Course Number 1446
Associate Professor Christopher Malloy
Fall; Q1Q2; 3 credits
This is a CORE course for students pursuing careers in Finance. Thus, students interested in pursuing careers in hedge funds, investment banking, PE and VC, wealth management, mutual funds, financial consulting, investor relations, client services, sales and trading, etc. should enroll in the course. Also, the course applies to students interested in managing their own portfolios, and personal wealth management more generally. Lastly, students interested in the stock market and other asset markets should enroll.
The course studies financial markets, principally equity markets, from an investment decision-making perspective. The course develops a set of conceptual frameworks and tools, and applies these to particular investments and investment strategies chosen from a broad array of companies, securities, and institutional contexts.
The course will also explore an important trend in the investment management industry, namely the continuing bifurcation of the industry into two main functions: 1) the creation of investment products or strategies designed to provide low-cost exposures to well-known risk factors (commoditization of these factor exposures "Commoditization") and 2) the search for new products or strategies that can generate risk-adjusted abnormal returns ("Alpha").
Content and Organization
The course is organized around essentially six components:
- Valuing stocks
- Stock picking: fundamental vs. quant approaches to investing
- Hedge fund strategies, fund-of-funds investing, activist investing, etc.
- Information flow in markets: informed trading, social networks, segmented markets
- Financial instruments: ETFs, mutual funds, hedge fund replication products, other investment vehicles; how to gain a target exposure
- Deals: in-depth exploration of specific deals and trades that illustrate critical market frictions & investor characteristics and biases
The materials consist of cases, prospectuses, newspaper clippings, a textbook, and other miscellaneous readings. A number of classes are built around visits from successful and well-known money managers.