Trading and Information Sources

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Trading and Information Sources

• Steve Condon
• Craig Ganger

The Stock Market Class
Winter 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

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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

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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)

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Types of Orders

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

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Types of Orders

• Limit

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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

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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

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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

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Research Analyst Reports

Username Password AG
Edwards www.agedwards.com SIM
SIMP1X Bear Stearns
www.bearstearns.com SIMS
SIM3545 Merrill Lynch
www.mlx.ml.com
kspellman SIMP1X Prudential
www.cm1.prusec.com SIM
SIM Salomon Smith Barney
www.salomonsmithbarney.com SIMOSU
SIMOSU UBS Warburg
www.ubswarburg.com simp
simpxxxx


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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

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The Stock Market Class Portfolio

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

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Fisher Resources Bloomberg

• Good for detailed news and information on many
  different types of securities
• 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

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Fisher Resources Datastream

• Lots of historical data on almost anything
• 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

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Fisher Resources First Call

• Real-time news provider
• Gives analysts reports, research broadcasts,
  etc.
• Use top row of buttons for quick access
• Ex F1 F10

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Fisher Resources Bridge

• Good for real-time news and data
• Lots of real-time data
• Colorful screen interface

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Fisher Resources StockVal

• 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