The required textbook is Gary Smith, Securities Valuation (available through Amazon). You can do your financial calculations with a financial calculator or with software I’ve written that is available at the SmithFinancialPlace web site.
The course web site also has a large collection of old tests (and answers). Please e-mail me with any and all questions, but assignments cannot be submitted electronically, for example, as e-mail attachments.
For a sense of the thrill of victory and agony of defeat, try Burton Malkiel, A Random Walk Down Wall Street; Michael Lewis, Liar’s Poke; Victor Niederhoffer, The Education of a Speculator; Barton Biggs, Hedgehogging; Roger Lowenstein, When Genius Failed; and any books by Andrew Tobias or “Adam Smith.” Warren Buffett's annual letters to Berkshire Hathaway shareholders are extremely insightful and wonderfully written.
Timely investment information is at Internet sites such as Bonds Online, CBS MarketWatch, Rueters, Morningstar, and ValueLine (through Blais)A huge collection of links is at Daily Stocks. For print sources, try The Wall Street Journal, New York Times, Barron’s (Claremont City Library), Value Line (Honnold and at the Claremont City Library), Financial Analysts Journal (Carnegie), and Journal of Portfolio Management (Honnold). The Wall Street Journal and New York Times are two of the nation's very best newspapers; Barron’s is a weekly paper devoted to investments, with interesting articles and lots of data. Value Line is a respected source of information about thousands of individual companies. Financial Analysts Journal and Journal of Portfolio Management have empirical studies; by the end of the semester, you should be able to understand every sensible argument and recognize every blunder.
10% weekly homework assignments Homework assignments are due at the beginning of class. I will simply record whether or not you have done the assignment; answers will be posted on the course web site.
20% challenging assignments Three challenging problems assigned during the course of the semester. You will work on 3 different 3-person teams randomly chosen by me. Each project will receive separate grades for the analysis and the written report. All 3 team members should work on each project and all will be graded on the analysis; slackers will have their grades adjusted accordingly. One team member will prepare the written report and will be graded on whether the writing is clear, persuasive, and grammatically correct. Each person in the class will write one report during the semester and consequently accumulate 4 separate challenge-problem grades during the semester, each worth 5% of the course grade: 3 team grades on analysis and 1 individual grade on a written report.
10% stock-pick paper Described in detail below.
20% midterm examination The first test, covering Chapters 1-8, will be in class on Wednesday, October 12. This will be a closed-book test emphasizing concepts, understanding, and applications.
40% final examination The final examination, covering all of the course material, will be similar to the midterm in structure, but 2 1/2 hours long, on Friday morning, December 16, from 9:00 - 11:30.
If you want extra time on a test, you can buy time at a price of 1 point a minute; for example, if a test is handed in 10 minutes after the scheduled finish time, 10 points will be subtracted from the test score.
You have been given $100,000 by
an eccentric millionaire to invest in one stock. If your selected stock does
well, you will be paid handsomely to manage her entire portfolio; if it does
poorly, you will have to get a real job.
Call a broker; check an investment advisory service’s
buy list; look in Barron’s, The Wall Street Journal, the
Internet, or elsewhere for a recommended stock that sounds good to you. At the
beginning of class on Monday, September 5, hand in a single sheet of paper
naming this stock, identifying the source of the recommendation and its reasoning.
Your purchase price is the closing price on September 5 (available on the Internet
at many sites and printed in newspapers on September 6). During the semester,
keep track of the daily price of this stock and the value of the NYSE composite
index. Each day, look on the Internet or in The Wall Street Journal company
index to see if there are any news stories about your company. You
can buy and sell your stock any day up until November 30; on November 30, you
must sell all of your shares. If you trade before November 30, you must tell
me so on the day that you buy or sell. Whenever you do trade, your buying or
selling price is the closing price that day.
On December 5, hand in a brief paper (5 pages maximum) that
(a) describes the company (Value Line or the Internet will help with this);
(b) identifies the reasons you purchased the stock; (c) compares the stock's
performance relative to the NYSE composite index (including a graph of daily
prices); (d) compares your performance relative to a buy-and-hold strategy if
you traded the stock during the semester, (e) explains why the company did well
or poorly (Internet, newspaper, magazine stories may help here); and (f) explains
why you either would or would not recommend keeping this stock in her portfolio.
You will be graded not on how well the stock did, but on whether your report
is complete, informative, and persuasive. Of course, winners are allowed to
gloat and losers may sulk.
You can do your financial calculations with a financial calculator or with software I’ve written that is available at the SmithFinancialPlace web site.
|
Class
Schedule |
|||
| Monday | Wednesday | ||
| Aug 29, 31 | introduction |
||
| Sept 5, 7 | Chapter 2 lecture |
more Chapter 2 lecture | |
| Sept 12, 14 | Chapter 3 lecture Ch1 HW 9, 11 Ch2 HW 3, 4, 15, 17, 33, 37, 41, 50 |
more Chapter 3 lecture | |
| Sept 19, 21 | more Chapter 3 lecture |
Chapter 4 lecture Ch3 HW 9, 10, 11, 13, 14, 16, 17, 20, 22, 29 |
|
| Sept 26, 28 | more Chapter 4 lecture |
Chapter 5 lecture Ch4 HW 1, 5, 8, 11, 21, 27, 30, 34, 37, 46 |
|
| Oct 3, 5 | Chapter 7 lecture |
more Chapter 7 lecture, EVA |
|
| Oct 10, 12 | Chapter 8 lecture Ch6 HW 2, 4, Ch7 HW 4, 12, 13, 16, 18, 20, 21, 22 |
midterm examination | |
| Oct 17, 19 | no class |
lecture on regression to mean Ch8 HW 14, 15, 16, 21, 27, 30, 32, 33, 37, 41 |
|
| Oct 24, 26 |
lecture on IRR |
Chapter 10 lecture Ch9 HW 5, 10, 11, 18, 19, 22, 28, 30, 31, 32 |
|
| Oct 31, Nov 2 | Chapter 11 lecture |
Chapters 11-12 lecture Challenge 2 due |
|
| Nov 7, 9 | Chapters 13-14 lecture |
Chapter 14 lecture |
|
| Nov 14, 16 | Chapter 15 lecture |
Chapter 16 lecture Ch13 HW 9 Ch14 HW 15, 16, 17 Ch15 HW 5, 8, 19, 21, 23, 37 |
|
| Nov 21, 23 | Ch 17 lecture | no class | |
| Nov 28, 30 | Chapter 18 lecture |
Chapter 19 lecture Ch16 HW 14, 15, 25, 27, 43 Ch17 HW 16, 17, 24 Ch18 HW 6, 7 Challenge 3 due |
|
| Dec 5, 7 | lecture on retirement plans hand in stock-pick paper |
bonus lecture | |