MBA Face-Off

CNBC would like to extend our thanks to all the MBA students from Carnegie Mellon, Cornell, Georgetown, Ohio State, University of Chicago, University of Michigan, University of Notre Dame & University of Texas Austin, for participating in this years MBA Face-Off.  » Read More

At Carnegie Mellon’s Tepper School of Business, we are taught the importance of interpreting data to make informed decisions.  Our strategy of selecting stocks relies heavily on quantitative stock screens that rank a set of stocks across various factors.  One stock that popped up on two independent screens was the Chinese telecom equipment manufacturer Spreadtrum Communications

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[SPRD  Loading...      ()   ].   As a fast-growing technology company with improving analyst estimates, good momentum, and an attractive valuation, there is a lot to like about the stock.

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The congressional super committee charged with finding an agreement on deficit reduction has a little more than a week to go until its November 23rd deadline. As that date approaches investors should be aware of the potential consequences should the panel be unable to reach consensus. If there is no agreement in place a series of budget cuts totaling roughly $1.2 Trillion would automatically take place starting in 2013, the cuts would be split between defense and non-defense spending. The consequences of these cuts coming at a time when the economy is barely growing at a positive rate, the macro environment continues to be highly uncertain and unemployment remains stubbornly high could be extremely deleterious and could put the US inexorably on the path to recession.
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Many members of our team went to Chicago’s “Invest For Kids” conference this week (see http://investforkidschicago.org/).  The presenting speakers were phenomenal (e.g. Cooperman, Milken, Perry, Zell, etc.) and provided some of their best investment ideas, and we are confident the conference will continue to expand to support its educational causes.  Much thanks to Mendoza and especially Invest For Kids for the opportunity to attend.  We highly recommend next year’s annual meeting.

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This past week, the markets had been extremely volatile because of the news coming out of Europe and Italy. We had very interesting debates in our Securities Markets & Investment class about the yield on Italian bonds: can yields above 7% for Italy be considered a Black Swan event?  Is it just the market’s way of ousting Mr. Berlusconi and pushing for reforms? Or do investors actually believe that Italy will not be able to repay its debt?

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Technicals, candlesticks, quants, fundamentals, vix, leg up, falling knife, dead cat bounce, Soros, Paulsen, Buffet, bulls, bears, hawks, doves, debts, shorts, unholy trinity, and round and round we go. None of it matters and all of it matters. This is the universe the trader lives in – only as good as your last trade.  » Read More

Suppose we start with the premise that markets are efficient.  That every investor is able to look forward and quickly calculate their expected return and potential risk of their trade, take in all available information, and then place a trade to execute on their beliefs.  A belief in a given trade must exist if the investor is to even initiate the trade in the first place.  Unfortunately for efficient markets, every belief encompasses the 2 biggest behavioral enemies of all investors: fear and greed.  No matter what anyone tells you, completely eliminating both emotions from your investment decisions is impossible.  The only way to control the risk of these emotions ruining a trade is by having an investment framework that is based on rules to control your conduct in the market. » Read More

Recently, our Cayuga Fund class had a discussion surrounding deep value investing. While this phrase is commonly used, it is rarely defined. Many stocks right now could be thought of as deep value but where is the line drawn? One Cayuga Fund Portfolio Manager defined deep value as investing in small companies that are not widely followed, after conducting significant primary research.

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