Analytical framework for investment decision making. Principles and techniques of analyzing industries and companies, managing specific portfolios.
Hello, and welcome to investment analysis at Syracuse University. My name is Ravi Shukla. I’ve been at Syracuse since 1992, and I’ve been teaching this course at Syracuse since 1998. My background as I come to this course comes from five years of engineering education, well actually seven years, because I also did my graduate work in that, then an MBA and a PhD in finance. I have never actually worked in the industry. I’ve done some consulting work, but I have researched and studied investments for a long time—almost about 30 years at this point. This course is about investing. Let me put this in perspective. Companies, governments, and other organizations issue securities. They sell securities to raise money for their operations or for the activities. Investors buy these securities; they invest in them. The investors expect some amount of rate of return on the investment.
This course is about the investor side of the story. What do investors think about when they buy securities? When they invest in them, they think about risk. They think about the fact that, in investing in the securities, they might not get the money back. And how do they manage that risk? So, that’s what we’ll talk about. The ultimate objective of this course is to help you actually create your own portfolio of securities. You will learn about techniques that will help you design your own portfolio and actually execute it by buying and selling securities. In the process, you will learn about the language of investing, how to go about setting up an account with the brokerage firm, buy and sell securities, techniques for selecting securities from a wide range of securities available to us, how to actually calculate the expected returns and the standard deviations of the security so that you can analyze them and put them in a portfolio, and how to actually create the portfolio. So by the time you finish, you would know how to create a portfolio, and then you will learn about the techniques to evaluate the performance of either your own portfolio or somebody else’s portfolio. That’s how the course will proceed.
Now, there are lots of things that go on in the investment world. This is only a 10-week, short course. We cannot do everything. So you will read in the news or hear other people talking about things, like fundamental analysis technical analysis, sector rotation, value investing, growth investing, all of those things are important, we just don’t have enough time to do all of those things here. So, I will touch upon these things a little bit here and there, but don’t expect to become an expert in value investing by taking this one course. What you will learn is the basics of investment analysis, and you can use those skills to apply to any of these things that you just heard me talk about.
The course is basically setting up a mathematical framework for making investment decisions. Now I should tell you that you’ll have a much better experience in this course if you have certain basic knowledge about the foundations that are used in this course. I expect that you have taken a course in managerial finance, which I think you have, where you learn about valuation, return, risk, stocks, and bonds, although I will explain these topics, but if you have some familiarity with them, it will make your experience much nicer. Statistics is an important component of this course, and I know that you have taken statistics in this program, so if you know something about frequency distribution, descriptive statistics, such as average standard deviation, probability, distribution, random variables, expected value, normal distribution, z-scores, so all of those things will help you understand this course much better. Familiarity and facility with basic mathematics will be useful. Can you do simple algebra? If you can, you’ll enjoy this course much more. If you don’t like algebra, you’ll probably have a tough time in this course. Finally, we will use Excel a lot. I’m not going to expect you to be an Excel programmer, but you should have the ability to build simple formulas in Excel—maybe a formula involving many different cells and how to multiply them together, take to the power of two, take to the square root, and things like that. I will show you how to do these things, but again you will do a better job, you’ll enjoy the experience much better, if you know something about this before we get into those chapters and those topics in the course. So that’s the brief introduction, and I look forward to working with you throughout the semester.