BM 418-14 Day 14 Notes and Objectives
Sudweeks,
Fall 2009 October 15, 2009
Winter 2010 February 23, 2010
I. Introduction
A. Welcome to class, it is great to be here
II. Day 14 Objectives
Investments 1: Before You Invest
A.
B.
C.
D.
Know what to do before you invest
Understand the ten principles of successful investing
Understand asset classes
Review the risk and return history of the major asset classes
Investments 4: Understanding Bond Basics
A. Understand risk and return for bonds
B. Understand bond terminology and the major types of bonds
C. Understand how bonds are valued
D. Understand the costs of investing in bonds
E. Understand investing in other asset classes
III. Active Learning Strategies
A. PowerPoint: Requirements of PFP (slide 4-6)
1. Investment Plan Assignments: BYI and Bonds (BYI-1: slide 7-10)
B. PowerPoint: Before you Invest: What should you do?
1. What should you do before you invest? (BYI-1: slide 11-13)
2. How have most investors done?
a) Results of 20 Year Dalbar Study (slide 16))
C. Is there guidance to help us in our investments?
1. Quote by Elder Oaks: Principles (BYI-1: slide 17)
D. Question: What should the principles be?
1. Divide into 4-6 groups and have them share their ideas: 4 minutes prep, get two
ideas from each group
E. Write Key Principles on Blackboard
1. Know yourself (1- slide 19): Take risk tolerance test TT16,
2. Understand Risk (1- slide 21): Use Return Simulation TT23,
3. Stay diversified (1- slide 22): Use return simulation TT23,
4. Invest low cost and tax-efficiently (1: slides 23-25),
5. Invest long-term (1: slides 26-27),
6. If you must invest in individual assets, know what you invest in and who you invest
with: Story of PM class and how much work it is (1- slide 28),
7. Monitor portfolio performance: President Monson and home teaching (1- slide 29)
8. Don’t waste too much time, money, and energy trying to beat the market: Bring
Binder from the PM class (1- slide 30)
9. Invest only with high quality, licensed, and reputable people and institutions (1- slide
31): Story of couple lost everything to member of ward / Bernie Madoff
10. Develop a good investment plan consistent with your goals, budget, and these
principles, and follow it closely (1- slide 32):
F. Why review asset class performance? (1-slide 61-67)
G. Case Studies
1. Case Study 5 (slides 83-85) Investor Risk Tolerance
2. Case Study 6 (slides 86-89) Investor Risk Tolerance
H. Final Thought of the Day
IV. Notes:
Winter 2010
I started with the PFP, and went into why I teach differently. I did what to do before you invest,
the DALBAR results of investor’s underperformance for equities. I then read Elder Oaks
principles. I then went into what to do before you invest. I then divided into groups, and they
thought up principles, and we shared them with the class. I elaborated on those principles with
the PowerPoints. I finished with the Asset Class performance and Case Study #5 and #6.
Reviews: 6,7,7,7,8,8,8,8,8.
Fall 2009
I started with the PFP, and went into why I teach differently. I did what to do before you invest,
then added the DALBAR results of investor’s underperformance for equities. I then read the
first presidency message of Feb 27 and into Elder Oaks principles. I then went into what to do
before you invest. I then divided into groups, and they thought up principles, and we shared
them with the class. I elaborated on those principles with the PowerPoints. I finished with the
Asset Class performance and Case Study #5 and #6. Reviews: 7,7,7.
Fall 2008
I started with the PFP, and went into why I teach differently. I did what to do before you invest,
then the DALBAR results of investor’s underperformance. I then read the first presidency
message of Feb 27 and into Elder Oaks principles. I then went into what to do before you invest.
I then divided into groups, and they thought up principles, and we shared them with the class. I
elaborated on those principles with the PowerPoints. I finished with the Asset Class
performance and Case Study #5. Reviews: 7,7,7,7,8,8,8.
Fall 2008
I started with the FEX advertisements and the DALBAR results, then read the first presidency
message of Feb 27. I went into the Plan requirements, and then IP requirements, then went into
Elder Oaks principles. I then went into what to do before you invest. I then divided into groups,
and they thought up principles, and we shared them with the class. I elaborated on those
principles with the PowerPoints. Reviews: 8.
Spring 2008
I started with the FEX advertisements, then read the first presidency message of Feb 27. I went
into the Plan requirements, and then IP requirements, then went into Elder Oaks principles. I
then went into what to do before you invest. I then divided into groups, and they thought up
principles, and we shared them with the class. I elaborated on those principles. Then I went into
asset class performance, and how they have performed over the last 80 years. I tried to get more
out of the class. Reviews: 7,7,8.
Winter 2008
I started with plan requirements, and then IP requirements, then went into Elder Oaks principles.
I then went into what to do before you invest. I then divided into groups, and they thought up
principles, and we shared them with the class. I elaborated on those principles. Then I went into
asset class performance, and how they have performed over the last 80 years. I tried to get more
out of the class. Reviews: 7.
Fall 2007
I started with plan requirements, then went into Elder Oaks principles. I then went into what to
do before you invest. I brought out the GPS and talked about the 50-20 and how the GPS
helped. I then divided into groups, and they thought up principles, and we shared them with the
class. I elaborated on those principles. Then I went into asset class performance, and how they
have performed over the last 80 years. I tried to get more out of the class. Reviews: 8.
Spring 2007
I started with plan requirements, then went into Elder Oaks principles. I then went into what to
do before you invest, and divided into groups, and they thought up principles, and we shared
them with the class. I elaborated on those principles. Then I went into asset class performance,
and how they have performed over the last 80 years. I tried to get more out of the class.
Reviews: 8.
Winter 2007
I started with plan requirements, then went into Elder Oaks principles. I then divided into
groups, and they thought up principles, and we shared them with the class. I elaborated on those
principles. Then I went into asset class performance, and how they have performed over the last
80 years. I tried to get more out of the class. Reviews: 7,7,7,7.
Fall 2006
I started with plan requirements, then went into elders Oaks principles. I then divided into
groups, and they thought up principles, and we shared them with the class. I elaborated on those
principles. Then I went into asset class performance, and how they have performed over the last
80 years. I ended with handing back the exams. I tried to get more out of the class. Reviews: 7.
Spring 2006
I started with requirements of the PFP, then went into before you invest. I then discussed the
quote by Elder Oaks, and explained the difference between assets and principles. I then told the
story of the GPS and 50-20 hike, and how it helped, and how we all needed a GPS for investing.
That GPS are the principles. We went through the principles, and I showed pictures to make my
points and stories about investing with good people. The risk tolerance test I used to help people
begin to think about their asset allocation. When we get to the section on Know what you invest
in, I should bring the binder of the Portfolio Management students.. It seemed to go OK. I only
got through the 10 principles.
Winter 2006
I started with requirements of the PFP, then went into before you invest. I then discussed the
quote by Elder Oaks, and explained the difference between assets and principles. I then told the
story of the GPS and 50-20 hike, and how it helped, and how we all needed a GPS for investing.
That GPS are the principles. We went through the principles, and I showed pictures to make my
points and stories about investing with good people. The risk tolerance test I used to help people
begin to think about their asset allocation. Perhaps I should change that to the next day. It
seemed to go OK, although the asset allocation stuff should be for day 2.
Fall 2005
I started with the requirements, then went to Before you Invest. Then I used the Oaks quote on
principles. We then talked on the principles of investing, and I wrote them on the board. We did
a risk tolerance test, and we finished out the principles. Then I let the students go, and talked
with those who were unfamiliar with investing. We talked of asset class performance, then asset
classes. Reviews: 3 (thought, 7.
Spring 2005
I stated with the story of the king who wanted all the world’s wisdom, and it was summed up in
the sentence “there is no such thing as a free lunch.” I then talked about the 50-20 and the GPS,
and how it told me where I was. I then went into the PowerPoints, and got through the
principles, using the Risk Tolerance test and Returns Simulation worksheet, then went through
the graphs. It seemed to go well. No reviews
Winter 2004
I need to give the students a break as they handed in the Midterms. I also need to tell them about
what we will be doing over the next 5 days. I asked about the best way to teach investing. Then
we went through the principles of successful investing. We did the risk tolerance test as part of
principle 1, and showed the risk spreadsheet as part of principle 2. They seemed to help. Then
we finished, went into before you invest, and asset class history. Reviews: 6,7,6,8 and 6,6,6
Fall 2004
I felt it went a lot better today. I started with how what we teach is different, and how we are
principles based. Then I asked questions as to the principles of successful investing. We then
went into the first principles. I then did the risk tolerance test, took what people thought before,
and then after. That was fun. I finished out with the graphs of history, and then for those
interested, we talked of asset classes. It felt much better. Reviews: 6,7,7,
Spring 2004
It seemed to work OK, particularly the principles. I found a neat quote from Elder Oaks that I
added. I started with know yourself and the risk tolerance test, which was fun, then finished with
the rest. I need to shorten the risk tolerance test. People want to move to the practical
application soon, but I have to hold them off. Reviews: 7,8
Winter 2004 Section 1
I got the midterms, then started talking about how I teach investments. Then we went into the
principles of investing, and I had added more information on costs. We did the risk tolerance
test, which took time. Then I ended with the graphs on asset class performance. It seemed to go
OK. Reviews: 7,7,8
Winter 2004 Section 2
I did basically the same thing, and did the introduction a little better. Everything seemed to work
ok. Reviews: 6,6,7,8
Fall 2003
I started with talking about principles, and then we went over them. At the know yourself stage,
I went over the risk tolerance test in class. Next time I will take a poll of the class, and have
everyone determine where they stand in the five categories. Then we will take the quiz, and then
see where people stand. I then went into the things to invest, and asset class performance. It
seemed to go OK. I need more info on asset class performance. I need to go through the
material, and not jump around as much. Reviews: 6,6,7
Spring 2003
I started with the ps and q’s of investing: Principles of Investing, Asset Class Performance,
Investment Plan, Portfolio Construction, Investment Process, and Performance Reporting. Then
I went into the principles of investing—I gave an attendance quiz as they handed in their exam
today. Then I went into asset class performance, which included the graphs. I let many go who
did not understand asset classes, and then remembered I had not finished the section on before
you invest. I finished that, then gave the risk tolerance test, and finished up with asset classes. I
forgot to hand out reviews, although I felt it went OK today. I changed the powerpoints to
include principles, before you invest, and then added Asset Class Performance., Reviews (est.
6-7).
Winter 2003
This was one of the best days of this section. Kendall could not come, so I taught the lesson. I
started with getting the exam. Then I talked about the key principles of investing, to teach
correct principles, and then let them govern themselves. I asked for input from the class, and we
talked about each of the ideas. It was a good list. Next, we talked about things you need to do
before you invest, and then took a risk tolerance test for the quiz. That worked out well too. We
talked a little about setting financial goals,
and
how to do it. Then we finished on the Investment Plan, and what happens when you don’t have a
good road map or plan or don’t follow it. Reviews: 8,6,7,6,7
Fall 2002
We had the quiz, then I talked about things to do before you invest. Then I talked about the
Investment Plan, and what it needed to include. It was good, because then Kendall Erickson
came in and talked about the investment plan, investors risk levels, and the importance of
starting now. It seemed to go OK, but perhaps it should be shortened. Reviews: 6,5,5,7,6
Spring 2002
I invited Kendall Erickson to come in. WE had the quiz, I discussed how I would be teaching
this section differently with principles and processes, rather than with stocks bonds, etc. I had
the group presentation, and then Kendall talked on the 10 basics of investing from Schwab. It
was really good. Reviews 6,6,7
Winter 2002
Kendall did a great job. The students were attentive and it turned out well. Its great that
someone else talks for a while and not just me. I think the students liked what they heard. I
did not give anything or any presentation.
Kendall did a great job—answered lots of questions from the basis to the more advanced. It was
really fun.