Author: Michael Trehan

Thanks for a Great Year!

It was an honor to host this club the past four years. Thank you, Mr. Dahl, for hosting the final year, and thanks to these students and others who have dropped by for the meetings!

Hunter Vazquez Michael Trehan Patrick Young Tareq Allan Narek Divanyan Sahil Sandhu richard dahl
WSCA Finance Club members

Left to Right: Hunter Vazquez, Patrick Young, Michael Trehan, Tareq Allen, Sahil Sandhu, Narek Divanyan. Cameron Gage left before the photo.

If You Miss a Meeting…

WSCA students: If you miss a meeting, please go over the slides under the WSCA Lectures tab for that meeting. The first dozen meetings or so are cumulative, and you need to know what we talked about in the prior meetings for the next one to make sense. You will have to research the bullet points on the slides yourself, because those slides simply serve as a list of topics for me to talk about. Email me any questions you have concerning topics that you were not able to research on your own.

– Michael Trehan

Meeting Times

Hello everyone,

I hope your summer went well. WSCA kids, please contact me via my RAFOS email now indicating what time and what days you would prefer to have the on-campus meetings. I will then work with Mr. Dahl to reconcile a schedule that works for everyone.

If you haven’t already, please look through the summer assignment in the previous post. Also, I finished beta development of a project I have been working on for a couple years — view it at www.OptionVista.com . I will be using it to teach some characteristics of options if you are interested.

– Michael Trehan

2017-18: Summer Assignments

Hello current and prospective members,

If you are interested in becoming a NEW MEMBER of the club for next year, fill out this Google Form here.

EVERYONE, including prospective members, read the rest of the post.

I am pleasantly surprised with the work that you all have been doing individually. I would like to continue this pattern of individual research in the 2017-18 school year.

As you know, the school year is wrapping up. In order for us to be as successful as possible next year, I would like all of you to take some time over summer to do the following:

  • New members ONLY:
    • Go through all the meeting slides from 2014. Google every point in the slide; the slides do not explain the concepts, but they serve as a directory of information.
    • Read ALL the blogs tagged “education” on this site, even the esoteric ones.
    • Come in knowing about stocks, bonds, fundamental, and technical analysis. Don’t worry about options and corporate finance too much.
  • Everyone, including new members:
    • Read the financial news headlines every day — WSJ.com or paper copy if you please (I get it on my doorstep every day, along with Barrons every Saturday). It should take 5 minutes.
    • Pick a single stock to follow over summer, and follow it extensively. Mid- to large-cap companies only (read the slides if you don’t know what that means), try NVDA, AMZN, SNAP, etc. Tech will have more news and larger swings for you to follow.
    • For your understanding of fundamental analysis, watch the HBO documentary on Warren Buffet. A link that may or may not work is https://www.youtube.com/watch?v=Lu6_XV21pT0, but it should be on YouTube somewhere; find it yourself if that link is down.
    • Now that you’ve watched that, know that fundamental analysis will not work for you in that way. Watch https://www.youtube.com/watch?v=cppxO67e6eo for an overview of a ratio that is used in fundamental analysis. You should’ve also seen this in the 2014 meeting slides if you are a new member.
    • For your understanding of technical analysis, watch https://www.youtube.com/watch?v=rlZRtQkfK04 over and over until you are familiar with all the terms used.
    • For your understanding of corporate finance, read pages 1-42 of http://www.econ.yale.edu/~nordhaus/homepage/documents/corporate-finance.pdf . Try to understand what they are talking about. Do not give up — this is necessary information as you will find out later.
    • One more thing — have an excellent summer!

2017 News & Notice

Hello followers,

Welcome to the new school year! We hope it is getting off to a good start for all of you. In the Rocklin Finance Club’s third year of existence, we’ll be focusing on what I learned in the two months I was in Cambridge taking Harvard University’s S192 Introduction to Capital Markets, what Aabhash has learned about money while visiting USC, and what Ken has been researching on SeekingAlpha. Stay tuned for more student-produced financial news and education!

Our meetings are no longer at Rocklin High. For information on meeting times and locations, please get my number or personal e-mail from any student that knows me on your campus and contact me, or fill out the old Google Form.

– Michael Trehan

Daily Bulletin: July 15, 2016

  • Wells Fargo, which does not have an investment banking business like the aforementioned JP Morgan and Morgan Stanley, reported dismal earnings and fell around 2.5%, reversing some of the gains of the financial sector yesterday as Wells Fargo is the largest bank. The bank was especially adversely affected by low interest rates, according to the WSJ. This contributed to the sluggish market performance today.
  • The VIX is down 1.17% today, showing that volatility and therefore fear is lower in the markets. The VIX is now at 12.67, a very low level. This contributed to the fall in bond prices and the large increase in 10 Year T-Note yield (up 4.18% today) as investors pursue the now less risky stock market instead of the low-yielding bond market.
  • Retail sales rose a higher than expected 0.6% in June according to Bloomberg, offsetting weak vehicle sales in the US. This economic indicator shows that consumer spending is still strong and possibly canceled out the negative effects of weak financial earnings today.

This has been my last daily bulletin. I hope they have provided some information as to why the market is moving for the past three weeks.

– Michael Trehan

Daily Bulletin: July 14, 2016

  • 10 Year T-Note yields continue to rise today by 4.22% along with the Dow, which rose by 0.73%. The previous correlation oddities have now been broken, and now investors are selling bonds in order to purchase stocks, according to the WSJ.
  • The Bank of England followed through on expectations to provide stimulus, helping the FTSE and the Dow gain. Domestic bank stocks like JPMorgan and Morgan Stanley beat on earnings, and rose 1.5% and 3.1%, pulling the broader market up.
  • The US Economic Surprise index by Citigroup rose to positive territory (13) for one of the first times in the past year and a half, according to the Wall Street Journal. The fact that there are upside surprises, as indicated by this index, shows that even under the weak EMH, the market can be positively affected by further news developments.

Daily Bulletin: July 13, 2016

  • According to the WSJ, a full 33% of sovereign debt worldwide is now issued at negative yields. This is not a new trend, but it coincides with a worldwide rise in stock markets. This pattern breaks the previously known positive correlation between bond yields and stock prices. High bond prices are caused by an overreliance on debt financing and lack of actual capital investment.
  • The domestic energy sector fell today by 0.86% as measured by XLE as the Middle East regains market share in the oil production industry. The Middle East now holds a 35% share in oil production. The fact that the energy sector was down while the general market was up exacerbates the negative effects of this news.
  • Economists expect the Bank of England to lower benchmark rates by 0.25% at its meeting tomorrow, a move that will calm the market and thus has already been priced into the market, causing today’s upward movement.

Daily Bulletin: July 12, 2016

  • Government bond prices in the US, UK, France, Sweden, and Denmark fell today, with 10 Year T-Note yields jumping by 5.44%. According to the WSJ, investors are less likely to accept low returns because of confidence caused by the possibility of Japanese stimulus and the knowledge that Theresa May will be Britain’s next PM.
  • The Dow joined the S&P in setting a new record, up 0.66% to 18347.67. One contributing causative factor the WSJ points out is “share buybacks,” in which companies buy back their own shares from investors to boost both shareholder confidence and stock price. Total buybacks for this year so far total $357 billion according to Birinyi Associates.
  • The British pound has not significantly recovered against the dollar with GBP/USD at 1.314 today , and is not expected to do so, according to the CFTC. This is because money managers are still holding mainly short positions, and this behavioural finance suggests that the pound will fall.