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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 and Information Sources


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    Presentation Transcript
    1. Trading andInformation Sources Presented by: Chen Cheng-Chung James Eisenman Hiren Ghala Jason Oien

    2. Trading

    3. 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

    4. 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

    5. Determining who to trade through • Quality of service • Research • Relationships • Costs

    6. 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

    7. Who will you trade through? • Our Broker List -Prudential Securities -Salomon Smith Barney -A G Edwards and Associates -Voyager Institutional Sales

    8. 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

    9. Types of Orders • Market • Order is executed immediately • Execution of order is time sensitive

    10. 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

    11. Information Sources

    12. Benchmark Information • Standard and Poors • www.spglobal.com

    13. Economic Information • Bureau of Economic Analysis • www.bea.doc.gov • Bureau of Labor Statistics • http://stats.bls.gov

    14. Economic Info con’t • Federal Reserve Board • www.federalreserve.gov

    15. Market Websites • Bloomberg.com • Comprehensive site • First Call • Reuters • Reuters StockVal

    16. Specific Company Info • Yahoo Finance – financial data, reports and quotes http://finance.yahoo.com • Wall Street Journal www.wsj.com – data and news

    17. 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

    18. 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

    19. 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

    20. Ratings • Together they are the two of the most prevalent ratings firms on Wall Street • www.standardandpoors.com • www.moodys.com

    21. Sell Side Websites • A.G. Edwards • Bear Stearns • Merrill Lynch • Prudential • Salomon Smith Barney • UBS Warburg

    22. Financial Website Practice • Yahoo Finance http://finance.yahoo.com/ • Stock Research • Basic Report • Detailed • Chart • Research • Msgs

    23. 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

    24. Financial Website Practice • Useful Tools • Recent news & Financial news • Education - investment tips - financial dictionaries

    25. Financial Website Practice • Morningstarhttp://www.morningstar.com/ • Snapshot • Morningstar grade -Growth -Profitability -Financial Health