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"Skin in the game" is a phrase popular with junior investment managers and non-accredited investors. It is not meant as a profanity nor is it a racist term.

Contents

Origin of the phrase [link]

The exact origin is attributed to Warren Buffet.[1] It is widely known that in Buffet's first fund he raised $111,000 from 11 doctors, himself placing a token sum of $100.00 (0.09%) as his "skin in the game".[2]

Skin as a measurement device [link]

The term is used to ask or convey an owner(s) or principals undefined but significant equity stake in a investment vehicle (i.e. fund) where outside investors are solicited to invest. The "skin" refers to equity and the "game", the investment vehicle. The theory is that principal's equity contribution is directly related to the stability of the investment and confidence that management has in the venture and is also (falsely) strongly correlated to the expected yield of the investment.

Research has shown that there tends to be a negative correlation between excess "skin" and negative returns.[3]

The main issues surrounding "skin" or excess "skin" is the Principal–agent problem where by transparency and sound fiduciary obligations are disregarded by principals who have capital or excess capital (skin) tied into an entity. Many banks and other financial institutions bar employees from having any "skin" where client capital is managed, principally to address the issue of Front running and commingled funds (MF Global).[4] Investment structures such as hedge funds, private equity, Trusts and Mutual funds are legally limited to a minority investment positions or are done to create a tax efficient structure. Typically equity inputs by these fiduciaries are around 0.5-2%.

Examples of usage [link]

  • Statement-: "We (I) have a lot of skin in the game." or "We have skin" not be mixed with the saying "Skinned alive"
  • Question: "How much skin in the game does management have?" or "Got skin?"

References [link]

  1. ^ Investopedia, Skin In The Game Definition, https://www.investopedia.com/terms/s/skininthegame.asp
  2. ^ legendsoftheirlife]], Warren Buffett - Legends Of Their Life, https://sites.google.com/site/legendsoftheirlife/warren-buffett
  3. ^ Stiglitz, Joseph E. (1987). "Principal and agent, The New Palgrave: A Dictionary of Economics, v. 3, pp. 966–71.
  4. ^ https://finance.fortune.cnn.com/2011/11/21/mf-global-bankruptcy/

External links [link]

Look up skin in the game in Wiktionary, the free dictionary.

https://wn.com/Skin_in_the_game_(phrase)

Skin in the Game

Skin in the Game may refer to:

  • Skin in the game (phrase), a phrase used by investors
  • Skin in the Game (album), 2011 EP by Canadian hard rock band Helix
  • The title of Season 13 Episode 22 of CSI: Crime Scene Investigation

    • See also

  • Skins game, a type of scoring for various sports
    • Read more
    This page contains text from Wikipedia, the Free Encyclopedia - https://wn.com/Skin_in_the_Game

    Skin in the Game (album)

    Skin in the Game is an EP release by the Canadian hard rock band Helix released in the fall of 2011. Consisting of four new songs and one cover, it is their 23rd official release, and their 3rd EP. It replaces a previously announced greatest hits CD to be titled Running Wild in the 21st Century. The new tracks recorded for that CD ended up on this release instead.

    Tracklist

  • "The William Tell Overture"
  • "Skin in the Game"
  • "The Bitch is a Bullet"
  • "Angelina"
  • "Champagne Communist"

    • References

  • ↑ http://www.bravewords.com/news/167944 HELIX - Skin In The Game EP Mastered
    • Read more
    This page contains text from Wikipedia, the Free Encyclopedia - https://wn.com/Skin_in_the_Game_(album)

    Podcasts:

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    PLAYLIST TIME:

    The Game

    by: Yashin

    My citylights don't shine for me
    A hopeless glow is all i see
    The sounds are deafening
    Why do you always see the worst in me
    She found comfort, living without me there
    There was a time, when i was free
    She showed me what it was to breathe
    The quiet games caught up with me
    Save your answer
    Run for our lives till we remember why
    We let it slip away
    There must have been another way
    Save your answer
    And i can see it now,
    All the times that i lost my way, i pray
    That these words find belief,
    Life will change everyday
    But we will stay the same
    Save your answer
    Run for our lives till we remember why
    We let it slip away
    There must have been another way
    Save your answer
    Do you really wanna forget you?
    Do you really wanna let go




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