Security Analysis

 

 

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Security Analysis

Professor Paul Johnson

This course will provide a real world view of the role and activities of an equity security analyst within the Value Investing framework. We will build an understanding of how capital markets function, teach the tools as well as the thought process of security analysis, and expose students to the mental limitations we all bring to the exercise. The course will focus on three aspects of securities analysis: (1) analyzing a company; (2) the valuation process; and (3) the mental models needed to achieve success in a highly-competitive capital market.

There is no formal structure to security analysis and the subject cannot be taught through books and readings alone. Although written material can provide analytical tools, security analysis must be learned through practice. Consequently, the course is split into two sections. The first eight lectures will focus on the various tools of security analysis. In the last two lectures, students will practice what they have learned by presenting original company analysis and a stock recommendation to the class.

The course prerequisites are courses in Accounting and Finance. “Earnings Quality” is also recommended.


Syllabus

 

Students are asked the following two questions in class.  Here are my responses.

Is the market short-term oriented?

What is the difference between value and growth investing?

 

I have also written a couple of essays relevant to securities analysis.

Academy Awards, Sharon Stone and Market Efficiency

Competitive Advantage

How to think about scenarios in the analysis process

Shenanigans, Forensic Analysis and Short-selling

 

A flow-chart of the securities analysis process

A chart of risk levels

Valuation Matrix

 

Michael Lewis's terrific story of the Oakland A's, as told in Moneyball, offers an interesting parallel to investing.  I use this book, and its insights, to provide important instruction in my class on Security Analysis.

 

Presentation Guide Lines

 

 

 

 

 

This page was last updated on 07/17/11.