Hi Tom,
I’ve been thinking of a course that could be put up that I think would be useful, I think we should have a course that provides students a way to systematically analyse financial information with the aim of managing risk. A system must after all have an aim because without an aim there is no system. Basically I think we should have a course that teaches traditional measures of valuation for financial assets such as earnings, cash flow, dividend yield, price to sales, price to book, internal rate of return, and return on equity. Other measures could also include those from people like Benjamin Graham and Warren Buffett such as “margin of safety” and “owner earnings” etc. What also could be included in the course is how to discover “off balance sheet” stuff.
I think we should have a course like this as a way to be able to interpret financial information, not a sort of “get rich course” etc. It should about providing sound investment principles, and mostly how to analyse the financial information that you gather. A comparison that I could probably make as what I think the course could be similar to is when investor Jim Rogers taught at Columbia Business School, here is an extraction from Rogers recent book ‘Street Smarts’:
“I am going to teach this course as if you were working for me. I am the head of research, the head of investments, at a fund, and you are going to be my analysts. I am going to give you companies to analyze, and I will teach you how to do it.” I told them how I went about analyzing companies. I gave them spreadsheets. I had the chairmen of a couple of large corporations come in, and in each case, I would sit and question the chairman as though I were a portfolio manager, an analyst, visiting him at his office, asking all the same questions I would ask if I were trying to figure out whether to invest in his company. Then I would throw it open to the students to ask questions. The assignment, after that, was to write a page, a single page—I would not accept anything longer, and I would not accept it if it were late—on what the student would do relative to that company’s stock: buy it, sell it, sell it short, or do nothing. After a few weeks of this, I had each student choose an industry to analyze—his or her choice, as long as I approved it. Say you were a student in my class and chose to be an airline analyst. We would have a dialogue in front of everybody else in the class, in which you would tell me what you thought. You would tell me how I could best make money in that industry, whether I should buy Delta, short Southwest, whatever your research told you. Everybody, I think, had three rounds. And that is the way the class worked.
Thanks.
.
