Modern Investment Strategies and New Financial Products
C15.0042
Prof. Jianping Mei
Prerequisites: C15.0003, C15.0008, and junior
standing.
The course covers some recent
research in investment strategy and product development. In addition to various
lectures given by the instructor, half a dozen lectures will be given by
industry leaders to bring students up-to-date on recent market and product
developmemt. The perspective is that of the investment manager, responsible for
investment portfolios of insurance companies, banks, pension funds, mutual
funds, endowment funds, and personal trusts. What we cover in this course has
obvious implications for asset allocation and security selection strategies.
The objective here is to train highly skilled financial analysts and managers
with strong theoretical background and practical knowledge.
Investment Strategists play
a key role in the investment process. Course acquaints students with the
process of developing a global macro view of the financial markets that can
guide international asset allocation, stock selection, foreign exchange risk
management, and other investment policies. Key topics include asset allocation,
equity valuation, thematic investing—i.e. determining how demographic,
technological and political trends will affect financial markets. The course
will also examine new and alternative investment vehicles, such as, emerging
market funds, project finance, real estate, art, hedge funds. It will also
cover history of financial markets. Knowledge of basic finance, macroeconomics,
economic history is helpful. Readings, group discussions, and cases employed.
The grade will be based on a
mid-term (30%), a final (40%), and a small group project (30%). The group
project will be conducted by a group of 5 students, which will focus on the
construction and marketing of a new financial product. It will include writing
a prospectus and a document for a “road show”. Towards the end of the term,
every group is expected to do a road show, i.e. convince an investment
committee made of your peers and myself that the product is a good long term
investment. Every student needs to make 4-5 minutes presentation on behalf of
the team. The grade will be based on the prospectus and the performance at the
“road show”.
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Topics (The lecture schedule is subject to change) |
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1 |
Introduction |
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2 |
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3 |
Corporate
Restructuring (Guest Speaker) |
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4 |
Private
Equity Investment (Guest Speaker) |
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5 |
Hedge
Funds (Guest Speaker) |
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6 |
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7 |
“A risk adjustment model for
REIT evaluation”, with J. Litt, Real Estate Finance. |
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8 |
“Asian real estate in a
portfolio context: Long-term opportunities”, Real Estate Finance. |
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9 |
Credit Derivatives Product (Guest Speaker) |
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10 |
Review |
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11 |
Mid-term |
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12 |
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13 |
Global
Asset Allocation (Guest Speaker) |
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14 |
Real
Estate Development |
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15 |
Art as Investment and the
Underperformance of Masterpieces: Evidence from 1875-2002, (With M. Moses), (Guest Speaker) |
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16 |
Bond
Funds (Guest Speaker) |
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17 |
Investing
in Comtemporiry ART (Guest Speaker) |
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18 |
Idiosyncratic risk and creative destruction
in Japan(with Y. Hamao & Y. Xu). |
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19 |
Political Risk and Currency Crisis |
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20 |
Student
Presentation |
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21 |
Student
Presentation |
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22 |
Student
Presentation |
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23 |
Review |
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24 |
Final |
Group Project: Develop a New Financial
Product
(You Should Start Working Now!)
In this course, you may also develop a new financial product with a group of your classmates. Here are the steps you should take:
a) Begin work immediately by forming your groups. Find a product that is under developed in certain markets/countries in the world.
b) I would advise you to work closely with other students in the class. They might have some connections and interesting ideas.
c) Find a most efficient way of obtaining data, via express mail, fax, or email.
e) When you start, use the following checklist:
1:
Collect pricing information about the product or service
2. Collect costs of labor, production, technology, amount investment and other
related startup costs (if any)
3: Collect industry competitive information as well as information on
government regulations
4: Provide financial analysis as well as major risk analysis
5: Provide Development, Financing, Marketing and other execution Strategies.
Deadline: You should deliver to me the
following on
1) 1/26: An email (jmei@stern.nyu.edu) notifying me what product you select, names of your group members, group leader and his/her email. (8 points)
2) 2/23: A first draft of your product description. (8 points)
3) 3/23: A first draft of cost and profit analysis based on costs of labor, production, technology, amount of startup investment, and pricing information. (8 points)
4) 4/11: A first draft of Country/Industry/company analysis for road show document. (8 points)
5) 4/18: PowerPoint presentation slides for road show (8 points)
6) 4/20: Road Show (20 points)
7) 5/4: Final version of Product
prospectus and powerpoint slides. (10 points)