10/10/2017 0 Comments The Road AheadThis week marked the first major event in ISM: the annual Business Symposium. While the experiences I had did sharpen up my interview, resume, and networking skills, the most rewarding takeaway was a more clear perception of what I want to gain through ISM.
Starting the year off, I thought that ISM would simply be an extension of the work that I have done at home for the past three years and that my focus would be on soft skills, like public speaking. Through speaking to these professionals, however, I realized how much practice I have already gotten with these soft skills. With all the professional experiences I have gone through, the foundation of my professional image is already somewhat developed, and the only thing I need to do to improve upon it is get more practice. By speaking with professionals in various industries, I found that my focus should really be shifted towards putting my knowledge into practice. I found that I have the fundamental knowledge necessary to become a talented investor, and actually trading on my portfolio will be one of the best ways to improve on that knowledge. Although I have a fear of making mistakes in my actual portfolio, it is the only way to truly become immersed in the industry and develop that quick intelligence that we see in so many successful businesspeople and investors. After all, my parents gave me startup capital with the expectation that I would lose some. Overall, this week was extremely eye-opening in terms of discovering how my time will best be used in ISM. By focusing less on the skills that I have already somewhat developed and committing my full focus to putting skills in practice, I will be able to learn more efficiently and create the successful portfolio that I have always dreamed of.
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10/2/2017 0 Comments Global IntegrationMy primary goal this week was to begin working on a topic that I have never studied before: commodities. Although I did have some background knowledge of what commodities are and how they are traded within the global stock markets, I did not know what effect they had on traditional equities and the economy as a whole. Through reading a research report on commodity pricing, I was able to get a grasp on what affects commodity prices, but more importantly, it prompted me to think about my own durable competitive advantage.
The major lesson I learned is that when considering the market for a commodity, you must consider the global perspective. In previous commodity pricing models, only a specific market was used. For example, researchers would calculate the iron prices of North America and Asia with two different sets of data. The researchers found, however, that by considering the global aggregate of supply and demand, the extreme overestimation of prices was eliminated. This shift from a regional to a global perspective signaled that commodities could be considered a global economy, showing the growing interconnectedness of different markets around the world. We have seen this trend of globalization grow throughout the past few years, especially the economic recession of 2008, when a failed U.S. housing market caused worldwide panic. This concept of globalization prompted me to think about my own place in the world of investing and business as a whole. Being half-Chinese, I understand the business markets of both the United States and China, the two largest economic powerhouses of today. As China’s economy grows out of its “adolescent” phase, many American investors and business will be expanding into the China. When this happens, they will need people with similar skill sets, who understand the language and culture of China, to facilitate those deals. This future area of business holds immense opportunity for me, so adding China-specific topics to my ISM research will allow me to further build up my personal competitive advantage and open up new opportunities in the future. Through the rest of the first semester, I hope to be able to continue my research into commodities in an effort to better understand what causes changes in the stock market and economy as a whole. The concept of globalization that was introduced to me will also motivate me to shape my research decisions for the rest of the year around building upon my personal strengths and solidifying my competitive advantage. 9/25/2017 0 Comments Creative AccountingThis week, I began to conduct a financial analysis on Progressive Waste Management. While surveying the strength of Progressive, however, another topic actually came to the front of my mind: cooking the books.
Cooking books is the modification of certain accounting rules in order to make a company appear healthier or more stable. Although many see this as fraudulent, it oftentimes is not. For example, Microsoft has some creative accounting methods that allow for excess earnings to be “saved for a rainy day” -- placed separately from normal earnings until they have a year with lower earnings, when they will inject some money from that rainy day fund. This essentially allows for earnings to be smooth year over year, signaling financial stability. While reading through Progressive’s financials, many opportunities for creative accounting practices came to light, especially within their merger and acquisition (M&A) accounting practices. The various methods for accounting for orders, inventory, and goodwill could cause some major disparities in M&A situations, allowing a company to hide things like unstable cash flow or profit. Although I understood the signs of cooked books, I quickly realized that I did not have the accounting background necessary to find where specifically they cooked their books. After doing a deeper dive into these various creative accounting practices, particularly through reading the book Financial Shenanigans by Howard Schilit, I was able to find some companies that cooked their books and pinpoint likely places where they had opportunities to use some of the previously described creative accounting practices. Having this newfound knowledge under my belt allowed me to better understand basic corporate accounting practices and familiarized me even more with the financials of any company that I come across. As ISM continues throughout the year and my research becomes even more rigorous and complex, the basic accounting skills that I began to develop this week will become even more developed and ultimately allow me to feel more comfortable with one of the most basic skills an investor needs to be successful. 9/18/2017 0 Comments Diamonds in the RoughFor this week’s research assessment, the focus was on finding my weaknesses in investment terminology and valuation. To do this, I read the 2013 annual report of Progressive Waste Management, a multinational non-hazardous waste company. Although waste management definitely is not the most flashy or exciting industry, there are some misvalued “diamonds” in the industry that could produce extraordinary profits. Because of the potential profitable companies that lie within the industry and my lack of exposure to waste companies, Progressive was the best company to research.
From the experience of reading through their 2013 annual report, I was able to determine that foreign exchange (FX) is my weakest area of knowledge. In terms of Progressive, foreign exchange was mainly carried out through interest rates on their revolving lines of credit and balance sheet adjustments. Even though they are only working with one exchange rate (CAD to USD), these adjustments sometimes went up into the hundreds of millions of dollars, resulting in the need for a little extra math to be done to find the pre-adjustment numbers. Although I understood what FX affected, I was not sure exactly how or why it changed the company’s financials. With the rapidly expanding world of multinational companies today, FX will become even more of a factor when considering a company’s financial stability, so understanding the effects of FX will allow me to get a clearer look at a company’s valuation and subsequently make better investment decisions. Overall, this week was successful because it allowed me to become more familiar with the first half of a annual report as well as find topics that I need to become more familiar with. The skills that I developed this week as well as next week (when I will be writing the financial analysis of Progressive Waste) will set the foundation for the way I read annual reports for the rest of this year and provide me with a means to work my way to a wider circle of competence. 9/11/2017 0 Comments Something Old, Something NewThis week in ISM, we did our first research assessment regarding the things that we want to learn throughout the year. Because I have some prior knowledge in the field of investments, choosing topics to research and study became difficult. Along with refining my own investment philosophy, I will also expand my study into other types of investment strategies, such as growth, quant, and mutual fund strategies. By becoming more familiar with these different approaches, I will be able to connect with more professionals as well as combine aspects of their theory with mine to create a more efficient and profitable portfolio.
While conducting research for the assessment, I got the chance to go back through some of the classic books for investing, such as Ben Graham’s The Intelligent Investor. I had read these books a few years ago but reading it again really brought me back to the basics of true value investing. Re-reading the chapter over margins of safety made me realize that I was making a crucial mistake in my investment strategy: I was not taking enough risk. Now, most people perceive risk as inherently bad, but a safe level of calculated risk can actually create a much more profitable portfolio. Because I was sticking to obvious, incredibly safe investments, I was giving up some return. Now that I have realized this problem, I can rebalance my portfolio to include some more adventurous assets. In addition to the classical literature of investing, I also started to delve into other historic portfolio strategies. Although I did not go into detail on any one strategy, I was able to get some foundational information for me to build off of later in the year. In addition, I also found that there were many similarities between the new strategies I learned about and my current beliefs. Overall, this week served as a good exercise in combining my previous knowledge with newly learned knowledge to eventually achieve my personal and financial goals. 9/4/2017 0 Comments Conquering the Art of CasualThis week, our class had to plan and deliver our first introductory speech. Public speaking has always been a difficult topic for me, but by practicing through interviews and small group conversations, I have become a bit more comfortable with speaking over the past few years. There is, however, one aspect of public speaking that I am still incredibly uncomfortable with: casual speaking in formal presentations.
We’ve all seen this in action. Think of all the great speakers you know (see: Steve Jobs, Malcolm Gladwell, and Martin Luther King Jr.). What do they all have in common? Some of the first things that come to mind are that they share a passion, are able to connect with the audience, and have an air of authority surrounding them that makes you want to listen to what they say. Personally, I feel like one of the most definitive characteristics of a public speaker is their ability to address the audience at an individual rather than a collective level. They learn to perfectly blend casual and formal language (both verbal and non-verbal) to a point where every individual feels like they are listening to a friend rather than a professor. Just like a model spends hours staring at a mirror to take that perfect candid picture, these great speakers have to constantly practice the different aspects of their public speaking personas to perfect their ability to maintain formality while also connecting with the audience using informal stories. After spending about two hours listening to Ted Talks while letting speech ideas simmer in the back of my mind, I began to write, keeping in mind that my ultimate goal was not to prove myself or argue a point, but instead to connect with the audience and allow them to see me for who and what I truly am. After this goal was set, I actually found two stories that perfectly tied into the points I wanted to make. I am not usually confident in my stories and worry that they won’t carry the same message from person to person. With these stories, however, I was actually confident in my ability to explain my stories and connect with the audience. This was a major milestone in my journey to become a successful public speaker. Overall, this week was successful because I made major progress towards feeling more comfortable with public speaking. The skills and experience I gained through the entire process of crafting and delivering an introductory speech will surely carry over into my professional sphere and beyond, allowing me to be more confident and eloquent person for years to come. 8/28/2017 0 Comments Redefining PassionAs the year starts in ISM, one of the main focuses of this week is finding the ”why” in everything that we do. We have all heard the famous Einstein quote, “The two most important days of your life are the day you are born and the day you find out why.” Although this truth may seem simple, many people spend years finding out what their purpose is.
Luckily, in ISM, one of the first assignments was to focus on our “true” dreams in life. Dreams that go beyond a career, grades, or material goods. Dreams that keep you motivated through tough situations. By considering our talents, activities, and life experience, many ISM students, including myself, found success in narrowing down what we truly wanted out of both our careers and life as a whole. Personally, I was lucky to find my calling early. When I finally started my formal work in investing in eighth grade, there were nights I could not sleep. I would analyze a company for six or more hours at a time, gaining more energy as I got closer to a solution. The reading and reports never felt like work. In those sleepless nights and endless hours, I found my personal definition of passion: an activity that you could not live without and never feels like work. To borrow Warren Buffett’s words, a true passion is found when you wake up every morning “tap dancing to work”. The guest lecture that we listened to on Wednesday given by Mrs. Julie Leslie (find her website here) really helped me narrow down my personal dreams and focus on my true goals and passions. Before the lecture, I always had a simple list of three things that I desired in the grand scheme of my life: independence, charity, and inspiration. This list, however, lacked detail. By doing the activity after the guest lecture, I found success in finding practical actions that I can take to fulfill those three simple goals. One of these practical actions was found by accident while cleaning out my investing library. In the back of a journal, I found the promise that I made to myself three years ago, when I first opened my own Scottrade account. I promised that my first $1,000 in profit would go to the Red Lily Foundation, a program that seeks to find treatments and cures for Postural Orthostatic Tachycardia Syndrome, or POTS. One of my closest friends was diagnosed with POTS three years ago, and her chances of a “normal” life went drastically down. These memories helped me realize the true motivation behind my goal of charity; I want to give everyone the chance to dream big and achieve anything they set their mind to. I found that all of the topics I felt truly passionate about (special education, young women in business, POTS, affordable education) were privileges that not everyone had access to, which often inhibited them from achieving their dreams. My true desire was not to simply give to charity, it was to help break down barriers to people’s goals by making the most of the privileges that I have. As the year goes on, these goals will transform into something even more specific and meaningful through purposeful self-evaluation and questioning, but I believe that I have found success in narrowing down my goals in life and finding how my chosen career will tie into those goals. For now, these ideas will serve as motivators throughout my journey in ISM, and encourage me to work as hard and efficiently as I can to achieve my dreams. |