< The Finance Professionals' Post: December 2010

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20 posts from December 2010

12/29/2010

Career Podcast: Trading Desk Research

Career Chat PodcastJon Jacobs from Interactive Data Corp goes into detail about how the Dodd-Frank Act and Volcker Rule will have banks eventually pushed out of the proprietary trading business, while bulge-bracket banks get rid of their researchers.  Jacobs also speaks about the grim future in which human stockbrokers are potentially replaced by black box trading like a Wall Street version of The Matrix.

Career Podcast: Private Wealth Management Post-Madoff  

If you like what you hear, the full audio is available on NYSSA's On-Demand website.

12/28/2010

Recent Market Decline Has Brought Risk to the Forefront

Buy-DONT-Hold-Investing-with-ETFs-Using-Relative-Strength-to-Increase-Returns-with-Less-Risk

Do you really understand stock market risk? Wouldn’t you want to earn a 10% or more annual return on your investments with little or no risk? Unfortunately, that combination of variables does not exist in the real world. The key is to ask yourself how much you can afford to lose, rather than how much you hope to gain. Focus more on downside protection than on upside projection. You need the proper mind-set. That means not only playing market offense, but, more importantly, playing market defense.

Continue reading "Recent Market Decline Has Brought Risk to the Forefront" »

12/27/2010

What Is Relative Strength?

Understanding_Relative_Price_Strength Relative strength is a method of selecting favorable stocks from within a universe of stocks. It is not the oscillator called “RSI” or “Relative Strength Index,” a common misnomer given to it. It is a selection method, not an indicator. Its underlying assumption is based on the observation that stocks, and other freely traded markets, have a predilection to travel in price trends—upward, downward, or sideways. This predilection is often called momentum, a term borrowed from physics that suggests these trends will continue into the future for an indeterminable period.

Continue reading "What Is Relative Strength?" »

12/22/2010

Book Review: The Heretics of Finances

Heretics-of-Finance Fundamental analysis and technical analysis have developed independently over the past several decades, for the most part. The Heretics of Finance, coauthored by Andrew Lo and Jasmina Hasanhodzic, enables fundamental analysts and portfolio managers to better understand the evolving profession of technical analysis.

Typically, a book like this would be chockfull of graphics depicting support and resistance levels for the markets, but Lo and Hasanhodzic have opted for a different approach. 

Continue reading "Book Review: The Heretics of Finances" »

12/21/2010

Developing Emotional Intelligence Skills to Help Clients in Distress

CFA InstituteMany advisers are moving in the direction of client relationship management, and are therefore managing clients’ financial hopes, dreams, expectations, and fears. Yet very few advisers have degrees in counseling. Emotionally intelligent communication strategies allow an adviser to turn an emotionally charged conversation into one that strengthens the adviser relationship and referral stream.

Click here to read the full article, written by Richard L. Peterson, MD.

12/20/2010

The New You: The Future of Securities Analysis

The Future of Securities Analysis Embattled as the financial services industry is at present, there's nevertheless a sense that the light of day has broken on transactions and markets too long shrouded in shadow. Corporations and executives are snatching eagerly at the opportunity to reinvent and revivify—and absolve—the profession.

But what will that makeover mean for practitioners? What will securities analysis look like 10–15 years down the road? Will the profession expand or contract? Will the majority of jobs be in the US or abroad?

Continue reading "The New You: The Future of Securities Analysis" »

12/15/2010

Returning as a Tiger: The Economic Reincarnation of India

INDEX: INDIA IN COMPARATIVE PERSPECTIVE | GEOPOLITICAL, DOMESTIC, AND ENVIRONMENTAL RISKS | RECENT ECONOMIC PERFORMANCE

For those who grew up with images of India as a land of poverty, recent news would seem veritable proof of economic reincarnation. Indian poverty still exists, of course, and in a land of more than one billion people, a 25% poverty rate means that at least 250 million people—or more than three-quarters of the US population—still live in highly precarious conditions. It will be a long time before its poverty can be eradicated, but India can boast of many recent achievements, and there are good reasons to expect that the country will continue to grow and develop rapidly as it has over the last decade. Investors are naturally interested in how to participate in this story.

Continue reading "Returning as a Tiger: The Economic Reincarnation of India" »

2010—The Year of the Integrated Report

Corporations are clearly increasing the quantity and quality of their environmental, social, and governance reporting in response to investor pressure and a growing awareness of the consequences of a failure to manage the associated risks. But few have taken the next step—to formally integrate their financial and ESG reporting. However, 2010 may be remembered as the year the integrated reporting movement truly began to gather steam.

Continue reading "2010—The Year of the Integrated Report" »

12/14/2010

Poll: The Bonus Outlook for 2010

The press is full of mixed news about bonuses on Wall Street: According to eFinancialCareers, half of the finance professionals surveyed expect their bonuses to grow this year. But, Options Group, an executive-search and consulting firm, predicts that bonuses will be down 22% to 28%. What are you expecting this year?

Recent Research: Highlights from December 2010

An Empirical Investigation of the Performance of Commodity-Based Leveraged ETFs.” The Journal of Index Investing (Winter 2010). Robert Murphy.

The authors investigate the ability of 12 commodity-based leveraged ETFs in the ProShares family to achieve their stated investment objectives.They find that these 12 ETFs generate average daily returns that are not statistically significantly different from their stated objectives.They also find evidence that over their entire lives these ETFs generally underperform expectations when considering their exposure (long vs. short), desired leverage, and expense ratios. Despite this general underperformance relative to expectations, the authors also find that roughly 1/3 of the ETFs outperform expectations. They also report that over their entire lives the 12 leveraged ETFs in their sample struggle mightily to beat the performance of their corresponding unlevered commodities or indices. Their general inability to beat their corresponding unlevered commodities or indices over the long run is demonstrated to be a function of the price volatility of the commodities and indices. The authors conclude that these commodity-based leveraged ETFs are effective ways to gain double and double inverse exposure to the corresponding commodities and indices on a daily basis.However, they advise against using these ETFs in any sort of buy-and-hold investment program.

 

Continue reading "Recent Research: Highlights from December 2010" »

More Reasons You Can Be Optimistic About Your Compensation

EFinancialCareersWe already know that the eFinancialCareers global bonus survey found half of Wall Street's professionals expect their bonuses to grow this year. No surprise that a third of them credit their own performance for the uptick. Read more about the survey or check out our video wrap-up.

12/13/2010

James Bullard's Five Easy Pieces of Quantitative Easing

James BullardThe Fed has drawn intense criticism for its decision to purchase $600 billion in long-term Treasuries over the next eight months. This approach, so-called quantitative easing, is aimed at keeping long-term interest rates suppressed. Speaking at NYSSA, James Bullard, the president and chief executive officer at the Federal Reserve Bank of St. Louis, explained the rationale behind the Fed's decision. 

  Five Easy Pieces of Quantitative Easing

12/10/2010

CFA Prep Podcast: CFA Level I, II, and III Differences

CFA Exam Prep Podcast

With the December 2010 CFA exam fast approaching, it may seem like the perfect time to panic. However, you can put your mind at ease by listening to several recordings of experts from the CFA Institute and NYSSA explaining the CFA testing process.

The clip provided below is from the CFA Exam Orientation. William A. Trent, director of the exam development division at the CFA Institute, outlines the different requirements for CFA Level I, II, and III as well as how some questions (particularly essay questions) are graded.

CFA Podcast: Differences between CFA Level I and Level II

If you want to watch the webcast of this entire event or any other NYSSA program, visit NYSSA's On-Demand website.

Book Review: Uprising

Uprising: Will Emerging Markets Shape or Shake the World EconomyCurrently money is flowing to the emerging markets. Many see China and India as the future, America and Europe as the past. A thoughtful and sophisticated look at these popular conclusions is presented by George Magnus in his new book, Uprising: Will Emerging Markets Shape or Shake the World Economy. He is well positioned for this analysis as a senior economic adviser at UBS Investment Bank London, having previously served as chief economist at UBS.

Continue reading "Book Review: Uprising" »

12/09/2010

Picking the Right Stock and the Right Strike

Picking the best stock for writing covered calls requires the same analysis as you use for picking stocks without options in mind. There are many criteria for this: fundamental, technical, or a combination of both. Some people want to hold stock for many months or years, while others want to earn a profit quickly and trade in and out of positions quickly. Your stock selection depends on your risk profile and your investment attitude and philosophy. Stocks should not be picked solely as good option-writing candidates, although that may serve as one of several criteria you employ.

Continue reading "Picking the Right Stock and the Right Strike" »

12/08/2010

A New Indicator for Predicting Market Corrections

Trading Realities: The Truth, the Lies, and the Hype In-BetweenHaving a method for calculating actual volatility allows us to calibrate the VIX against the market and track the ratio of the VIX to true volatility (VIX/true) over long periods of time. This experiment is also supported by decades of freely available historical data that the CBOE has posted on its website. All of the information can be downloaded in spreadsheet form with the click of a mouse. The comparison yields surprising results.

Continue reading "A New Indicator for Predicting Market Corrections" »

12/07/2010

What’s Your Risk? Single Name Security Exposure Analysis

FACTSETOver the last two months, I’ve visited many of our portfolio analytics clients in the U.S. to gather feedback on FactSet’s new Single Name Security Exposures tool. Single Name Security Exposures lets you look across all portfolios or a subset of portfolios to quantify your exposure to a security, an issuer, an industry, a country, or a specific set of securities. Simply put, it tells you how much you own and where you own it.

Continue reading "What’s Your Risk? Single Name Security Exposure Analysis" »

12/06/2010

Solutions for Hedge Fund Managers Considering the GIPS Standards

Although the GIPS standards do not address the particular challenges of hedge funds, claiming compliance is possible and increasingly important for hedge funds. Creation of a client presentation, the process and frequency of portfolio valuation, and net performance stream calculation methodology are some of the issues hedge funds tackle in claiming compliance.

Continue reading "Solutions for Hedge Fund Managers Considering the GIPS Standards" »

12/01/2010

Does Past Performance Matter? The S&P Persistence Scorecard

S&PInvestment professionals often consider measures of past performance and related metrics when selecting funds. So how much does past performance really matter? To help answer this important question, the S&P Persistence Scorecard, produced twice a year, tracks the consistency of top performers over consecutive annual periods. The latest Scorecard shows that very few funds manage to consistently repeat top-half or top-quartile performance. In fact, over the five years ending September 2010, only 4.1% of large-cap funds maintained a top-half ranking over five consecutive 12-month periods. 

How to Fake Charisma

EFinancialCareersIf you’re going for any client-facing role in an investment bank, it will help if you have it. It will also help if you want to get promoted. And it will help if you’re interviewing 20 times at Goldman Sachs to establish your fit likeability in the eyes of potential colleagues.

But what happens if you’re not charismatic? What happens if you have the magnetism of a cucumber? Fortunately, this can be overcome.

Click here to read the full article. 

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