hirsch ch02
TRANSCRIPT
Chapter 2
Sources of Investment Sources of Investment InformationInformation
CHAPTER 2 OUTLINE
2.1 2.1 Ways of Wall StreetWays of Wall Street
2.2 2.2 Internet RevolutionInternet Revolution
2.3 2.3 Investment Information on the InternetInvestment Information on the Internet
2.42.4 Financial PressFinancial Press
2.5 2.5 Wall Street ResearchWall Street Research
2.6 2.6 Investments as a ProfessionInvestments as a Profession
KEY TERMS
Chartist/TechnicianChartist/Technician Head and ShouldersHead and Shoulders Stock QuotesStock Quotes Real TimeReal Time EDGAREDGAR Ticker SymbolTicker Symbol 10Q Report10Q Report 10K Report10K Report Proxy StatementsProxy Statements
SEC Form 144SEC Form 144 Stock Message BoardStock Message Board Bullish/BearishBullish/Bearish Stock BrokerStock Broker Security AnalystSecurity Analyst Portfolio ManagersPortfolio Managers Certified Investment Certified Investment
PlannerPlanner Investment BankerInvestment Banker
Ways of Wall Street
Caveat Emptor (Let the Caveat Emptor (Let the Buyer Beware)Buyer Beware)
““Where Are the Where Are the Customers’ Yachts?”Customers’ Yachts?”
Neither the Advice nor the Neither the Advice nor the Wisdom on Wall Street is freeWisdom on Wall Street is free
WHAT DID THEY SAY??
Wall Street & Internet Jargon
Trader TermsTrader Terms
Internet TermsInternet Terms
Technician’s TermsTechnician’s Terms
Financial and Investing Glossaries on the Internet:Financial and Investing Glossaries on the Internet:
<<http://http://www.matisse.net/files/glossary.htmlwww.matisse.net/files/glossary.html>>
<<http://http://www.siliconinvestor.com/misc/glossary/alist.htmlwww.siliconinvestor.com/misc/glossary/alist.html>>
TECHNICIANS or CHARTISTS
Pick stocks based on patterns of Pick stocks based on patterns of past price and volume data--e.g., past price and volume data--e.g., “head and shoulders” “head and shoulders” formation--bearish indicatorformation--bearish indicator
Technical trends can move Technical trends can move markets in short term, but markets in short term, but fundamentals count in longer fundamentals count in longer termterm
Tend to look at day-to-day stock Tend to look at day-to-day stock movements, often with 20/20 movements, often with 20/20 hindsighthindsight
Internet Revolution
Widespread Widespread dissemination of dissemination of informationinformation
Two-way Two-way communicationcommunication
Cheaper and more Cheaper and more timely than print sourcestimely than print sources
Makes financial markets Makes financial markets more democraticmore democratic
Reduces information-Reduces information-gathering costsgathering costs
Can be fertile space for Can be fertile space for stock price manipulation stock price manipulation and fraudand fraud
THE INTERNETSo Powerful, It Brings Down Walls
With a click of the mouse:With a click of the mouse: consumer newsconsumer news attitudesattitudes impressionsimpressions ideasideas variety of new products and servicesvariety of new products and services
Enemy of despots and dictatorsEnemy of despots and dictators
E-commerce and the Internet
Tool for ConsumersTool for Consumers Tool for CompaniesTool for Companies
Ready information is Ready information is enemy of high prices enemy of high prices and high profit margins and high profit margins as consumers shop via as consumers shop via the ‘netthe ‘net
Reduce pricesReduce prices
Get closer to customersGet closer to customers
Find out how to meet and Find out how to meet and exceed customer needsexceed customer needs
Financial Informationon the Internet
<<http://http://cbs.marketwatch.comcbs.marketwatch.com>> <<http://http://www.dailystocks.comwww.dailystocks.com>>
Stock Quotes in Real TimeStock Quotes in Real Time
Volume InformationVolume Information
Financial Data on:Financial Data on:
CompaniesCompanies
IndustriesIndustries
U.S. EconomyU.S. Economy
World eventsWorld events
QuotesQuotes
ChartsCharts
NewsNews
SEC FilingsSEC Filings
Stock Research ReportsStock Research Reports
Earnings EstimatesEarnings Estimates
FundamentalsFundamentals
WHO IS EDGAR?
<<http://www.edgar-online.comhttp://www.edgar-online.com>>
Electronic retrieval analysis for SEC filingsElectronic retrieval analysis for SEC filings
Free website for gov. reports filed by individual companiesFree website for gov. reports filed by individual companies
For-profit company that supplies For-profit company that supplies investors with SEC reports and filingsinvestors with SEC reports and filings
Ticker symbol: unique 2,3,or 4 letter Ticker symbol: unique 2,3,or 4 letter code for companycode for company
SEC REQUIRES
10Q:10Q: Quarterly Accounting Quarterly Accounting InformationInformation
10K:10K: Annual Accounting Annual Accounting InformationInformation
13D:13D: 5% Ownership 5% Ownership PositionsPositions
Form 144:Form 144: Intention to Sell Intention to Sell Restricted StockRestricted Stock
Proxy statement or annual meeting announcement Members of top
management Board of directors Large investors Stock ownership
positions by managers Pay-for-performance
incentives
REAL TIME QUOTES
<<http://http://freerealtime.comfreerealtime.com>>
Fast-moving marketsFast-moving markets
Up-to-the-minute quotes and newsUp-to-the-minute quotes and news
Free quote informationFree quote information
MUTUAL FUND INFORMATION
<<http://http://www.morningstar.comwww.morningstar.com>>
Morningstar—watchdog Morningstar—watchdog group for mutual fund group for mutual fund industryindustry
Comprehensive, timely Comprehensive, timely information and analysisinformation and analysis
Information on sector Information on sector fundsfunds
STOCK MESSAGE BOARDS
Websites for anonymous individuals to post Websites for anonymous individuals to post information about companies or investmentsinformation about companies or investments
Timely information about what other investors are Timely information about what other investors are thinkingthinking
Can be manipulated via misinformation, rumor, and Can be manipulated via misinformation, rumor, and gossipgossip
<<http://quote.yahoo.comhttp://quote.yahoo.com>>
FINANCIAL PRESS
Financial Newspapers:Financial Newspapers:
The Wall Street Journal The Wall Street Journal (print & interactive (print & interactive versions)versions)
Investor’s Business DailyInvestor’s Business Daily
New York TimesNew York Times
San Francisco ChronicleSan Francisco Chronicle
USA TodayUSA Today
Financial Periodicals:Financial Periodicals:
Barron’s,Business WeekBarron’s,Business Week
ForbesForbes
FortuneFortune
Inc.Inc.
MoneyMoney
WorthWorth
WALL STREET RESEARCH
Analyst Opinion Summaries
Wall Street trading firms’ opinionsWall Street trading firms’ opinions Detailed information about:Detailed information about:
CompaniesCompanies Industries Industries Overall EconomyOverall Economy Global Stock and Bond MarketsGlobal Stock and Bond Markets
Buy/sell recommendationsBuy/sell recommendations Bullish ConsensusBullish Consensus Bearish SentimentBearish Sentiment
WALL STREET RESEARCH
Company Reports
Company ReportsCompany Reports
Industry ReportsIndustry Reports
U.S. Market OutlookU.S. Market Outlook
Global OutlooksGlobal Outlooks
Investments As a ProfessionFinancial Job Market Overview
Employment opportunities in financial services expected to Employment opportunities in financial services expected to grow rapidlygrow rapidly
Amount of financial sophistication demanded of finance Amount of financial sophistication demanded of finance specialists and nonspecialists expected to risespecialists and nonspecialists expected to rise Corporate Treasurers/CFOsCorporate Treasurers/CFOs Personnel/Human ResourcesPersonnel/Human Resources
Boundaries between investment and financial instruments Boundaries between investment and financial instruments continue to blur--> more account executives incontinue to blur--> more account executives in Commercial banksCommercial banks savings institutionssavings institutions insurance carriersinsurance carriers real estate companies real estate companies
CAREER OPPORTUNITIESStock Brokers & Investment Managers
Stock Brokerage:Stock Brokerage: financial agents who act as financial agents who act as go-betweens for individual buyers and sellersgo-betweens for individual buyers and sellers
Investment ManagementInvestment Management
Security Analysts:Security Analysts: specialists who identify specialists who identify investment opportunities for individualsinvestment opportunities for individuals
Portfolio Managers:Portfolio Managers: manage investments for manage investments for individuals and institutionsindividuals and institutions
CAREER OPPORTUNITIESFinancial Planners
Help individuals identify and meet financial goalsHelp individuals identify and meet financial goals
Certified Financial Planners:Certified Financial Planners: must pass challenging exams must pass challenging exams from College of Financial Planning--equivalent to CPAfrom College of Financial Planning--equivalent to CPA
financial plan processing and insurancefinancial plan processing and insurance
investment planninginvestment planning
income tax planningincome tax planning
retirement planning/employee benefitsretirement planning/employee benefits
estate planningestate planning
CAREER OPPORTUNITIES
Investment Banking
Help corporate clients meet Help corporate clients meet financial needs, such as financial needs, such as issuing stocks or bondsissuing stocks or bonds
Arrange to sell new securities Arrange to sell new securities to general publicto general public
Arrange mergers and Arrange mergers and acquisitionsacquisitions