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General Meeting #6 October 11, 2011
Agenda Question of the Day Market Overview Dissecting GDP Team Stock Pitch Membership Voting Announcements
Question of the Day
World Market Overview
U.S. Market Overview
S&P 500 Snapshot
Market Overview U.S. Markets EU Bailout Fund Saga – Slovakia lawmakers reject plan One of Europe’s poorest nations – 17 countries in Eurozone 16 have passed Slovakia is the last holdout Need unanimous vote Slovakia Prime Minister Iveta Radicova urged Parliament to pass measures Senate GOP fillabusters Obama’s jobs bill – Absolutely no surprise here Market News
Earnings Front Alcoa kicks off earnings season by disappointing Wall Street Important Upcoming Earnings Reports: – October 13: JPMorgan Chase Concensus EPS Est. $0.96 – October 17: Citigroup Concensus Est. $0.33 – October 17: Wells Fargo Concensus Est. $0.72 Earnings Season
Philosophical Importance Know what you’re looking for How to look for investments Consistency of strategy – Continuous improvement – Understanding of risks/rewards Framework for Investing
Broad Views Technical Philosophies – Price movement Understanding pricing trends, finding when history “repeats” – Supply and Demand Reactions Market actions tend to discount everything (at some point) Fundamental Philosophies – Financial analysis Margins, ratios, earnings, leverage, etc. – Strategic understanding Industry, competitive advantage, growth opportunities
Technical Philosophies Price Movements – Strength, direction, momentum and duration of trends in a stock’s price – Primarily a mathematical/statistical analysis – Examples: MACD, Bollinger Bands, etc. Supply and Demand Reactions – Finding when the market is acting irrationally based on recent price level changes – Example: point and figure charting
Fundamental Philosophies Value – Purchasing fundamentally underprice companies – Typical signs of value stocks include: Below Book Value Low P/E, P/B, P/S ratios Stable earnings, consistent earnings yield Growth – Purchasing rapidly ascending companies – Typical signs of growth stocks include: High sales growth rates Possibly low/no-profit (with expectations for a rapid flip) High overhead for growth (expected to diminish) Two Primary Groups
Fundamental Philosophies Benjamin Graham and David Dodd – Securities Analysis and the Intelligent Investor – “Mr. Market” – Price level vs. Intrinsic Value Walter Schloss – 15.3% annualized returns for 50 years (vs. 10% w/ S&P 500) – Identify securities that sell for considerably less than their value to a private owner Less interested in underlying operations Variation of Price level vs. Intrinsic Value Value Investors
Fundamental Philosophies Phillip Fisher – Common Stocks and Uncommon Profits – Stock’s worth considered in terms of potential growth rather than price trends and absolute value Growth Investors
Fundamental Philosophies David Einhorn – 1996 to present: 21% annual returns – Fundamental tenants: How competitive is the business How does the company perform relative to competitors Are management’s interests aligned with shareholders? Concentrated Portfolio Other Successes
Fundamental Philosophies Warren Buffet – “I’m 15% Fisher and 85% Graham” – 20.5% annualized returns since 1965 – Keys: Margin of Safety High quality, still growing businesses Management quality Competitive advantage Other Successes
Fundamental Philosophies The key to investing is not assessing how much an industry is going to affect society, or how much it will grow, but rather determining the competitive advantage of any given company and, above all, the durability of that advantage. The products or services that have wide, sustainable moats around them are the ones that deliver rewards to investors. -Warren Buffet Other Successes
Membership Voting Is this stock investment grade?
Membership Dues Active Members must pay dues – $40 per semester or $60 per academic year Payment Methods: – Online via website: http://usiteam.org/ Navigate to Membership and select “Pay Dues” – In person by cash, check, or credit card (see Mark)
Stock Pitch Competition CORRECTED DATE: Saturday, October 22 nd 10:30a-6:00p, SAC Legislative Assembly Awards: – 1 st Place Overall – 2 nd Place Overall – Best Underclassmen Team Registration commences online Tonight!
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