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Trading and Information Sources. Presented by: Chen Cheng-Chung James Eisenman Hiren Ghala Jason Oien. Trading. The Trading Procedure. The analyst has an idea to buy/sell The analyst convinces the portfolio manager (PM) to take action The PM tells the internal trader to buy/sell

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Trading andInformation Sources

Presented by:

Chen Cheng-Chung

James Eisenman

Hiren Ghala

Jason Oien



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The Trading Procedure

  • The analyst has an idea to buy/sell

  • The analyst convinces the portfolio manager (PM) to take action

  • The PM tells the internal trader to buy/sell

  • The internal trader calls the best broker with the order

  • The broker calls the commission broker on the exchange

  • The commission broker goes to the specialist who completes the deal


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The Back Office Trading Procedure

  • Broker executes trade (sell/buy)

  • Broker informs Deposit Trust Corporation (DTC) about trade (sell/buy)

  • DTC informs State Street Bank (custodian) to transfer shares/cash to the DTC

  • Shares/cash are transferred to DTC with T+3 business days

  • DTC transfers shares/cash


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Determining who to trade through

  • Quality of service

  • Research

  • Relationships

  • Costs


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Trading Costs

Actual Cost % Cost

  • Commission 6 cents/sh 12 bps

  • Market Impact 9 cents/sh 20 bps

  • Delay Costs 24 cents/sh 53 bps

  • Missed Trades 8 cents/sh 16 bps

    Total 47 cents/sh 1.01%

    * Plexus Estimates


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Who will you trade through?

  • Our Broker List

    -Prudential Securities

    -Salomon Smith Barney

    -A G Edwards and Associates

    -Voyager Institutional Sales


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When to execute trades

  • Timing is everything

  • Depending on the urgency trades will be executed the same day or the next day

  • Trading volumes are usually low before the market closes


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Types of Orders

  • Market

    • Order is executed immediately

    • Execution of order is time sensitive


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Condition

Price above the limit

Price below the limit

Limit-buy order

Stop-buy order

Buy

Action

Stop-loss order

Limit-sell order

Sell

Types of Orders...

  • Limit



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Benchmark Information

  • Standard and Poors

    • www.spglobal.com


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Economic Information

  • Bureau of Economic Analysis

    • www.bea.doc.gov

  • Bureau of Labor Statistics

    • http://stats.bls.gov


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Economic Info con’t

  • Federal Reserve Board

    • www.federalreserve.gov


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Market Websites

  • Bloomberg.com

    • Comprehensive site

  • First Call

  • Reuters

    • Reuters StockVal


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Specific Company Info

  • Yahoo Finance – financial data, reports and quotes http://finance.yahoo.com

  • Wall Street Journal www.wsj.com – data and news


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More Financial Websites

  • Signalwatch.com - Technical Analysis - Charts using support and resistance levels

  • Wall Street Week - Industry Executives giving their thoughts and picks

  • Etrade Financial - Trading website that provides a minimum amount of info to non-members


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Analyst Reports and Financial Data

  • Multex www.multex.com – Analyst reports from various firms

  • The Street www.street.com

  • Motley Fool www.motleyfool.com

  • Bloomberg www.bloomberg.com – Analyst reports, exchange rates, quotes

  • Value Line http://www.valueline.com

  • Morningstar www.morningstar.com – data and analyst reports


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Annual Reports and Filings

  • Edgar Scan - 10 K’s and Q’s

  • www.sec.gov – for 10 K’s and other company specific reports

  • Annual Reports Gallery www.reportgallery.com


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Ratings

  • Together they are the two of the most prevalent ratings firms on Wall Street

  • www.standardandpoors.com

  • www.moodys.com


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Sell Side Websites

  • A.G. Edwards

  • Bear Stearns

  • Merrill Lynch

  • Prudential

  • Salomon Smith Barney

  • UBS Warburg


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Financial Website Practice

  • Yahoo Finance http://finance.yahoo.com/

  • Stock Research

  • Basic Report

  • Detailed

  • Chart

  • Research

  • Msgs


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Financial Website Practice

  • How to manage a portfolio?

  • Open a portfolio account

  • Sign in

  • Sector overview

  • Create your own portfolio

  • Manage your Portfolio

    -Example market index

    -Basic feature

    -Advance feature


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Financial Website Practice

  • Useful Tools

  • Recent news & Financial news

  • Education - investment tips

    - financial dictionaries


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Financial Website Practice

  • Morningstarhttp://www.morningstar.com/

  • Snapshot

  • Morningstar grade

    -Growth

    -Profitability

    -Financial Health


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