MANA 4101 Wall Street 101

Exchanges

DOW
NASDAQ
CBOT
S&P 500
RUSSEL 2000
FTSE
LA BOURSE
NIKKEI
HENG SENG

DOW Companies removed

Alcoa, BofA, HP, AT&T

Buy side" - Buy stocks

Mutual funds-
Fidelity, Vanguard, Wellington -- portfolio managers
Institutional Investors -- CalPERs

Hedge Funds

Icahn Capital Mgmt
Pershing Square - short stocks

Liquid Alternatives

-Global real estate
-Start-up companies
-Unlisted securities

Sell side

-Analysts
-Private clients-trading
-Investment banking

Budget Bracket

Merrill Lynch
Goldman Sachs
Morgan Stanley
J.P.Morgan
Bear STerns
Lehman Brothers
Niche players: Keefe, Bruyette, and Woods; Fox, Pitt-Kelton

Retail Brokers

-Execute trades for clients, earn commissions (beware)
-Bring individuals investors' assets into fee-based accounts
evolving job function: online brokers=cheaper commissions & internet offers research=less need for advice
-Essentially sales function

Institutional Sales

-Provide research/insight for Portfolio Mgers to bring in trading commissions=the link between sellside and buyside
-Primarily relationship mgmt

Analysts

-Sell-side: sell research to buyside in order to earn commissions and close investment banking deals
-Associates manage models, client calls, eventually cover their own space

Investment Bankers

Underwrite corporations' equity and debt offerings, advise on mergers & acquisitions, take a % of deal as fee revenue
-Regulated interactions with Analysts
-Analysts: modeling, presentations
-Associates: jack of all trades
-VPs/MDs: deal sourcing, relatio

The Chinese Wall

Supposed" wall barring information transfer between banking, analysts, and sales

Technical Analysis

Chart Analysis
-Head and shoulder
-Ceilings and floors
-Breakouts
-200 Day Moving Avg

Fundamental Analysis

-Mgmt team
-Product characteristics
-Industry characteristics
-Future cash flows

Current trends

Re-regulation: conflicts between investment banking and commercial banking (Enron and Worldcom)
Analyst scrutiny: conflicts between research and investment banking
Accounting: quality of reported financial results

Blue chip

Large, well established, and financially sound company that has operated for many years

Dividend

a sum of money paid regularly (typically quarterly) by a company to its shareholders out of its profits

Beta of a stock

risk an investor is exposed to by holding on to a particular stock or portfolio as compared to the market as a whole

Stock split

For example, assume that XYZ Corp. has 20 million shares outstanding and the shares are trading at $100, which would give it a $2 billion market capitalization. The company's board of directors decides to split the stock 2-for-1. Right after the split tak

Penny stocks

just don't - common stock valued at less than one dollar

Managerial Implications

-Must manage Wall street expectations
-Mgers are responsible for controlling the stock price
-Mgers are responsible for guiding investment banking activities
-Mgers guide investment of excess profits. it is illegal to fix, or prop up the stock price

Further reading

WSJ
Barron's
Bloomberg

DOW

United States

NADAQ

United States

CBOT

Options Trading in Chicago

S&P 500

Standard and Pores

Russel 2000

London

FTSE

Financial Times in London

La Bourse

French Exchange

Nikkei

Tokoyo

Heng Seng

Chinese Exchange

Exchanges

DOW
NASDAQ
CBOT
S&P 500
RUSSEL 2000
FTSE
LA BOURSE
NIKKEI
HENG SENG

DOW Companies removed

Alcoa, BofA, HP, AT&T

Buy side" - Buy stocks

Mutual funds-
Fidelity, Vanguard, Wellington -- portfolio managers
Institutional Investors -- CalPERs

Hedge Funds

Icahn Capital Mgmt
Pershing Square - short stocks

Liquid Alternatives

#NAME?

Sell side

#NAME?

Budget Bracket

Merrill Lynch
Goldman Sachs
Morgan Stanley
J.P.Morgan
Bear STerns
Lehman Brothers
Niche players: Keefe, Bruyette, and Woods; Fox, Pitt-Kelton

Retail Brokers

-Execute trades for clients, earn commissions (beware)
-Bring individuals investors' assets into fee-based accounts
evolving job function: online brokers=cheaper commissions & internet offers research=less need for advice
-Essentially sales function

Institutional Sales

#NAME?

Analysts

#NAME?

Investment Bankers

Underwrite corporations' equity and debt offerings, advise on mergers & acquisitions, take a % of deal as fee revenue
-Regulated interactions with Analysts
-Analysts: modeling, presentations
-Associates: jack of all trades
-VPs/MDs: deal sourcing, relatio

The Chinese Wall

Supposed" wall barring information transfer between banking, analysts, and sales

Technical Analysis

Chart Analysis
-Head and shoulder
-Ceilings and floors
-Breakouts
-200 Day Moving Avg

Fundamental Analysis

#NAME?

Current trends

Re-regulation: conflicts between investment banking and commercial banking (Enron and Worldcom)
Analyst scrutiny: conflicts between research and investment banking
Accounting: quality of reported financial results

Blue chip

Large, well established, and financially sound company that has operated for many years

Dividend

a sum of money paid regularly (typically quarterly) by a company to its shareholders out of its profits

Beta of a stock

risk an investor is exposed to by holding on to a particular stock or portfolio as compared to the market as a whole

Stock split

For example, assume that XYZ Corp. has 20 million shares outstanding and the shares are trading at $100, which would give it a $2 billion market capitalization. The company's board of directors decides to split the stock 2-for-1. Right after the split tak

Penny stocks

just don't - common stock valued at less than one dollar

Managerial Implications

#NAME?

Further reading

WSJ
Barron's
Bloomberg

DOW

United States

NADAQ

United States

CBOT

Options Trading in Chicago

S&P 500

Standard and Pores

Russel 2000

London

FTSE

Financial Times in London

La Bourse

French Exchange

Nikkei

Tokoyo

Heng Seng

Chinese Exchange