Presentation on theme: "THERE ARE NO WARRANTIES, EXPRESSED OR IMPLIED, AS TO ACCURACY, COMPLETENESS, OR RESULTS OBTAINED FROM ANY INFORMATION DISCUSSED DURING HAWKTRADE MEETINGS."— Presentation transcript:
THERE ARE NO WARRANTIES, EXPRESSED OR IMPLIED, AS TO ACCURACY, COMPLETENESS, OR RESULTS OBTAINED FROM ANY INFORMATION DISCUSSED DURING HAWKTRADE MEETINGS. Past performance does not guarantee future results. Investment returns and principal value will fluctuate, so that investors' shares, when sold, may be worth more or less than their original cost. Investing in any financial instruments does not guarantee that an investor will make money, avoid losing capital, or indicate that the investment is risk-free. There are no absolute guarantees in investing. HAWKTRADE and its members do not bear any responsibility for losses or gains made by members trading on their personal accounts based on analysis from HAWKTRADE meetings.
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Managing Partner at True North Wealth Management His primary focus is on educating high net worth families and organizational clients on complex financial matters and simplifying their lives by designing comprehensive solutions.
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Fundamental Analysis 101
A method of evaluating a security that entails attempting to measure its intrinsic value by examining related economic, financial and other qualitative and quantitative factors. Fundamental analysts attempt to study everything that can affect the security's value, including macroeconomic factors (like the overall economy and industry conditions) and company-specific factors (like financial condition and management).evaluating
A methodology of observing influential factors and drivers from a broader spectrum and narrowing in to company specific drivers. Economic Factors: GDP growth, Consumer Confidence, Employment Industry Factors: Current Trends, Competition, Regulation Company Factors: Operating Margins, Revenue Mix, Free Cash Flow
Real GDP is the market value of all goods and services produced in a nation during a specific period of time. Indicator of economic health and stability, often times influencing Federal Reserve’s monetary policy.
CPI measures the changes in the prices of goods and services by urban consumers in a specific time period (monthly). It is the best gauge of inflation in the economy and often drivers monetary policy. It is important to understand what CPI is doing to identify whether COGS is moving from supply/demand imbalance, and what true returns are.
Provides current unemployment rate, as well as jobs added for the previous month. Survey of roughly 300,000 establishments across 600 industries, account for approx. 1/3 of all payroll employees. It is important because it gives insight into current wages earned and labor costs, while also providing overall view of the strength of the labor force and economy.
Bloomberg Economic Calendar - mic-calendar/ mic-calendar/ U.S. Department of Labor – bls.gov/ces/home.htm U.S. Department of Commerce – census.gov/cgi-bin/briefroom/BriefRm
Life cycle – important to understand the whether or not it is a mature industry: proven demand, barriers to entry, excess to capital markets Business cycle – link to the overall economic cycle, seasonality of business, revenue mix according to interest rates
Technology – does the industry introduce new technology, is it in danger of being obsolete from new tech Government – effect of government regulation on supply chain, consumption, safety/employee benefits Social Changes – convenience of platform, lifestyle changes, health concerns Demographics
Natural resources used in production of products. Supply/Demand relationship. Interest rates on financing activities. Union costs and wage increases.
Product Lines – current demand for products, revenue mix New Products – potential growth of new products Customer Base – the customers that are likely to buy their products (income distribution, geographic, lifestyle, gender) Marketing Strategy
Competitive Environment – how many players, market share, diversification, barriers to entry, life cycle Comparative Analysis – operating margins, revenue mix, debt levels, shareholder policy, pricing ratios
Every publicly traded company must report financial statements to the SEC. 10K – annual report of financial operations of the company 10Q – quarterly report of financial operations of the company SEC – sec.gov Thompson One - https://www.thomsonone.com/Workspace/Main.aspx?View=Action%3dOpen&BrandName=ww w.thomsonone.com&IsSsoLogin=True
Moderate growth in recent history, but expected to improveimprove Consumers are still mending their eroded trust post financial crisis In the period between European and Asia- Pac banks outpaced domestic growth Very competitive, many institutions offer the same core services Banks, thrifts, credit unions, investment banking firms, brokerage fees etc. Some product differentiation in terms of specialized services and fees
Interest Rates Interest Rates The banking industry is extremely sensitive to interest rate fluctuations The majority of a banks revenue comes from assets (loans) on their balance sheet Gap The difference between a banks assets and liabilities A positive gap generates profits during periods of high interest rates Capital Adequacy Banks are required to have certain types of capital in reserve in the case of an adverse scenario Banks can either issue new equity or shrink balance sheets to increase capital
Litigation Expense Banks are still paying off the settlements that came after the crisis Bank of America (BAC) reported $5.6 billion in litigation cost(BAC) JP Morgan Chase & Co (JPM) had an unexpected $1 billion legal expense (JPM) Earnings Season The “big banks” reported earnings last week Bank of America Citigroup JP Morgan Chase Wells Fargo Goldman Sachs Morgan Stanley Results were positive overall
Financial holding company involved in a myriad of services Reported net income of $5.57 billion Reported Increased fixed income revenues due a volatile September Mortgage business profit tumbled, down $266 million from prior year
Three operating segments Community banking Wholesale Banking and Wealth Brokerage and Retirement Earnings of $5.7 billion meet expectations Earnings expectations Returned $3.6 billion to shareholders through stock buybacks and repurchase agreements Strong revenue diversification
Producer Price Index, Retail Sales and Housing Starts
Measures inflation from the perspective of the seller Has been very low, even turning negative Decreased by.1% when analysts expected an increase
Declined.3% in September Number was drug down by low auto and gasoline sales Core still decreased by.1% after removing the gasoline and auto components
A “housing start” is registered at the start of construction of a new primarily residential building Multi family component up 16.7% Single family component up 1.1%