Columbia University
Graduate School of Business
B9301-74
Advanced Seminar in Investing
Professor Paul Johnson
Thurs: 4:00-6:50 PM
Winter 1998
303 Uris Hall
Return to Seminar in Investing
This course will attempt to incorporate the two analysis classes – Securities Analysis and Value Investing – with the recent academic work in finance and complex adaptive systems, aimed specifically at the investment process as it is practiced on Wall Street. Considering the close proximity of the School to the center of the investment profession, we aimed to prepare students to move quickly into active roles within the investment profession upon graduation.
The goal of the course is to introduce the students to a relatively deep, overview of the investment process and develop key skills needed to become a successful securities analyst and investor. The course will cover the entire gambit of the investment profession from the dynamics of capital markets to the investment decision-making process, including an in-depth discussion of market efficiency and its consequences to investing. In order to gain practical experience, students will complete three stock recommendations and a full industry analysis during the course (plus a bunch of other fub stuff). This will be structured with a combination of lectures (5 class sessions) and student presentations (6 class sessions.)
The course will offer a challenging and interactive environment to pursue the key investment topics, but will require a tremendous amount of work on the part of the students. Because of the intensity of the course, its attendance will be limited to 30 students. Students will be required to have completed Finance B8313-01 "Securities Analysis" with Professor Johnson or B9301-66 "Value Investing." Interested students will be required to apply for admission into the class; they must submit an essay answering a few questions along with a resume to be considered.
The course will cover the entire gambit of the investment profession from the dynamics of capital markets to the investment decision making process, including the history of investing and an in-depth discussion, and consequence, of market efficiency.
The class will be split into three modules.
The first module will focus on extending our lecture discussion from Securities Analysis. We will cover much of the same material as in that class, although the discussion will be more interactive and the pace will be greatly accelerated.
We will use the case book from the first class (8301) as the case book for this class since most of you never read any of the articles and they are interesting even for a second time to those few of you that bothered cracking the book during the first class. In addition, in light of the cost of the original case book, this way we can amortize it over more classes.
Newspapers: The stock market is the life blood of a capitalist economy. Therefore, the market gets a tremendous amount of press coverage. The Wall Street Journal, Investors' Business Daily and Barron’s are the best day-to-day sources of information, although all of the popular business press cover the market as well. We will discuss in class any major development related to the stock market and to specific industries assigned to groups in this class. Please read the financial press everyday and be prepared to discuss these articles.
Required reading: To be published in early March 1998:
Moore, Geoffrey A., The Gorilla Game, (New York, HarperBusiness), 1998
Each student will present three stock recommendations during the semester -- two buy recommendations and a sell recommendation. Each presentation will be limited to 3 minutes (in order to simulate the real world), followed by 1 minutes of Q&A from the students. These presentations will be graded by the audience, your fellow students. To aid with the presentation, each student will prepare a one-page handout to be distributed in class to the audience (I have designed the form). Presentations will be held strictly to the allotted time, so be prepared and watch the time! There will be a separate handout on this assignment. I will invite former students to attend the final presentations--Alumni Day--to spice up the Q&A and to help with the final grading.
The third module will focus on industry knowledge. Securities Analysis (8301) focused on company- specific knowledge; this class will augment that knowledge with over all industry knowledge. To accomplishes this goal, the class will be split into 15 groups of two students each. Each group will be assigned a specific industry group. Each student group is expected to become an expert on the industry during the duration of the course. Each group will be required to become immersed in the industry, with weekly discussions of major events (if they arise), key industry changes and general news topics within the industry. During two of the last three classes, each group will give an in-depth presentation on the industry, covering basic growth characteristics, competitive structure, economic outlook, and investment appeal. Each group will select a recommendation as their best long investment and the best short investment within the industry. (see separate handout for more details)
Grades in the course will be based on the following:
1. Industry presentation (30%)
2. Three minute drills (50%)
3. Class participation (20%)
Grade breakout:
| Individual activity | 70% |
| Group activity | 30% |
This is considered a seminar level course and, therefore, the focus will be on the class topics more than grades.
This course is designed to help build the following skills:
Communications Skills
Presentation
Writing short essays/reports
Model Building
Income Statement, Balance Sheet, Quarterly Forecast
ROIC
Capital Market Theory – Highly Competitive Environment
Research Techniques
Rational Decision Making
The course assignments fall into the following categories:
6 presentations
1 full financial mechanics exercise
3 mini-financial mechanics exercise
1 industry analysis
3 essays
3 single stock sheets
All students completing these exercises correctly will be prepared to assume a full-time job on Wall Street.
World-wide Web
To facilitate the distribution of course and other related material, I have set-up the following web-page:
www.CAPatColumbia.com
Handouts, homework assignments and related material will be available at this site; please feel free to browse.