Monday, March 28, 2011

A snapshot of what I am doing now

Within my team, we are analyzing 6 financial companies. I was assigned to the duty of analyzing Citi Group (C) along with helping the team as needed with their analyses on the other financial companies.

Any ways, the process of doing the analysis is intense. I am working under pressure to meet the deadline while maintaining accuracy. The work will be presented and judged by the team once it is done. It is pretty much known that this is going to be an intense process due to the fact that many tough questions will be asked. And I would have to answer they Whys and Hows. Also, we have tough judgers within our team members. The reason for saying this is that because some them are about to graduate and they have been analyzing a lot of companies’ financial statements.

Besides all of this, I get excited when it comes to Financial Modeling with Excel. This is what I love the most. What even is more exciting is that I am taking a Financial Modeling class with Dr. Yook who is an expert in the subject and who has been teaching this course for over 10 years at Carey. In fact he is one of the leading professors who created the Master of Science in Finance.  

I shall keep you updated in how the end result is of my analysis.

Hussain Jubail

Trial and try

I was exposed to the term of the title when I sat in the econometrics class in college. It means using different inputs to get various results from one model. I heard about the advanced method (monte carlo simulation) much earlier, but truly learned it only several years ago. This random thought came into my mind when I was trying to find out a way to make my everyday tasks easier without lowering the quality of our daily conference call. Then, discussion about everyone's outlook of the coming week's market was picked to be our fixed topic for Monday.

Members were asked to indicate one coming event/economic data that they think is important to the market in this coming trading week.

Consumer confidence (Tuesday, 3/29, 10:00am)

The Conference Board's consumer confidence index rose to 70.4 in February for the best reading in three years. January was revised more than four points higher to 64.8. Most of the improvement was related to a better assessment of the jobs market. Fewer consumers in February said jobs are hard to get, at 45.7 percent, compared to January's 47.0 percent. Also, improvement was especially striking in the assessment of future income which before this report had been in unprecedented inversion, that is more saw their income decreasing than increasing. In the latest report 17.3 percent saw their income improving versus 13.8 percent seeing a decrease. But higher gasoline and food prices likely will weigh on confidence in March.

Most U.S. States Post Unemployment Decline (Fri, MARCH 25, 2011, 4:21 PM)

Strong hiring in February pushed the overall unemployment rate down to 8.9%, the lowest level in nearly two years, as employers added 192,000 jobs to nonfarm payrolls.

According to the regional and state unemployment rates reported by the Labor Department, 27 states and the District of Columbia recorded unemployment rate decreases, while seven states registered rate increases and 16 states had no change.

Among them, California had the largest increase in employment last month, gaining 96,500 jobs. However, the unemployment rate in the state was among the highest of all the states, at 12.2%. Kansas lost 12,800 jobs, the largest monthly decline in employment, though its unemployment rate is at 6.8%. Nevada’s unemployment remained the highest in the nation, at 13.6%.

Construction... Unfortunately / fortunately, we didn't have a hurricane / earthquake so, we don't have to rebuild an entire nation. Construction is slated to go down by .3% because housing starts went down in February. Construction spending has been negative for at least the last 3 years. This isn't a good sign given that the US economy depends heavily on home building and construction. Infrastructure was supposed to be given a boost, but we haven't seen that yet. Why? I'm not sure since I haven't given this topic much thought, but this is something which we can discuss on the call.

Both Consumer confidence and the unemployment rate are said to be important in the coming week.  For construction, we will need Saliq's explanation about why he believes it is important.


-- Chang --

Thursday, March 24, 2011

We're Headed to NYC

Hussain & Soujanya worked hard over the last 2 weeks to line up a few organizations for us to visit tomorrow (March 25th) in NYC.  I am sitting at a Starbucks in Boston right now waiting for 12PM to roll around so I can head on over to Harvard University and then to NYC tonight.  Soujanya is already in New Jersey and will head to NYC tomorrow morning, and the rest of the team is back in Baltimore preparing to leave tomorrow morning.

We are very excited to head up to NYC tomorrow to visit Brown Brothers Harriman and then head on over to Times Square to visit New York Society of Security Analysts.

I will post pictures soon after our trip!


Monday, March 21, 2011

Selling a bit overdone?

Over the past several days we have seen the market drop several hundred points due to the Middle East turmoil, the Japan crisis, and the overall economic uncertainly of the global economy.  The above chart (DJ 30) gives a quick snap shot of the index over the past 1 year.  We are seeing the Stochastic indicators come back up from their lower levels, market trading above the 50 and 200 day moving average, but the Chaikin Money Flow chart has dropped over the past month.

I personally believe that the market is continuously reacting to the same negative news and is the reason behind the drop in the stock prices over the past several days.  Media reports the same bad news about Japan and the Middle East every day and the market keeps dropping.  How many times can you sell on the same news?  The fundamentals haven't changed, the crisis is the same, but the perception of the crisis has changed due to the continuous hammering of the same negative news from media giants.

Your thought...?


Tuesday, March 15, 2011

DOW drop 200+ points on open

Is the magnitude of volatility in the stock markets justified by the the impact of Japan's disaster or are there other factors in play?  Is the potential end of QE2, lack of job growth, natural disasters, etc. the reason? 

The Equity Analyst Team has been working through these questions on the 7:30 morning calls for the past few days.

- Saliq

Friday, March 4, 2011

What should be important in the analysis for small- and mid-size firms?

In the past two days, our conference calls were about what should be the three most important parts in analysis of the two different sized companies. We believe this will help us with the way we analyze our target firms, hence to improve the quality of our reports. Bellow are the rankings some opinions posted by our members:


1. Industry analysis 2. Trend analysis 3. Ratio analysis

1. Ratio analysis: analyze based on financial reports: assets, liabilities, cash flows, solvency, liquidity, and profitability, to get info about the company's performance.
2. Industry analysis: industry trend & development, compare it with the average level in the industry
3. Business analysis: the company's primary transactions, business prospects in the future


1. Business analysis: it's always the most important to understand what the businesses are for a company, especially when the target company becomes bigger and more complicated. For mid-size ones, they operate in more areas and have more businesses than small financial firms.
2. Market analysis: different from analyzing the small companies, mid-size financial companies are more connected to the overall economy, thus the whole financial market. Of course, the market here stands for the ones our companies are operating in, instead of the U.S. or world market.
3. Industry (competitor) analysis: some of the mid-size firms may not have substantial competitors in its operational region, so it's helpful to compare other peers from other regions with it and draw a picture of the industry

1. Industry analysis: Is important because you need to know the nature of the industry and its characteristics.
2. Competitors analysis: Is important because you will know how these firms compete with each other and whether the competition comes from the industry itself or also from other industries such as big firms.
3. Assets and Liabilities analysis: The asset and liability size is important and whether they are strong enough to weather any financial storms.

Although some of our ideas overlap with others', there are still things we hold different opinion. Sometimes I just want to have a debate on topics like this. A long debate...

-- Chang