15.493  Practice of Finance: Perspectives on Investment Management (H2)

Thank you all for your great questions during the class and thoughtful papers. I have updated all the speaker's slides. Unfortunately, Paul Reeder asked me not to post his slides. Feel free to ask me any questions about his presentation and I will answere as best I can. I also want to give you a more complete answer to the question that was asked about my demographics talk on the potential impact it may have on future demand for stocks. The question was that " I painted a fairly dire future for the market". As I said, I don't think it will necessarily be dire, but I was just questioning if we can expect the standard 11% per year long term returns of the S&P 500 in the future. One aspect that I did not mention is that there could be great demand for stocks from the citizens and governments of the developing countries that will replace the demand that came from the developed countries in the last 100 years. Sometime around 2017-2020 the GDP of the developing countries is expected to surpass the GDP of developed countries and they will become big savers that will grow demand for stocks worldwide.

For the readings for Priceline, I have included all the information from when Paul Reeder decided to buy the stock in 2007. There are earnings announcements and Analyst Reports from 2007 that he used to make his decision. I have also included a current S&P Report on Priceline. Have a good holiday.

For the second 1-page Buffett paper you can choose to write about one of the following two topics:

Option 1) Considering what you have learned in this class and the readings, what do you think is a sustainable strategy to make money in the stock market?

Option 2) What is the topic that you have found most interesting in the latest Buffett readings (since the last Buffett paper)?

Here are the nine stocks you can choose from for your final paper:

Federal Express (FDX)   VF Corp. (VFC)   3D Systems (DDD)   Facebook (FB)   Walgreens (WAG)

Adobe (ADBE)   Edwards Bioscience (EW)   Redhat (RHT)   and just added Baidu (BIDU)

Suggestions for what the paper should include:
• 1 page describing the company, interesting facts about the company, the company's competitors broadly defined and then the 3-4 key competitors.
• 1-2 pages on the company's 3 or more competitive strengths, their 3 or more competitive weaknesses and explain why for each one.
• 1-2 pages of what you think will be the 1-2 key issues that will determine the near term and long term stock price (they could be different for each time frame).
• 1-2 pages creating an estimated Income Statement for 2013-2015 (the next 3 years).
• 1-2 pages- examine the income statement, cash flow statement, and balance sheet- explain one or two interesting financial details for each statement that is relevant in analyzing the stock and why. (it could be a ratio, a percentage, an absolute number, or some footnote, etc)
• 1-2 pages- use two different valuation metrics that you think are appropriate for the company and explain why they are appropriate. Then determine if the stock is a BUY or SELL and explain why you made that decision.

These are just suggestions. Feel free to include any additional material that you think would be valuable. You are on your own for this assignment. We will not be posting any Wall Street Reports for the assignment. Look forward to your papers.

The company that our Nov 27th class speaker, Janet Yoo, will cover is B / E Aerospace, ticker BEAV. Students still needing to complete additional two-page company reports can write their report on this company. Material for BEAV will be posted on Wednesday.