation simmers an enduring debate. Critics raise a compelling argument that free markets, left unchecked, can become breeding grounds for manipulation, misinformation, power imbalances, and staggering wealth inequality. How much government regulation is necessary to ensure the vitality and equity of the U.S. economy? In this exploration, we navigate the complexities of this conflict, shedding light on the pros and cons of an entirely free market versus one tempered by government oversight.

At the heart of this debate lies a fundamental question: To regulate or not to regulate? A free market operates on the principle of laissez-faire, where resources flow organically based on supply and demand, with minimal government intervention. Supporters of this model, emphasize its contributions to political and civil freedom. In such a framework, individuals make choices about what they buy and consume. The result is a marketplace that fosters economic growth, transparency, and, most importantly competition. Here, consumers wield the power to dictate the products and services in demand, shaping a dynamic economy. However, the critics of a free market economy paint a different picture, one colored by Page 3

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concerns about overly intense competition leading to a "survival of the fittest" mentality. In this environment, businesses may prioritize profits over the welfare of the general public, striving for larger net incomes while disregarding societal consequences; this can lead to greed and overproduction, leaving a large gap between the wealthy and the struggling majority.

The solution, it seems, lies in a delicate balancing act. The ideal economic system marries the free market with the stabilizing force of intelligent regulation. A case in point is the dramatic collapse of Washington Mutual during the 2008 financial crisis. This event vividly underscores the debate surrounding government regulation within the financial sector. Government intervention was instrumental in avoiding a potential economic disaster and stabilizing the broader financial system.

Advocates of regulation argue that this intervention was a necessary lifeline to prevent even graver consequences. Yet, it's essential to recognize the downsides of government intervention. The rescue of WaMu, alongside other troubled banks, raised valid concerns about moral hazard. Financial institutions, aware of the safety net, might be encouraged to undertake riskier ventures, knowing that taxpayers could bear the brunt of their recklessness. Additionally, the sale of WaMu's assets to JPMorgan Chase spotlighted the distortions that can arise from government intervention. Smaller, more responsible banks did not receive the same level of government support, potentially worsening the concentration of power within the banking industry.

Singapore stands as a compelling example of the intricate interplay between free markets and government regulation in history. Since gaining independence in 1965, Singapore has undergone an astonishing economic transformation, evolving from a small, resource-poor nation into a thriving global financial and trade hub. Its unique approach combines the hallmarks of a THE RAM STREET JOURNAL

December 2023

free-market economy, such as minimal taxes and a transparent regulatory environment, with strategic government intervention. The city-state actively promotes targeted industries, invests in education and workforce training, and maintains a strict legal framework to ensure the rule of law. This harmonious balance between free-market principles and government involvement has propelled Singapore's economic success, attracting multinational corporations, encouraging entrepreneurship,

and positioning it as one of the world's most prosperous and economically dynamic countries, all while preserving social stability and order. Striking the right balance between necessary regulation and the discipline of the market remains a challenge. It calls for a nuanced approach, one that harnesses the creativity and innovation of the free market while implementing safeguards to protect against the dangers of unfettered capitalism. It might be challenging, but it is possible.

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Stock Market

December 2023

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Auto Workers Strike Alex Sultan, '25

On September 15th, 2023, a strike of about 40,000 United Auto Workers Union (UAW) members occurred. These workers demanded a significant increase in their salaries. Because of recent high inflation, these workers needed a higher wage to compensate for the price increase of goods and services. This strike created enormous losses for major automobile companies such as General Motors (GM) and Ford (F).

During a strike, companies have fewer workers; therefore, they are usually limited in how much they can produce.

Not only does a limited supply hurt producers, but it also negatively affects consumers. When the supply of something goes down (in this situation, cars), the price will increase. Prices for vehicles have already been going up recently; the strikes can make prices of cars shoot through the roof. The strike will likely hurt the automobile industry in the short run. Although the outcomes are still unknown, due to increased wages, the strike can also damage the car industry in the future.

The UAW strike has cost F and GM about 1.3 Billion dollars and 1 Billion dollars, respectively.

This loss completely counteracted their thirdquarter net income of about 1.2 Billion dollars. F stock dropped by almost 23%, a considerable amount in only a month and a half. Meanwhile, GM had about 3 Billion dollars in net income in the third quarter. The losses experienced during the strike impacted GM but not nearly as much as F. GM’s stock fell by about 19% in about a month and a half. This isn’t as significant as F, but the losses are still pretty big over such a short period.

The UAW strike seems like it’s on the brink of ending. New contracts have been made, including increased salaries and a THE RAM STREET JOURNAL

Pictured above is a UAW (United Auto Workers) strike

shorter work week. Every automobile company varies on the amount their company’s wages were raised, but they are all pretty significant. One company, Stellantis, increased top wages by 33% to 42$/hr, starting wages by 67% to 30$/hr, and temporary workers have received a 165% increase in their salaries. These numbers look enticing for workers; however, not all workers want to ratify this new contract. In the meantime, it seems like the strikes are over, but there is still a slight chance they will start back up.

Triple Witching Alex Ottensoser, '24

The most recent Triple witching took place on September 15. No, this isn't a dark omen signaling the approach of Halloween. Triple witching is the simultaneous, quarterly expiration of stock options, stock index futures, and stock index options contracts, all on the same trading day. This happens four times a year: on the third Friday of March, June, September, and December.

The convergence of these three expirations on the same day can increase trading volume and market volatility as traders and investors adjust their positions.

Additionally, the final hour of trading

preceding the closing bell, known as the triple witching hour, is usually the most volatile.

The three components of Triple Witching are the following: Stock Options, Stock Index Options, and Stock Index Futures.

Single Stock Futures: Futures contracts on individual stocks rather than stock indexes. Stock Index Options: These are options contracts that give the holder the right, but not the obligation, to buy or sell a stock index at a specific price (strike price) on or before a specified expiration date. Stock Index Futures: These are futures contracts based on a particular stock index, such as the S&P 500 or NASDAQ. They allow traders to speculate on the stock market's future direction in general.

The contracts for these three components expire on Triple Witching Fridays. Why is this important?

Triple Witching Day is significant for several reasons: 1. Increased Trading Volume: On Triple Witching Day, trading volume tends to increase as traders and investors close out or roll over expiring contracts. This increased activity can lead to greater price volatility.

2. Options and Futures Expiration: It marks the expiration of multiple options Page 5

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and futures contracts, which can impact the prices of the underlying assets.

Traders may take actions to exercise options or roll over futures contracts, affecting supply and demand dynamics.

3. Portfolio Rebalancing: Mutual funds, index funds, and other institutional investors often engage in portfolio rebalancing on Triple Witching Day. This can involve buying or selling large quantities of stocks and derivatives to realign their portfolios with their investment strategies.

4. Hedging Strategies: Traders and institutions use options and futures to hedge their positions and manage risk.

Some may need to adjust their hedges as these contracts expire, leading to additional trading activity.

Because of these simultaneous events, Triple Witching Day is when traders and investors need to be extra vigilant, as increased trading volume and volatility can create both opportunities and risks, though not necessarily implying a specific direction for the market.

The Arm IPO Explained Elliot Weiss, '26

Last month, Arm Holdings went public at a valuation of $54 billion, making it the largest IPO of the year.

Given that most people have never heard of this company, we have to ask what they do and how they have achieved such a high valuation. Arm started from a desktop computer company called Acorn, which tasked a team in their company with making a computer processor to put in one of their new computers.

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trouble, they spun off their processor division into a new company, Arm. So what does this company do, and how do they make money? Arm, unlike other chip companies, doesn't manufacture or even sell its processors.

Instead, they create designs for the architecture of chips, patent the designs, and then charge other tech companies interested in making their chips a licensing fee. This strategy allows Arm to have a gross margin of 96%.

Today, 99% of smartphones use chips based on Arm architecture, and many laptops and PCs do too. They also have a growing business in chips for servers. The reason for Arm's virtual monopoly in the smartphone industry is based primarily on two factors: Arm's architecture is based on the idea that when a device gives instructions to a chip, it breaks those instructions into many more minor requests. This allows Arm chips to have significantly lower power usage than other processors, making it ideal for smartphones, where battery usage is a significant issue. The second factor that contributes to Arm's success is that once they license their designs to companies, these companies can alter the designs for their specific needs. For example, Apple optimizes its chips for internet browsing and running IOS, while laptops may optimize for heavy workloads, gaming, and running Windows. Arm provides a better solution for companies instead of buying chips directly from suppliers like Intel and then having no way to change them for their specific needs.

The total valuation of Arm is currently 120 times larger than the profits of the company, making it an extremely expensive stock, and given that most of its profits come from the smartphone industry (which isn't expected to grow much in the future given that most people already own smartphones) how is it possible that

Arm has such a high valuation? Much of the high price tag has to do with the Artificial Intelligence craze that started last year after the release of ChatGPT. Most AI training is done by a type of processor called a Gpu, or graphical processing unit, which Arm doesn't make.

The only exposure they have to AI is that GPUs need CPUs, a different type of chip, to be able to run. Arm specializes in CPUs, giving investors hope that Arm may be able to piggyback off the AI wave and earn large sums of money for investors in the process.

Opponents to this prediction claim that the chips Arm makes for AI are not actually differentiated from competitors and that AI will only account for a tiny portion of Arm's profits. They claim that in the leadup to the IPO, Arm management tried to market themselves as a player in AI to impress investors, who may be willing to buy shares of any company connected to AI. In reality, they claim Arm is only a minor player, and they will make far more money from the smartphone and consumer devices markets.

Arm is down 20% post-IPO, which may indicate that the hype phase is over, and investors are readjusting expectations for what is and probably will be, a very successful and profitable company, just not the next AI superstar.

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History of Finance

December 2023

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Panic of 1819 Jeremy Feder, '24

Unemployment rates skyrocketing, banks failing, mortgages foreclosingthis might as well be the 2008 Financial Crisis. However, these are the results of the Panic of 1819, the first financial Crisis in U.S. history. This event would completely change American economic policy.

After America’s victory in the Revolutionary War in 1783, it experienced the Era of Good Feeling.

True to its name, Americans felt a positive sense of national purpose and unity during this time period as they were euphoric of their new independence. Congress also adopted economic policies that reflected national unity as they instituted a national bank and protective tariff to promote domestic goods.

The War of 1812 abruptly ended this era as America and its indigenous allies attacked British North America.

However, the war led to a growth in the production of domestic goods as U.S. manufacturers began producing military goods and munitions to meet the demands of the war. After three years, the war ended, causing an abrupt halt to the growth in trade, causing the panic of 1819. Widespread unemployment, bank failures, and foreclosures on mortgages ensued. This economic turmoil caused severe suffering for many Americans, as jobs were lost, homes seized, and banks closed their doors. The panic exposed the vulnerabilities of the American economy and highlighted the need for a more stable and regulated financial system.

Although the panic ended in 1823, it had widespread implications. The national economic policies implemented during the Era of Good Feeling were protested as ineffective, and a new THE RAM STREET JOURNAL

economic ideology emerged. Advocates of this new approach argued that government involvement in banking and economic regulation had contributed to the panic and that a more laissez-faire approach was necessary to prevent future financial crises. Economists called for limited government intervention in the economy and the promotion of free-market principles.

Figures such as Andrew Jackson subscribed to this approach, and the Second Bank of the United States became a symbol of elitism and economic inequality.

Although other economic crises would later overshadow the Panic of 1819, it had a profound and lasting impact on American monetary policy. It paved the way for a new era of economic thought until this day.

Black Monday, 1987 Zachary Kochin, '25

On October 19, 1987, a day referred to as "Black Monday," the Dow Jones Industrial Average (DOW) experienced a historic and dramatic decline, plummeting by a mindblowing 22.6%.

This sudden and severe drop in the stock market sent shockwaves throughout the financial world and left investors and experts scrambling for explanations.

The week before the 1987 collapse, following a particularly poor week in which the S&P fell by over 9%, saw an abundance of sell orders as the new week got underway. The Dow Jones Industrial Average and the S&P 500 lost more than 20% of their value starting at the open on Monday, October 19, 1987.

Although there had been discussions about the United States entering a bear cycle, markets provided virtually little indication of what was to come.

One of the central reasons behind the 1987 stock market crash was a combination of overvaluation and market speculation. Throughout the preceding years, the stock market had experienced a significant bull run, with prices soaring to what many experts believed were unsustainable levels. This led to an overinflated stock market, with prices becoming inconsistent with underlying economic fundamentals.

Additionally, the use of computerized trading systems and portfolio insurance, which were relatively new at the time, made it much worse. These computerdriven trading strategies which were used by investors and program trading sped up the market's decline as computerized sell orders were triggered.

Panic selling ensued, with investors trying to unload their holdings in a rapidly declining market. The absence Page 7

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December 2023

of a coordinated response from regulators and big financial institutions in the early stages of the crisis was another issue. The confusion was further increased by the lack of mechanisms to stop trading in the case of a sharp drop in the market. The protections and safety nets that are there in today's financial markets weren’t in use at that time for investors. As a result, that fatal day's enormous decrease in the Dow Jones became one of the worst single-day losses in stock market history due to the fast and uncontrollably selling of equities.

2008 Financial Crisis Zachary Kochin, '25

The 2008 financial crisis, also known as the Great Recession, was a significant global economic downturn that had a profound impact on people's lives. The Great Recession was primarily caused by a housing market bubble in the United States. During the early 2000s, there was a surge in housing prices, driven by easy access to mortgages and an excessive belief in ever-increasing home values. As a result, many people took out risky subprime mortgages they couldn't afford, and financial institutions bundled these loans into complex financial products, making them seem like they were worth more than they were. When housing prices eventually started to decline, the bubble burst, leading to a chain reaction of bank failures, massive foreclosures, and a severe credit crunch.

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The effects of the 2008 financial crisis were devastating. Millions of people lost their homes, and unemployment rates soared. Stock markets around the world plummeted, and the global economy plunged into recession. In the United States alone, the GDP diminished by 2.8% in 2009, and the unemployment rate reached 10%. Other countries also experienced significant economic downturns.

Businesses struggled to secure loans, and many had to cut jobs or shut down.

The crisis left a lasting impact on individuals and governments, as they

dealt with the aftermath. Some argue that better regulation of the financial industry, stricter lending standards, and increased oversight of complex financial products could have mitigated the crisis. The lack of transparency in the financial markets and the excessive risk-taking by banks played a significant role in its occurrence. While it might not have been entirely preventable, a more cautious approach to lending and investment, along with improved regulatory measures, could have reduced the severity of the crisis.

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Environment

December 2023

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Governments’ Involvement in Businesses’ ESG Practices Aryeh Goldstein, '25

Global warming poses a significant problem for business and the planet through supply chain disruptions and new radical changes in the earth's weather. Climate change is due to human-caused carbon emissions and pollution. According to NOAA's 2020 Annual Climate Report, the combined land and ocean temperature has increased at an average rate of 0.13°F per decade since 1880. However, since 1981, the average rate of increase has been 0.32°F, over double the rate since 1880. Although these numbers might seem inconsequential, this has created many problems, including frequent and intense droughts, storms, heat waves, rising sea levels, and melting glaciers.

Changing climate patterns pose problems for business, especially for companies relying on raw goods and organic materials. Since record-keeping began 140 years ago, 2019 saw the second-highest average temperature increase, with global land and ocean surface temperatures increasing by 1.71°F.

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How can the government help businesses curb climate change? The answer is through incentives and deterrents. The first incentive the government has provided is tax cuts. For example, in November of 2021, the House of Representatives passed a bill that would include $555 billion in offered tax cuts to companies if they reduce their

carbon emissions. This bill is already in full effect, as companies, including Honda, have taken advantage of these tax cuts. One deterrent is through the cap and trade system. The cap and trade system mandates that a company the government selects not exceed its given number of carbon emission limits. If said company exceeds this limit, the government will charge them a certain amount directly from their profits, creating a massive deterrent from exceeding the limit.

Although these systems seem great, there are doubts regarding whether or not they will succeed in reducing companies' carbon emissions at a successful rate. A recent debate over how carbon emissions have become prevalent highlights the older debate over the role the government should play in business. On one side, you have those who believe that the entire premise of business, specifically in America, is based on the free, private Page 9

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market system, and the government should not intervene at all. On the other side, you have those who believe that this problem has grown to such an extent that if the government doesn't intervene, the planet will face too dire consequences to come back from. Considering how little time we have to mitigate climate change, a drastic fix must be made as soon as possible.

A Bank of America spokesperson put it best, saying, "Current policies remain insufficient to adequately incentivize the changes necessary to reach these lofty goals, whether through carbon pricing or other means." He states that if the punishments and incentives aren't increased, the entire attempt will come up a day late and a dollar short. I believe that businesses can't do it alone, and the belief that they can is evidently incorrect. Enterprises need motivation and cooperation amongst themselves if impacts from climate change are to be diminished.

Difference Between RiskDriven and Ethics-driven ESG Practices Amiel Low, '24

Environmental, Social, and Governance (ESG) practices are evaluated by organizations like MSCI and Morningstar to help investors understand how much good a certain company is doing for the world (a rating that is becoming increasingly valued in today’s world).

However, there are two distinct forces that drive different companies' desire to

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invest in ESG practices: risk-driven vs. ethics-driven.

Risk-driven ESG practices focus on mitigating risks related to ESG factors that could hurt a company's financial performance. Consequently, their ESG efforts tend to be reactive and driven by the need to avoid regulatory fines, lawsuits, or negative publicity.

For instance, in 2010, British Petroleum’s (BP) poor environmental standards led to an oil spill in the Gulf of Mexico, which resulted in severe environmental damage and substantial financial losses. In response, BP started implementing ESG practices to improve its environmental safeguards, safety protocols, and crisis management. This move wasn't altruistic, it was to protect BP’s bottom line so therefore it was risk-

driven.

In contrast, ethics-driven ESG practices reflect a companies’ true desire to improve the world. These companies proactively integrate ESG standards into their core business strategies, aligning their values with their actions.

One company that has implemented ethics-driven ESG practices is Patagonia, which donates a lot of money to environmental causes and advocates that fashion companies become more sustainable.

In conclusion, understanding the differences between risk-driven and ethics-driven ESG practices helps investors align their values with their investments by either investing in companies that are driven by risk management or ethical considerations.

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Crypto

December 2023

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What is the Block Chain and How Does It Work?

Victor Moche, '25

In today's society everyone uses technology in every aspect of their lives from online banking to booking a vacation to Hawaii. Consequently, hackers can steal any type of information about you and your financials right out of your hands, but this isn't the case with Cryptocurrency.

Crypto’s robust security lies in its ability to track and control your assets using the blockchain as a digital ledger.

But instead of all the records being controlled by a single entity, it is charred throughout the internet. These people guard the information in the ledger, making sure the ledger isn't tampered with and remains accurate. Additionally, the ledger isn’t a list of transactions, it’s divided into blocks. Every block is like a record containing a multitude of transactions like buying or selling cryptocurrency, or even other important information like property records.

Another precaution, each block also has a special code, that's based on the information in that block and the unique hash of the previous block. This makes it nearly impossible for anyone to tamper with information inside a block without any notice. Before adding a new block to the Blockchain it goes through a process called "consensus" in which computers verify the transaction that created the new block. Specifically, Bitcoin miners compete to solve math problems that verifies and adds the next block.

Consensus is another safety mechanism used so no one person can just write whatever they want in the ledger.

Once a block is added to the Blockchain, it's locked in place, therefore prohibiting anyone from intermeddling with information inside it.

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These safety procedures provide Cryptocurrency with a reputation of reliability because one can trust the history of transactions is true and can't be messed with. Additionally, copies of this ledger are stored globally so the ledger stays safe and the network keeps running at all times. All in all, a blockchain is like a digital ledger that's maintained globally, divided into blocks, secured by special codes, and used to keep a transparent and secure record of transactions for cryptocurrencies ensuring no one can cheat it.

Benefits and Downsides of Crypto Mining Victor Moche, '25

As Cryptocurrency mining grows more popular in society individuals will gradually start investing without considering the downsides that can possibly alter their decision. In order to understand Cryptocurrency mining it is imperative to realize both the upsides and downsides of investing in it. Accordingly, Crypto mining is using high tech computers to solve complex mathematical equations. When they solve these problems, they benefit by earning cryptocurrency as a reward for their work.

Mining also encourages the creation of faster and more powerful computers, which can lead to technological advancements. However, not everyone may want to mine Crypto due to its downsides. Computers that mine Crypto eat through a ton of electricity while they

work really hard to solve problems. No ordinary computer can mine for Crypto, there are special computers and hardware that can cost upwards of $10,000. Plus, you have to keep upgrading them to stay competitive, costing even more money.

Additionally, it always comes with the risk that other computers may run faster and earn all the Crypto without your computers managing to mine any.

With costs and competition very high, Crypto mining can prove a challenge in making profit.

Environmentalists also fret about the energy consumed by mining and fear that it can have a negative impact on the environment, especially if the electricity used is from non-renewable sources like coal.

Lastly, Cryptocurrency prices can be extremely volatile, so what you earn from mining can change on a daily basis.

In conclusion, crypto mining is where you use powerful computers to earn cryptocurrencies, but it also has downsides like cost and competition therefore proving to be a challenging form of revenue.

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Real Estate

December 2023

THE RAMAZ BUSINESS JOURNAL

Is There a Limit to Americans’ Self-Storage Addiction?

Evie Rosenfeld, 24'

Even though self-storage exists worldwide, nowhere is more popular than the U.S., thanks to Americans’ neverending consumerism.

Nevertheless, investing in storage is unique because it has performed decently during prosperous times and phenomenally during economic decline, specifically during the pandemic. The question at hand: is there still room for growth in the industry?

Significant factors driving demand for storage are that workers are slowly returning to the workplace, and the highest mortgage rates in years are decelerating home sales. However, occupancy rates at self-storage facilities have fallen below historical averages, prompting businesses to offer steep discounts to draw in new clients.

Additionally, Plans for new storage development have been derailed by sharply increased borrowing prices. Even though the S&P 500 has risen by double digits this year, shares of the large companies that keep America's hoard on month-to-month rentals, such as CubeSmart, Public Storage, and Extra Space Storage, are primarily down this year. America's tendency to hoard things makes a persuasive case for storage.

More than one in ten Americans, according to market data, rent storage space.

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Because they are ready to pay much more over time than the value of whatever they are storing, storage customers are frequently characterized as irrational.

When people look for "storage near me," they are often in a hurry. Disasters like divorce and death increase demand. And so do new careers, marriages, and children. “The only thing that competes with an existing customer is the trash can,” said Spenser Allaway, a storage analyst at real-estate research firm Green Street. Two key components that make storage lucrative are month-to-month contracts, which allow for flexible rent increases, and human nature. What someone pays when moving in doesn't matter because most stays last longer than the initial rates.

Airbnb Takeover Nathan Hiltzik, 25'

Airbnb’s have been on the rise in recent years. Airbnb is a relatively new phenomenon that is taking the market.

They are an advancement in the traveling and hosting industry. Airbnb is an online marketplace that connects people who want to rent out their property with people who are looking for accommodations, typically for short stays. Airbnb’s business model currently operates with minimal regulatory controls in most locations, and as a result, hosts and guests both have incentives to use signaling mechanisms to build trust and maximize the likelihood of a successful booking. Airbnb offers hosts a relatively easy way to earn some income from their property.

There are both advantages and disadvantages but it has changed the market. For example a hotel may be a more safe and stable option, most of the time. Hotels are a far more traditional concept, with guest rooms and occasional suites. Airbnbs, on the other hand, typically offer residential-style amenities like living rooms, kitchens, dining rooms, laundry facilities and, in some locations, a private place to park your car. However Hotels have far more oversight then Airbnbs. This is a primary reason why hotels top Airbnb when it comes to quality. Hotels also have 24 hour staff available to manage the general operation. One may have access to the workers whenever something is wrong.

In general, hotels offer the option for daily housekeeping while airbnbs don’t.

They also don’t charge for this service as an extra fee, while airbnbs do for the most part.

The flexibility aspect of both options is decent when making a reservation.

Many hotels have the option of a non refundable rate or an increased rate with more flexibility. Even with normal cancellation policies, some hotels are more flexible than others. On the other hand airbnb hosts set their own cancellation and refund policies, which are stated on the listing and the booking process. One can find listings with both non refundable and refundable price options, and one can also set a filter to search for listings with a free cancellation option.

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Although it may seem like there aren’t so many advantages and disadvantages for each platform, airbnbs have significantly changed the industry. Consumers have so far enthusiastically adopted the services offered by firms like airbnb. The rapid growth of peer to peer platforms has been aided by their ability to scale supply in a near frictionless manner as well as the varied selection of goods and services they have on offer. Airbnb has served over 30 million guests since it was founded in 2008. Its valuation of over 10 billion now exceeds that of well established global hotel chains like Hyatt.

HVS estimated that hotels lose approximately $450 million in direct revenues per year to AirBnb. Between September 2014 and August 2015, 480,000 hotel room nights were reserved while over 2.8 million room nights were booked on Airbnb. By 2018, HVS estimates that Airbnb room nights will reach 5 million per year. Clearly, the vacation rental site has diminished the demand for traditional hotel rooms. Additionally, many hotel employees are losing their jobs because of these decreasing demands. Airbnbs are less labor intensive than hotels because they do not require the same level of service. Over 2,800 jobs are directly lost to Airbnb, a loss of over $200 million in income for hotel employees.

The other impact comes when those guest choose not stay in hotel, so they lose the loyalty benefits they get if they stay in chain hotel i.e. SPG for Starwood, but on the other hand hotel chains losing loyal customers to AirBnb, so potentially hotel chains to lose customers and Airbnb might think to have its own loyalty program in the near future. Each additional 10% increase in the size of the Airbnb market resulted in a 2-3 % decrease in hotel revenue.

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December 2023

Lastly and since Airbnb base locate in the USA, Airbnb rentals fall under different laws and tax regulations than hotels , i.e. In New York City, the loss in hotel room nights costs local, state and federal governments $226 million in lost tax revenues per year. The total effect of Airbnb on the hotel industry and the government in NYC is about $2.1 billion annually. As Airbnb continues to grow at a rapid rate, these losses will only increase.

SEC Fines Real-Estate Firm CBRE Over Violations of Whistleblower Protections Fisher Angrist, 24'

allegations that its separation agreements hindered potential whistleblowers from reporting to the regulator. The SEC claimed that CBRE required employees, between 2011 and 2022, to sign a release as a condition for receiving separation pay, stating they hadn't filed complaints against the company with any federal agency, thus impeding potential whistleblowers. This settlement is part of the SEC's broader investigation into various agreements, including nondisclosure agreements, that may prevent the reporting of federal security law violations.

CBRE revised its separation agreements and conducted a global audit of similar agreements and templates. The settlement reflects the SEC's increased enforcement actions on whistleblower protection rules, with recent cases against companies like Monolith Resources.

Legal experts suggest that companies need to carefully review and modify their agreements to comply with evolving regulatory standards.

Commercial real estate investment firm CBRE has agreed to pay a $375,000 settlement with the Securities and Exchange Commission (SEC) over

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Entrepreneurship

December 2023

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ChatGPT and Its Effect on Businesses

How To Come Up With a Business Idea

Annie Malkin, ’26

Unfortunate news for the English department, using ChatGPT is no longer considered a product of laziness. In fact, many different companies today are using the chatbot to improve efficiency for their business. The Coca-Cola company uses ChatGPT for marketing, specifically creating advertisement message copy. Microsoft’s search engine, Bing, uses the company’s GPT-3 language model code. Morgan Stanley uses ChatGPT to organize its investment strategies, market research, and analyst insights. Many other companies, like Snapchat, Duolingo, and Khan Academy, use AI chatbots to interact with their customers better. ChatGPT does these jobs faster and more efficiently than traditional labor pools. Using AI, companies lower their head counts by lessening the number of employees working in a department. Having fewer employees producing quicker results reduces salary, overhead and time enabling them to become more economically efficient.

However, this efficiency is risky.

Implementing ChatGPT without supervision can result in false advertising, public relations disasters, and security breaches. Often, the suggested text produced by chat GPT makes false or misleading claims about the product the company is trying to promote.

Additionally it may cite sources that don't exist and its sourcing process is notorious for plagiarism. It can also express an opinion that is in contrast to a company's messaging, creating PR issues. Most worryingly, ChatGPT can allow customers to access confidential information if employees enter it into the interface. Many businesses worry about how these factors affect their image and security.

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Maya Putterman, ’25

For these reasons, Amazon, Apple, Samsung, Verizon, and many banks such as JPmorgan, Wells Fargo, Citigroup, Bank of America, and Goldman Sachs have banned ChatGPT. Companies can avoid these risks by having employees regulate their usage on ChatGPT. Rather than using the suggested text word for word, companies should hire workers to use ChatGPT to help guide them through completing their tasks rather than replacing the human element completely . Leveraging ChatGPT in this way will still improve the quality of the content immensely.

Additionally, as this practice becomes more routine, it will limit security risks as well. This human-regulated use of AI will limit the risk of leaking information ChatGPT can access. For example, if you wanted to organize a contact list, instead of letting ChatGPT have access to all of a company's partners it will only be able to access what the regulator allows it to. By refining the data, regulators can not only tweak the output they can tweak the input. This idea of using ChatGPT in moderation while using it as a tool is something that can also apply to Ramaz.

Instead of banning ChatGPT for school use, we should encourage students to use it to improve their writing and research proficiency. It is imperative that they use ChatGPT to strengthen their original thought and be devoid of plagiarization.

This is also important because as time goes on these skills will be necessary when we join the workforce. The adoption of ChatGPT in the business world signifies a significant shift in how businesses operate, emphasizing efficiency and productivity by use of new technologies that are directed by humans.

Have you ever wanted to start a business or organization but didn’t know where to start? Did you struggle to come up with a unique idea?

The first step of becoming an entrepreneur and starting a business is to come up with an idea. However, it’s important that your idea for your business is something you are passionate about because it will motivate you to continue growing your business even when it is difficult. Think about what you are passionate about: What are some of the things that interest you? What are some of the causes you care about?

If you were making the world a better place, what would some of your goals be?

What issues would you tackle? In 2015, the United Nations launched the Sustainable Development Goals (SDGs) to make the world better for everyone by 2030. It took 3 years of consulting with the people in these countries about the issues that mattered most to them to decide on these 17 goals. The 17 SDGs concentrate on 3 pillars of sustainable development: social, environmental, and economic.

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December 2023

The 17 SDGs can be utilized by entrepreneurs to brainstorm ideas.

The 17 SDGs show us the problems the world is facing and the areas where innovation is needed. The 17 SDGs guide us in coming up with an idea that is relevant to other people as well. Think about some of the challenges you face in your daily life : What are some problems you face or you see others in your community face? What is an issue you care about that you would like to learn more about? How can you create a business or organization that addresses your issue?

Did reading this article help you come up with a business idea? Are you interested in turning your idea into an actual business? Come to the Entrepreneurship club to learn how you can turn your ideas into a reality.

To request an advertisement contact Ilan.puterman@theclubhub.org

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Business of Sports

December 2023

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Lionel Messi’s Affect on Inter Miami’s Ticket Revenue and Apple TV Season Pass Evan Bourkoff, '25

Lionel Messi's signing with Inter Miami in Major League Soccer (MLS) sent shockwaves through the football world(American soccer). Messi is arguably the greatest soccer player of all time. Hence, his arrival in the MLS was a game-changer for Inter Miami and the league's business and popularity.

The first significant effect was global attention to Inter Miami and the MLS. This was Messi's first time playing professionally outside of Europe. The news of his arrival in America created a buzz in the sports world, increasing international media coverage and public interest in America. The business aspect of the MLS experienced a significant boost with Messi's arrival. Merchandise sales skyrocketed, with Messi Inter Miami jerseys sold very well. Inter Miami attracted more deals from companies that wanted to associate themselves with Messi, which is most companies. The MLS also had a massive improvement in broadcast revenue. Now, countries not in North America want to watch MLS games because they want to watch Messi. This made the league more marketable on a global scale.

Inter Miami got Messi to sign with them and come to America by offering him a unique contract. As part of his THE RAM STREET JOURNAL

contract, he gets ownership of the team when he is no longer playing. He also receives a percentage of their jersey sales and broadcast revenue profits. MLS wanted Messi to come to America, and for good reason.

Inter Miami was the worst team in the league before Messi arrived. His impact on the club's performance cannot be understated. Messi scored very quickly in his first few matches and set up his teammates well to score. The team's performance led to more people coming to games, and Inter Miami quickly transformed from one of the worst teams in the league to one of the best. Inter Miami became more competitive, with Messi leading them, making the MLS even more exciting for fans and viewers.

In conclusion, Lionel Messi's contract with Inter Miami profoundly affected the MLS's business landscape.

The MLS capitalized on Messi's star power, enjoying increased revenues, international recognition, and enhanced competitiveness. The move solidified the league's standing on the global stage and paved the way for future football legends to consider the MLS as a possible destination for their careers. Messi's tenure in the MLS will be remembered as a pivotal moment in the league's history, marking a transition from a developing football nation to a true global powerhouse.

Discrepancy in Quarterbacks’ and Running Backs’ Salary Joseph Kaufthal, '25

The current NFL Quarterback and Running back market: This past half a year, many New York Giants fans have asked a common question- how can a player like quarterback Daniel Jones receive a fouryear, $160 million contract while a player like running back Saquon Barkley has to fight with the team for months and even skip training camp only to receive a 1year contract worth $10.1 million? The answer is quite simple. In today's NFL, the quarterback is more valuable to a franchise than the running back. But why is that, and how has this league-wide conundrum affected business at other positions?

Offenses ran through their backs for the first 90 years of professional football. From Jim Brown in the 50s to Adrian Peterson in the early 2010s, running backs were the league's stars.

Throughout the 51 years of the NFL OPOY (Offensive Player of the Year) award, running backs have won 26 times.

That includes eight years between 1996 and 2003, where a running back won the award every year. Over the past decade and a half of the league, however, quarterbacks and even wide receivers have dominated the award. Over the last 16 years, eight quarterbacks and three receivers have won the OPOY award, compared to just five running backs. This all comes down to the dwindling usage of running backs. In 2004, only seven quarterbacks had over 500 pass attempts, and nine running backs had over 300 rush

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attempts. Compare that to 2016, where 16 quarterbacks had over 500 pass attempts, and only two running backs had over 300 rush attempts. Because of the constant hits they take, running backs are also very susceptible to injuries. Due to the combination of injuries sustained and their usage plummeting, many NFL teams have employed a strategy known as running back by committee. Instead of paying a lot of money to one running back and handing the ball off to him all game, teams have drafted and signed two or even three younger backs that they can rotate in and out of games. This strategy has proved effective, as demonstrated by the Kansas City Chiefs, who won the Super Bowl last year with their top two running backs being Isiah Pacheco, a rookie paid very little as he was drafted in the last round, and Jerrick McKinnon, signed by the team for one year at $990,000. Since more and more teams have recently won by doing this, it has destroyed the running back market.

Christian McCaffrey is considered by many to be not only the best running back in the league but one of the best players at any position across the league and is thus the highest-paid running back in the league. His contract is worth $64 million over four years, with an AAV (average annual value) of $16 million, which is only the 114th-ranked contract by yearly average value in the entire league. In comparison, Joe Burrow, the highestranked quarterback by AAv, makes $55 million a year. In fact, the top 15 players in the NFL ranked by AAV are quarterbacks. Over the past few years, star running backs have constantly had to fight for new contracts that pay them well below what other top players at their positions make, while this off-season, a quarterback seemed to get a new, recordsetting contract almost every week. This recent trend in contracts has applied not only to the quarterback and running back markets but also to every positional market in the NFL. Many wide receivers, the players tasked with catching passes THE RAM STREET JOURNAL

December 2023

from the quarterback, have also received large contracts recently. And the players who are most responsible for protecting the quarterbacks, the left tackles, have cashed in recently, too. On defense, cornerbacks, the players who cover the wide receivers and stop the passing attack, and pass rushers, whose job is to tackle and disrupt the quarterback before they can get the pass off, have been making more and more money as of late.

In every sport, a new player comes along every few years who receives a contract from his team that resets the positional market, and this has continued happening at every position in the NFL besides running backs over the last few years. It all comes back to the data that has led NFL franchises to stop investing large sums of money into the running back position and instead invest it into the quarterback and other positions.

long enjoyed a roughly 50% female audience." Within a day of the game, Kelce's merchandise increased 400% in sales; he gained 300,000 new followers on Instagram, and the Apple charts rated his podcast #1. Since Taylor's First appearance at a game, Kelce has been the third most searched celebrity on the internet, with Beyoncé and Taylor Swift before him. Taylor's impact was so significant that the owner of the Dallas Mavericks, Mark Cuban, made a comment stating that he wanted to set Taylor up with one of the men from his team, hoping that it would have the same effect it had on the NFL but on his team and the NBA. Taylor Swift made her second appearance in New York, watching the Chiefs compete against the Jets, this time with even more viewers. With 27 million viewers, this game is now the mostwatched Sunday program since Super Bowl LVII. While Taylor Swift has not attended all of the Kansas City Chief games, she still contributed and impacted the NFL and Travis Kelce in many ways.

Taylor Swift's Impact on NFL Eleanor Abitbol , 26'

Taylor Swift made her first appearance at a week 3 NFL game on September 24th, with the Chicago Bears playing against the Kansas City Chiefs. Taylor Swift was there supporting Chief Player Travis Kelce, a two-time Super Bowl champion. Taylor Swift enjoyed her game view in a box, alongside some of Kelce's family members, and there were also 24.3 million viewers. This was the most viewed program for that week. Roku reported the "largest demographic increase for the Chiefs-Bears game was among women ages 18-49, jumping 63% week-over-week, even as the NFL has Page 17

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Puzzle

December 2023

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Can You Spot the Eight Differences at Warren Buffet’s Press Conference?

1: Ice-pop color. 2: Microphone cnn/fox. 3: Ring on interviewer holding phone. 4: Tie color of man on the right. 5: Pin on jacket of man on the left. 6: Placement of lights on the top left 7: Buffet’s sleeve length. 8: Exit sign on top right.

The RSJ Team: Editors-in-Chief: Amiel Low Jeremy Feder

Word Search Puzzle 20 Business-Related Terms

Layout Editors: Fisher Angrist Evie Rosenfeld Columnists: Alex Sultan Aryeh Goldstein Jesse Rubenstein Evan Bourkoff Maya Puterman Writers: Elliott Weiss Alex Ottensoser Seth Abraham Zachary Kochin Victor Moche Joseph Kaufthal Jacob Yashar Eleanor Abitbol Annie Malkin Nathaniel Chetrit Nathan Hiltzik THE RAM STREET JOURNAL

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