Gary Smith
Economics 156: Security Valuation and Portfolio Theory (Carnegie 214, MW 1:15 - 2:30)
The required textbook is Gary Smith, The Art and Science of Investing (available online). You can do your financial calculations with a financial calculator or with software I’ve written. The course web site also has a large collection of old tests (and answers). Please e-mail me with any and all questions. 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, MarketWatch, Rueters, Morningstar, and ValueLine (through Blais). A huge collection of links is at Daily Stocks. We also have access to the WRDS database (I will give you our class user name and password). This course must be taken for a letter grade. Course grades will be based on the following: 0% homework assignments Five exercises related to each chapter of Security Valuation and Portfolio Theory, which you may discuss with other students, I will cold-call students in class to share their answers. 55% challenge problems Randomly selected 2-person teams will work together on 18 projects with the results presented in class or via Zoom. The presentations can utilize Keynote, Powerpoint, or other visual aids. The class and I will give each speaker constructive suggestions. The presentations will be evaluated based on their effectiveness in conveying the intended information. They should be professional, organized, clear, and engaging so that the audience pays close attention, understands what you are trying to tell them, and retains the main points well enough to explain them to others. Avoid "um," "like," and "you know." Energy is good. Fiddling with pens, papers, and buttons is bad. Maintain eye contact and smile. 15% 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. 30% final examination The final examination, covering all the course material, will be similar to the midterm in structure, but 2.5 hours long, on Friday, December 16, from 2:00 - 4:30. 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.
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
There is a mask mandate for all indoor spaces on campus. You must wear a mask for the entire class; eating and drinking are not permitted. Your mask must cover your mouth and nose. The college has zero-tolerance for violations of this policy, which means that if you come to class unmasked you will have to leave class for the day. |
|
Class attendance is required but if you need to miss class for health reasons, I will work with you. |
| The pandemic is fast-moving and there are likely to be breakthrough infections at the Claremont Colleges, so I may adjust the syllabus as the semester evolves. |
Class
Schedule |
|||
| Monday | Wednesday | ||
| Aug 29, 31 | introduction | lecture: In science we trust | |
| September 5, 7 | Labor Day recess |
presentations 1 |
|
| September 12, 14 | presentations 2 Chapter 3 homework due: |
lecture: IRRs, Liberty Quarry |
|
| September 19, 21 | presentations 3 |
presentations 4 | |
| Sept. 26, 28 | presentations 5 Chapter 6 homework due: |
presentations 6 | |
| October 3, 5 | presentations 7 Lecture: EVA Chapter 7 homework due: |
presentations 8 |
|
| October 10, 12 | presentations 9 |
midterm examination | |
| October 17, 19 | fall recess |
lecture: Houseonomics |
|
| October 24, 26 | presentations 10 |
lecture: The AI Delusion | |
| Oct 31, Nov. 2 | presentations 11 Lectures: Benford's Law Chapter 12 homework due: |
lecture: Semi-efficient markets Chapter 13 homework due: |
|
| November 7, 9 | Lecture: NHST presentations 12 |
lecture: Regression toward the mean |
|
| November 14, 16 | presentations 13 Lecture: 1% Chapter 15 homework due: |
presentations 14 |
|
| November 21, 23 | presentations 15 |
Thanksgiving recess | |
| November 28, 30 | presentations 16 Lecture: CAPM Chapter 18 homework due: |
presentations 17 |
|
| December 5, 7 | presentations 18 |
lecture: Retirement plans & investing outlook | |