MUTIS Finance Conference 2014
Paul Middleditch
Lecturer in Macroeconomics
@DrMiddleditch
In preparation, use your mobile
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1
Linkedin Rankings for Investment
University of Manchester
Ranks seventh on Linkedin in the UK for employment in the area
of investment banking.
151,800 students & alumni on Linkedin (440 personally
connected)
https://www.linkedin.com/edu/rankings/gb/undergraduateinvestment-banking
2
What contributes towards the success of our graduates?
The existence of MUTIS is no doubt significant
Manchester Business School
Award winning careers office
The Economics Department………..?
3
What is your impression of the current
value of the FTSE 250?
33%
1. Strongly undervalued
2. Undervalued.
20%
3. About right.
20%
17%
4. Overvalued.
10%
5. Strongly overvalued.
1.
2.
3.
4.
5.
Macroeconomics IIIA
ECON30611– 3rd Year UG Macroeconomics IIIA – approx
300 students
Twitter: @PaulM_Mac3A14
Learn the importance of expectations in the realistic modelling of
the economy.
Concepts of Rational Expectation and Adaptive Expectations
Derive the New Keynesian Philips Curve (NKPC) from first
principles:
Macroeconomics IIIA
What about when we disaggregate?
The concept that both market fundamentals ‘and’ expectations
drive prices can be dis-aggregated.
The NKPC can be manipulated to describe the disaggregate or the
sectoral level, such as the finance sector:
Richard Evans – The Telegraph 25th Oct
Stock Market Value:
The market PE ratio
currently around 15
Cyclically adjusted PE
(CAPE) currently 14 (11
in 2009)
Dividend Yield currently
4% (Highest for 13
years)
All measures signal
‘BUY’ but only reflect
past information.
Legacies, Clouds and Uncertainties –
IMF World Outloook (Global Growth – 3.3% 2014)
What is your impression of the current
value of the FTSE 250?
30%
1. Strongly undervalued
2. Undervalued.
20%
20%
17%
3. About right.
13%
4. Overvalued.
5. Strongly overvalued.
1.
2.
3.
4.
5.
What is your impression of the current value of the
FTSE 250?
33%
Strongly undervalued
Undervalued.
20%
10%
20%
20%
About right.
17%
17%
Overvalued.
Strongly overvalued.
30%
20%
13%
First Slide
Second Slide
Conclusion....
 Traditional measures of stock market and investment
vehicles value tend to be backward looking.
 Current prices already contain information about the
future so measures of value should also.
 Including policy announcements and economic outlook
could provide better indicators for the future value of
stocks, forex, bonds and financial vehicles generally.
Finally, you can also view the course taught in Economics
at Manchester over the web to see this in practice:
@PaulM_Mac3A14
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