Trading and Information Sources

1
Trading and Information Sources

• Jeff Stickel
• Luke Whitworth
• Nikhil Shah
• Corinne Sibly
• Rohini Vagarali
• Mike Webb

Finance 724
Spring 2003
2
Trading
The Stock Market Class
3
The Trading Procedure

• The Analyst (student) has an idea to buy/sell
• The Analyst convinces the Portfolio Manager
  (class) to take action
• The PM tells the internal trader (GA) to buy/sell
• The internal trader calls a broker with the order
• The broker calls the commission broker on the
  exchange
• The commission broker goes to the specialist who
  completes the deal
• Confirmation of the order takes place in reverse

4
Behind the Scenes

• Buy/sell order from client
• Broker executes trade
• Broker informs Deposit Trust Corporation (DTC)
  about trade
• DTC informs State Street Bank (custodian) to
  transfer shares/cash to the DTC
• Shares/cash are transferred to DTC within T3
  business days
• DTC transfers shares/cash

5
What Broker to Use?

• Cost
• Quality of Service Execution
• Quality of Research
• Availability of Resources
• Soft dollars
• Relationships are key

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 of one-way trade involving a
  large-cap stock

7
Who Do We Trade Through?

• Our Broker List
• Prudential Securities (5 cents/share)
• Salomon Smith Barney (6 cents/share)
• A G Edwards and Associates (6 cents/share)
• Voyager Institutional Sales (6 cents/share)

8
Types of Orders

• Market
• Order is executed immediately
• Execution of order is time-sensitive

9
Types of Orders

• Limit

10
Information Sources
The Stock Market Class
11
Research Economic Data

• Bureau of Economic Analysis
• www.bea.doc.gov
• Bureau of Labor Statistics
• http//stats.bls.gov
• Federal Reserve Board
• www.federalreserve.gov

12
Research General News

• WSJ www.wsj.com
• News, need online account for full access
• CNN money.cnn.com
• News, stock data, data for many markets
• Bloomberg www.bloomberg.com
• News, number of markets covered
• CBS cbs.marketwatch.com
• News, basic data
• Financial Times news.ft.com
• Local and global news stories

13
Research Company Data

• Yahoo finance.yahoo.com
• Historical quotes, basic stock data, news, charts
• Hoovers www.hoovers.com
• Company capsule, competitors, news, executives
• MSN moneycentral.msn.com
• Real-time quotes, news, up/down-grades
• BigCharts www.bigcharts.com
• Pretty Charts
• Quicken www.quicken.com
• Competitor Comparisons, Portfolio
  Tracking/Analysis

14
Research Annual Reports

• Company Websites
• For pretty annual reports available to investors
• Edgar Online www.edgar-online.com
• Go to www.freeedgar.com for free registration
  (10 docs/month)
• Access to 10Ks and other company filings
• http//edgarscan.pwcglobal.com
• Improved site w/ excel-download capability
• Report Gallery www.reportgallery.com
• Includes domestic and international reports

15
Recommended Research Sites

• For industry information
• Check out SP Industry Guide on closed reserve in
  Bus. Library
• Lexis-Nexis
• For company information research
• Visit the company website
• www.edgarscan.pwcglobal.com
• Ks,Qs, benchmarking assistant, and more
• www.lexis-nexis.com
• Must be in, or access through the library
• www.multexinvestor.com
• LoginID 724class
• Password royce
• www.bloomberg.com
• www.yahoo.com
• For one-pager
• www.multexinvestor.com
• Login ID 724class

16
Sell-Side Research Sites

• AG Edwards
• www.aredwards.com/inet
• LoginID sim
• Pass simport
• Bear Stearns
• www.bearstearns.com
• LoginID Spellman
• Pass simport1
• Merrill Lynch
• www.mlx.ml.com
• LoginID kspellman
• Pass SIMP1X

• Prudential
• www.cm1.prusec.com
• LoginID SIM
• Pass SIM
• Salomon Smith Barney
• www.salomonsmithbarney.com
• LoginID SIMOSU
• Pass SIMOSU
• UBS Warburg
• www.ubswarburg.com
• LoginID simp
• Pass simpxxxx

17
Other Useful Investment Sites

• Standard and Poors www.spglobal.com
• Benchmark information
• CFA exam stuff www.aimr.org
• Morningstar www.morningstar.com
• Lots of mutual fund stock analysis
• Fisher library access to Investext Plus
  http//fisher.osu.edu/library/databases/online.h
  tm
• Access to sell-side research reports
• The Street www.thestreet.com
• Lots of commentary, analyst info
• Stock Tips www.marthastewart.com

18
One Pager

• 1st go to
• www.cob.ohio-state.edu/fin/faculty/spellman
• 2nd
• Click tools right-click on One Pager
• Choose Save Target As and save it to your disk
• 3rd
• From Start menu, navigate to stock-val (in
  faculty applications) and select SV Connect
• 4th
• Open your saved one pager template
• 5th
• Enter ticker symbol and hit altF5 to update
• 6th
• Enter data where red

19
The Stock Market Class Portfolio

• Yahoo! Finance
• http//finance.yahoo.com
• Sign in
• Yahoo! ID ALPHA_PORTFOLIO
• Password BETA
• Click on portfolio name
• Updating done by GA

20
Library Online Research Databases

• Library home page www.lib.ohio-state.edu
• Search by Title
• Business Source Premier
• Articles on companies and industry
• Searches over 3,200 business periodicals
• Investext
• Investment research reports on companies and
  industries

21
Fisher Resources Bloomberg

• Computer 1
• Good for detailed news, data, and analysis of
  global financial markets and stocks
• Colorful keyboard
• Use top row of keys to go to primary menus
• Ex equities, money mkt, govt, munis, commodities
• Uses menu system with either mouse or number
  enter
• Lots of real-time data
• News, quotes, earnings estimates, filings

22
Fisher Resources Datastream

• Computer 4
• Vast resource of economic and financial data
• Equities, fundamentals, economics, indices,
  interest rates, exchange rates, and futures
• Especially useful with international companies
• Download many different data types for many
  different securities
• Ex monthly price data for 30,000 equities
• Use macro w/ DS code to download data into
  comma-separated file

23
Fisher Resources First Call

• Computer 3
• Real-time news provider
• Gives analysts reports, research broadcasts,
  earnings estimates, growth rates
• Use top row of buttons for quick access
• Ex F1 F10

24
Fisher Resources Bridge

• Computers 2, 5, 7
• Good for real-time news and data
• Primary and emerging markets, real time quotes,
  technical and fundamental analysis, market
  displays, charts, and latest news

25
Fisher Resources StockVal

• Computers 2, 5, 7
• Good for historical data ratios
• Add-in w/ excel makes analysis easier
• Uses a lot of tabs, buttons, etc. so wonder
  around with mouse
• Can create portfolios
• Multiple equity analysis at same time
• Application Handout