Nivine Richie, Ph.D., CFA is an Associate Professor of Finance at the University of North Carolina Wilmington. She teaches courses in corporate financial management, derivatives, fixed income, and commercial bank management. Her research interests include cost of capital, banking, and derivatives. She has published studies in the Journal of Economics and Finance, Journal of Futures Markets, Review of Futures Markets, and Journal of Trading, among others.
When you are trying to put a value on the stock, what do you look at?
The analyst interviewed here uses EBITDA multiples to determine what the stock is worth.
What factors does the analyst interviewed here focus on to determine the value of Amazon?
If management is more focused on customers and less focused on investors, then what impact is the stock price likely to experience?
Americans are expected to spend $8.4 billion on Halloween this year, an all time high. From the National Retail Federation:
More than 171 million Americans plan to celebrate Halloween this year, spending an average $82.93, up from last year’s $74.34. Total spending is expected to reach $8.4 billion, an all-time high in the history of NRF’s annual survey conducted by Prosper Insights. The survey finds that 7 in 10 consumers plan to hand out candy, and nearly half will decorate their home or dress in costume.
This infographic shows the expected spending on the upcoming holiday
You will find more statistics at Statista
The infographic below compares the world's financial markets by size.
A recent article on CNBC reveals that wealthy investors allocate a significant portion of their portfolios to real estate and private equity because publicly traded shares don't offer enough opportunity.
From the article (Acton, 21 Oct 2016)
An investment club for the ultra-rich has revealed its members' are sticking with real estate and private equity amid a dwindling appetite for hedge funds.
A survey by TIGER 21, whose 400 members count a collective $40 billion in assets under management (AUM) between them, shows a 28 percent average allocation to real estate investments and a 21 percent slice of the portfolio being allocated towards private equity.
Entrepreneur Magazine lists several reasons to invest in real estate, despite the woes that faced the industry nearly 10 years ago
1. Use borrowed money to finance the investment
2. Expect some appreciation in value
3. Benefit from tax savings
4. Provides retirement income
What is a reasonable expected return from investing in real estate today? What risks face real estate investors?
CNN's Fear & Greed Index is showing more fear over the last few weeks, but fear in financial markets is not as high as it was earlier in 2016.
source: CNN Money Fear & Greed Index as of 22 Oct 2016
The factors driving the index are:
1. Junk bond demand
2. Put and call options
3. Market volatility
4. Safe haven demand
5. Market momentum
6. Stock price strength
7. Stock price breadth
Go to CNN Money's Fear & Greed website and read the definitions of each of these factors. In your own words, describe how each one gives an indication of fear versus greed.
Working at a startup firm sounds exciting. Bringing an idea to market, being one of the key decision makers, possibly hitting the jackpot when the firm eventually gets sold. However, working at a startup is not without risk. The infographic below shows that most startups never make it past their 16th birthday, and yet they employ a large share of the US workforce.
source: The Vault Guide
What factors will you consider when you apply for a job after graduation?
The infographic below shows that millenials aren't much different from baby boomers in their concern about salaries. Retirement, benefits, insurance are all important, but salary takes first place.
You will find more statistics at Statista
This video shows the factors that go into the design of the U.S. currency
Go to this website and trace the history of the U.S. $10 note. When was it introduced? What is its history?
For the first time, a centuries-old map is for sale. The map depicts the known world in the 1531. It's on vellum and the color is vivid. Maps like this would have been purchased by kings to be used for treaties and exploration.
Institutions such as the library of congress will try to buy it and the price will be in the multiple millions.
How would you value this investment? What factors would you take into account as you try to forecast its price?
This video from the CME group explains the pricing of oil, and how investors can use exchanges to manage their financial risk. Two concepts are touched on here:
Snapchat, the tech messaging platform started by a group of Stanford students, is said to be worth $25 billion, the third largest of the former tech unicorns. Alibaba still holds 1st place at $167 billion and Facebook comes in second with $104 billion.
What is a "unicorn?" How are the valuations of these companies determined?
After the Civil War, newly emancipated African-American men and women needed a place to deposit their earnings. In 1865, the Freedman's Bank was formed. The estimate is that over the nine year life of the bank, over 100,000 individuals and institutions opened accounts totaling over $57 million, which is equivalent to $115 billion today.
What is the purpose of a bank today?
What led to the demise of the Freedman's Bank?
According to this new article (Popely, 17 Feb 2016) auto sales have been strong for several reasons:
To keep monthly payments affordable, many borrowers are entering into loans with terms longer than five years.
This short video from the Federal Reserve describes the results of the Fed Survey of Household Economics and Decision Making on Auto Lending, and in it we see longer terms of auto loans.
(The transcript is found here.)
For discussion: what is the risk to consumers if they take out a car loan longer than five years?
Modigliani and Miller proposed that the value of the firm is independent of how the firm chooses to finance its assets. This infographic from GraduateTutor.com shows the Modigliani & Miller (aka M&M) theory
This video describes what it's like to work at the Federal Reserve in Banking Supervision. Listen to what Erik says are the features of his work and what he enjoys about working for the Fed.
What does his work at the Fed require of him? What does he seem to enjoy the most about his work at the Fed?
Do you think this is the kind of work environment you would enjoy? If so, what can you do to pursue this as a career option?
On Wednesday, Blackberry announced it would no longer produce smartphones, bringing the age of Blackberry (aka "crackberry") to a close. From MSN.com:
Originally known as Research in Motion, the company earned a dedicated following of "CrackBerry" addicts and introduced millions to the smartphone.
But, its luster faded with the introduction of the iPhone in 2007 and the large number of low-costs Android handsets that followed.
BlackBerry travelled a road well-worn.
Finland's Nokia, once the world's largest mobile phone maker, has seen its smartphone business go up in smoke as well.
Internet pioneer Yahoo recently inked a deal to sell its core business to US telecommunications firm Verizon after years of struggling in vain to revive growth in an online search market usurped by Google.
"What they have in common is that they haven't reacted well to rapid change from their original positions," said Endpoint Technologies Associates analyst Roger Kay. "Tech has high velocity."
The infographic below shows the rise and fall of Blackberry: