Dr Bryan Mills

Markets

Mediocrity

Medici

• M&S• 2010

Case

• Does news matter

• Is it science

News Analysis• Alchemy or;• Child’s play?

Technical Analysis

• Data or• Dialogue?

FundamentalAnalysis • But then

what?

Behavioural

• How to lose money

Managed?

-£10,000,000,000

£10,000,000,000

£30,000,000,000

£50,000,000,000

£70,000,000,000

£90,000,000,000

£110,000,000,000

£130,000,000,000

£150,000,000,000

Enough to fund 20million HE students

On-going bank costs

£1,790,000,000,000

News Analysis

Marks & Spencer Group PLC30 July 2010 The Company's capital consists of 1,582,902,704 ordinary shares with voting rights. Therefore, the total number of voting rights in the Company is 1,582,902,704. Up 0.51%

31 August 2010 The Company's capital consists of 1,582,917,001 ordinary shares with voting rights. Therefore, the total number of voting rights in the Company is 1,582,917,001. Up 4.16% 01 November 2010 The Company's capital consists of 1,583,507,776 ordinary shares with voting rights. Therefore, the total number of voting rights in the Company is 1,583,507,776. Down 1.91%

http://www.londonstockexchange.com/exchange/prices-and-markets/stocks/exchange-insight/news-analysis.html?fourWayKey=GB0031274896GBGBXSET1

“M&S seems to have the strongest momentum among the majors, with industry data still supportive,” said analyst Andrew Hughes.He estimated M&S to show “scarily good” same-store sales growth of 4 per cent for general merchandise and 3 per cent for food. By comparison, sales at Next and Argos stores may fall by 4.5 per cent and 6 per cent respectively, he forecast.December 16 2010

M&S finds favour as Footsie volumes slow for ChristmasFinancial Times December 16th 2010

M&S finds favour as Footsie volumes slow for ChristmasFinancial Times December 16th 2010

Technical Analysis

resistance

support

Bollinger

bands

Candle

sticks

Moving averages

• Settlement as of 24/12/2010, at 5:45 p.m. • Marks & Sp. fractionally up, achieving a modest profit of +0.43%. The day started well for the

stock, which approached the previous session's peaks with a first price of 376.2, and stayed on a plateau during the entire session. The weekly analysis of the security and the FTSE 100 shows Marks & Sp. losing relative strength against the index.

• Status and Trend Analysis • While the medium-term scenario still looks bearish, the short-term structure shows some

promising signs, with support at 372 holding strong. The positive movement in the short

term indicates a potential reversal of the bearish trend, with the possibility of prices flirting with the key resistance level of 378. Thus there is a good chance of the bullish phase continuing towards the 384 level.

• Risk Analysis • The security's level of risk is currently under control, with daily volatility at 1.641, whilst

daily volume remains high, having risen above the 1-month volume moving average in the last session. Marks & Sp.'s stable movement suggests that institutional investors have an interest in the security, to the extent that they can exert a high degree of control over its trend, which appears orderly and without strong fluctuations.

Last year, United lost at home only twice: to Chelsea and to Aston Villa. That loss to Villa was during this very weekend of fixtures a year

ago

4700 4900 5100 5300 5500 5700 5900 61009000

9500

10000

10500

11000

11500

12000

DOW v FTSE

FTSE

DO

Wr=0.96

data from yahoo.finance

Fundamental Analysis

2007 2008 2009 201060

70

80

90

100

110

120

130

M&S Performance

Revenue PAT EPS

‘Quants’

Buy and hold Conditions are 'right'

in the short run, the market is a voting

machine, not a weighing machine

"being greedy when other people are fearful and fearful when other

people are greedy." value investing

Growth stocks > 15%

If you spend more than 13 minutes analyzing

economic and market forecasts, you've wasted 10

minutesPeter Lynch

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DP

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11

0

Cash flow

•Sales volume•Retail price• Inflation

• Interest• Exchange rates

•Costs• Inflation

• Interest• exchange

• Exchange rates

WACCCost of equity

Cost of debt

BetaMarket returnRisk free return

DividendShare price

Behavioural

Heuristics applied to surfing

• Rule of 72. divide the number 72 by whatever yield you are getting to see how long it would take for your investment to double.

• “120 Minus Your Age” Rule. That is your percentage of stock allocation.

• The Long Term Inflation Average Is 4% • Very Few Years Are “Average”. • You Need 20x Your Gross Annual Income to

Retire. • Save and Invest 10% of Your Pre-Tax Income. • 10, 5, 3 Rule. You can expect a nominal return of

10% from equities, 5% return from bonds and 3% return on highly liquid cash

• Required Return. Required return = risk free rate + beta (historical market return – risk free rate).

http://etfdb.com/2009/top-10-investing-rules-of-thumb/

Stereotypes and anecdotes

mis-pricings and return anomalies

http://funds.ft.com/UKUnitTrustsandOEICS/ActiveManaged

http://www.londonstockexchange.com/exchange/prices-and-markets/stocks/indices/summary/summary-indices-chart.html?index=UKX

http://kara.allthingsd.com/files/2009/12/eric-schmidt.jpg

http://www.msnbc.msn.com/id/13560741/ns/technology_and_science-science/

Same

Different

1-ten-22-ten-43-ten-6