Attendance is required at the first class meeting on
Jan 14 and at the final presentations on May 6.

Week 1: Jan 14. Course Introduction and Review of a Random Walk Down Wall Street.
Download the Course Syllabus.
Assignments:
1. Read A Random Walk Down Wall Street Chapters 1-11.
2. Complete the Study Guide Questions for all Random Walk chapters.
3. Prepare for a brief open-note quiz on A Random Walk Down Wall Street.
4. Complete WTE applications and budgets.



Week 2: Jan 21. (No in-class meetings; MLK Holiday). Perspectives on Active Money Management.
Assignments:
1. Take the Chapter 1 online lecture: Part 1 Part 2 Part 3
2. Complete Homework Questions 1-38 for Chapter 1.
3. Skim through the investment process descriptions from Morgan Stanley, Invesco-1, Invesco-2, Hancock, Northpointe, Goldman Sachs and the Boston Co.
4. Use the research reports above to identify similarities in the way active equity managers conceptualize their stock selection process, and relate to specific items in previously-published SIF reports (available on the APM Research Page).
5. Prepare for class discussion by reading the following articles and briefly outlining the main ideas from each: a.) The Prescient are Few b.) An Index Fund Fundamentalist c.) The Winners Game d.) Levels of the Game e.) Why Do People Trade?
6. Watch the CNBC interviews with Charles Ellis (re: his investment philosophy: Charles Ellis) and Gary Kaminsky (re: the underperformance of stock mutual funds, video embedded below). Key takeaways from the Kaminsky video include the percentage of mutual funds underperforming their benchmarks by at least 5% (500 basis points).




Week 3: Jan 28. Analyzing The Macro-Finance Environment.
Assignments:
1. Take the Chapter 2 online lecture Part 1 Part 2 Part 3.
2. Review my December 2012 article Sluggish Business Conditions Expected to Continue.
3. Write out brief summaries (no more than 100-200 words) of at least 2 articles about the global economy and/or the interaction between the economy and financial markets and bring your summaries to class. My Quicklinks in the navigation bar to the right are a good source of material for this assignment.
4. Begin making notes as a starting point for the writing assignment required for Chapter 2 in the following file: Ch-02-Economic-Indicators. More detailed instructions on how to analyze and interpret each indicator can be found in Part 1 of the online lecture. Bring your notes to class on Jan. 28! We’ll spend most of the class period workshopping this writing assignment as a group activity.
5. Use the Economic Scorecard spreadsheet to rank each economic indicator -1, 0, or +1 and interpret the lagging, coincident and leading diffusion indexes. This will also be part of our in-class workshop activities.
Additional Materials:
National Bureau of Economic Research Business Cycle Dates
Investopedia article on cyclical stocks: http://investopedia.com/articles/00/082800.asp



Week 4: Feb 4. Complete the Macro Forecasting Newsletter
Assignments:
1. Tonight’s class will consist of student-led discussions of the current state and likely direction of the global macroeconomy. Students should be doing a lot of reading and thinking this week and be able to enunciate clear, well-organized thoughts about the economy.
2. Students will submit their final draft of the Macroeconomic Newsletter this week (this is a multi-week collaborative project due Sunday, February 10).
Additional Materials:
Readings will be posted.



Week 5: Feb 11. Historical Performance Analysis.
Assignments:
1. Read the Chapter 4 Lecture Notes (we’re not covering a “Chapter 3”): Fundamental Analysis and Valuation.
2. Study the following teaching examples to gain additional familiarity with our modeling process: Oracle, Williams Companies and Apple.
3. Students begin building their own financial analysis spreadsheet using the following template (this is a multi-week individual project that will continue for the next 2 weeks). A good goal for this week is to get the Historical Performance Analysis worksheet and Income Statement Forecasting worksheets functioning. (You’ll have to read ahead in the Chapter 5 materials for the forecasting instructions.) You will build out the following spreadsheet template:
MCD Performance Analysis Template
Use the formulas and examples in the following notes:
Fin-Analysis-MCD-YUM.pdf
The idea is to get all the finance formulas in the spreadsheet template functioning so that you can duplicate the answers in the following file:
MCD Performance Analysis Model
The performance model file immediately above is a fully functioning analysis and forecasting model. We’ll use these all semester. For this week’s learning activities, use the MCD performance model as an answer key to follow as you fill out your performance analysis template.
4. After analyzing each firm’s metrics, use the diffusion indexes on the Historical Performance Analysis worksheet to assign a performance score to each firm. Be prepared to explain your rankings for each metric in class.
5. These 5 videos provide you with many tips regarding how to complete the Historical Performance worksheet: Video-1 - Video-2 - Video-3 - Video-4 - Video-5. The spreadsheet featured in the videos use an old example from IBM, but the layout of this semester’s spreadsheet model is identical to the one shown in the videos. Also, the videos are in Flash format, so they will not play on an iPad or iPhone.
6. Next week’s videos provide information about the Income Statement and Balance Sheet Forecasting worksheets.



Week 6: Feb 18. Financial Statement Forecasting, Financial Analysis and Valuation.
Assignments:
1. Read the Chapter 5 Lecture Notes: Forecasting and Valuation.
2. This week’s homework involves manipulating the forecasting and analysis spreadsheets (provided below) to gain an understanding of financial statement forecasting and the financial analysis of pro forma financial statements.
3. Students continue building their own financial analysis spreadsheet (this is a multi-week individual project that is due Sunday, March 3). These 5 videos provide you with ample tips regarding how to complete the Income Statement and Balance Sheet Forecasting worksheets: Video-1 - Video-2 - Video-3 - Video-4 - Video-5. (The videos are in Flash format, so they will not play on an iPad or iPhone.) The following video provides updates for the Balance Sheet Forecasting worksheet: Video-6.
Additional Materials:
Chapter Spreadsheets: This week’s assignment continues using the Spreadsheet Template distributed with the Week 5 materials above.



Week 7: Feb 25. Creating and Presenting a Stock Analysis Narrative.
Assignments:
1. This week students finish their spreadsheet model by completing the Financial Analysis and Valuation worksheet. The following videos provide you with tips regarding how to complete this week’s assignment: Video-1 - Video-2 - Video-3 - Video-4 - Video-5. (The videos are in Flash format, so they will not play on an iPad or iPhone.) This assignment is due Sunday, March 3. Bring your spreadsheet to every class session so we can make final corrections in the lab as necessary.
2. Students will take turns explaining items in the model such as:
a.) Historical Performance and Historical Value Creation
b.) Forecasting Assumptions (with an emphasis on explaining the rationale behind the choice of growth rates, margins, beta, etc.)
c.) The stock’s Relative Valuation compared to its key competitor (P/E, P/FCF, P/B, etc.)
d.) The stock’s Valuation (over- or under-valued based on a discounted FCF model and dividend discount model)
Teams will be critiqued and graded based on the clarity, brevity and accuracy with which they analyze and explain items 2a-d above.
3. Use the following blog articles on Oracle, Williams Companies and Apple as examples of how to apply our analysis and valuation process.
Additional Materials:
VZ-Word VZ-Excel VZ-S&P
EMR-Word EMR-Excel EMR-S&P
DE-Word DE-Excel DE-S&P
The segment to watch in the video below features analyst Reggie Middleton (starting around 50 seconds in through the 2 minute mark) discussing how Apple’s product strategy will lead to compression in their profit margins. A great example of an experienced analyst connecting his deep knowledge of a company with their expected future financial performance. Apple’s historical gross and operating margins are shown below, with the video following:

Watch below as Andrew Ross Sorkin portrays a “journalist” (probably from a David Mamet script) and asks blatantly leading questions, trying to get his guests to “confess” that the economy is really doing well, then sits in shock as the guests tell the truth anyway. Sad to see a young talent sell out -- but as Keynes said, “It’s better to fail conventionally than succeed unconventionally.”



Week 8: Mar 4. Position Reviews: Stocks to be announced.
Assignments:
1. Students will be assigned to 1 of 3 teams. Each team will be tasked with using the entire model to explain items such as:
a.) Historical Performance and Historical Value Creation
b.) Forecasting Assumptions (with an emphasis on explaining the rationale behind the choice of growth rates, margins, beta, etc.)
c.) The stock’s Relative Valuation compared to its key competitor (P/E, P/FCF, P/B, etc.)
d.) The stock’s Valuation (over- or under-valued based on a discounted FCF model and dividend discount model)
Teams will be critiqued and graded based on the clarity, brevity and accuracy with which they analyze and explain items 2a-d above.
2. Use the following blog articles on Williams Companies, Oracle and Apple as examples of how to apply our analysis and valuation process.



Week 9: Mar 11. Position Reviews: ABX, PG, PAYX
Assignments:
1. Students will be assigned to 1 of 3 teams. Each team will be tasked with using the entire model to explain items such as:
a.) Historical Performance and Historical Value Creation
b.) Forecasting Assumptions (with an emphasis on explaining the rationale behind the choice of growth rates, margins, beta, etc.)
c.) The stock’s Relative Valuation compared to its key competitor (P/E, P/FCF, P/B, etc.)
d.) The stock’s Valuation (over- or under-valued based on a discounted FCF model and dividend discount model)
Teams will be critiqued and graded based on the clarity, brevity and accuracy with which they analyze and explain items 2a-d above.
2. Use the following blog articles on Williams Companies, Oracle and Apple as examples of how to apply our analysis and valuation process.
Additional Materials:
ABX Word ABX Excel ABX S&P ABX Argus
PG Word PG Excel PG S&P PG Argus
PAYX Word PAYX Excel PAYX S&P PAYX Schwab

Video: Downloading and Graphing Financial Data From Capital IQ



Week 10: Mar 18. Spring Break -- No Class Meetings
Assignments:
1. Students monitor the financial news to keep in touch with the macro-finance narrative.
2. Students will run the Capital IQ stock screener and generate 1-2 stock ideas for analysis as new long positions in the SIF portfolio (video orientation below):
Additional Materials:
The following video will orient you to the Capital IQ Stock Screener. I recommend watching in full screen mode:





Week 11: Mar 25. Firm Strategy, SWOT and Porter Analysis
Assignments:
1. Last week’s teams will update their Mar. 4 presentations to include an analysis of each firm’s strategic position in its industry. The frameworks we’ll use for this are a SWOT and Porter analysis.
2. Read the following online articles to refresh your understanding of the SWOT framework from QuickMBA and MindTools. (You are also highly encouraged to review the coverage of these topics from your Strategic Management textbook and other materials provided in your Strategic Management course.)
3. Use each company’s 10-K and the CEO’s letter to shareholders in the Annual Report to outline each company’s Strengths, Opportunities, Weaknesses and Threats. (Remember that S&W take an internal perspective on the company, and O&T pertain to factors that are external to the company.) The following worksheets provide suggestions of how to set up the analysis, although the spaces provided are so small you will probably work more effectively if you re-create your own SWOT worksheet in Word: SWOT Template 1 and SWOT Template 2.
4. Read the following online articles to refresh your understanding of the Porter framework from QuickMBA and MindTools. (You are also highly encouraged to review the coverage of these topics from your Strategic Management textbook and other materials provided in your Strategic Management course.)
5. Use each company’s 10-K and the CEO’s letter to shareholders in the Annual Report (provided below) to construct a Porter’s Five Forces analysis. The following worksheet provide suggestions of how to set up the analysis, although the spaces provided are so small you will probably work more effectively if you re-create your own Porter worksheet in Word: Porter Template.
6. Synthesize your outputs from #3 and #5 above into a 400-500 word analysis of your company’s strategic position (you are practicing a draft of how the Strategic Positioning: SWOT and Porter Analysis section of your final reports will read). Everything we’ve practiced regarding business writing is in effect here: a.) short, clear sentences, b.) unambiguous words and phrases, c.) a clear progression of ideas, and d.) bullet point summaries wherever possible.
7. When you re-present last week’s analysis, include a discussion of how this week’s exercise in analyzing a company’s strategy and competitive position influenced your quantitative analysis and the final recommendation (BUY/HOLD/SELL) you make on the company.
8. Each group will turn in one SWOT analysis, one Porter analysis and one summary of their firm’s strategic positioning. Due date is Sunday, March 10. File names should follow the pattern Stock Ticker-SWOT, Stock Ticker-Porter, Stock Ticker-Strategy.
Additional Materials:
ACN Slides in PPT (one example of the order in which to script future presentations; good example of how to present the Porter’s 5 Forces analysis)
HAS Slides in PPT (another good scripting example; use the SWOT slide for future presentations, can also use the Porter’s slide)



Week 12: Apr 1. R.I.S.E. Conference Preparation/New Position Analyses/Technical Analysis
Assignments:
1. The new idea generation team will work with the stock screener and interact with me on their possible new position ideas.
2. Additional assignments TBA.
Additional Materials:
To be posted.

The following video will orient you to the PRVit (“Prove It”) Reports from EVA Dimensions:





Week 13: Apr 8. New Position Analyses Continue.
Assignments:
1. To be posted.
Research Materials:
To be posted.



Week 14: Apr 15. Final Decisions on SIF Portfolio Adjustments.
Assignments:
1. To Be Announced
Additional Materials:
Chapter Files: To be posted
Chapter Spreadsheets: To be posted



Week 15: Apr 22. New Position Analyses Continue.
Assignments:
1. To Be Announced
Additional Materials:
Chapter Files: To be posted
Chapter Spreadsheets: To be posted



Week 16: Apr 29. New Position Analyses Continue.
Assignments:
1. To Be Announced
Additional Materials:
Chapter Files: To be posted
Chapter Spreadsheets: To be posted



Week 17: May 6. Presentations. 5:30-7:30 pm in HC 104.
Assignments:
1. Final Reports, Spreadsheets and PPTs are due Sunday, May 5.
Additional Materials:
Chapter Files: To be posted
Chapter Spreadsheets: To be posted
Here’s the link to the Washburn Final Exam Schedule in case you need it.