A Random Walk Down Wall Street
Stat 006p
Fall 2004
Hanes 308
Instructor: Chuanshu Ji
Office: 203 Smith Building
Phone: 962-3917
Email: cji@email.unc.edu
Office Hours: by appointment
TA: Jason Rein
Email: jrein@email.unc.edu
Office Hours: by appointment
Class Website:
www.stat.unc.edu/faculty/ji.html
Class Meeting Schedule:
TR 9:30-10:45
Required Texts:
A Random Walk Down Wall Street by Burton G. Malkiel.
The Wall Street Journal
Understanding the current business and economic environment is an essential step
in learning about the stock market. Current events will be discussed weekly in
class. The Wall Street Journal provides semester subscriptions at a discounted
price for students in classes in which the text is required.
Course Objectives:
The goal of this class is to provide an introduction to the stock market and the market
mechanisms that drive its behavior. Various statistical, economic, and market analyses
will be incorporated to aid in the learning experience.
Grading:
25%
Participation:
The goal of UNC’s freshman seminar program is to engage underclassmen in a
small, discussion-oriented learning environment. Direct interaction with fellow
students and the professor is fundamental in enhancing the learning process.
Attendance and participation are expected.
75%
Group projects, papers and homeworks:
The remaining portion of grades for the class will come from various assignments
established throughout the semester. The work will include statistical analysis,
writing and presentations.
**
Grading, assignments and schedule are subject to change throughout the semester
as deemed fit by the instructors. Students will be given ample notification if this
is the case.
Class Schedule:
Week 1:
Introduction to class and stock market game
T
Aug. 24:
R
Aug. 26:
Read chapter 1: “Firm Foundations and Castles in the Air”
Week 2:
Initial market introduction
T
Aug 31:
R
Sept. 2:
Read chapter 2: “The Madness of Crowds”
Week 3:
History and current state of the economy
T
Sept. 7:
Read chapter 3: “Stock Valuation ‘60s-‘90s”
R
Sept. 9:
Random Walk as a Toy Probability Model
Week 4:
Research and analysis: Yahoo! review
T
Sept. 14:
Read chapter 4: “Firm Foundation Theory”
R
Sept. 16:
Descriptive Statistics
Read chapter 5: “Technical and Fundamental Analysis”
Week 5
Technical analysis – Financial Time Series
T
Sept. 21:
Read chapter 6: “Technical Analysis and Random Walk Theory”
R
Sept. 23:
Technical stock analysis homework 1
Week 6:
Technical analysis – Financial Time Series continued
T
Sept. 28:
R
Sept. 30:
Technical stock analysis homework 2
Week 7:
Technical and Fundamental analysis
T
Oct. 5:
Read chapter 7: “How Good is Fundamental Analysis?”
R
Oct. 7:
Research report on companies invested in due
Assignment of group scandal projects
Week 8:
T
Oct. 12:
R
Oct. 14:
University Day (no classes from 9:30 to 12:30)
Fall Break
Week 9:
Fundamental analysis; how to create and manage a successful portfolio
T
Oct. 19:
Read chapter 8: “Modern Portfolio Theory”
R
Oct. 21:
Mid-semester portfolio analysis due
Compound Interest Rates
Week 10
Fundamental analysis; how to create and manage a successful portfolio (continued)
T
Oct. 26:
Read chapter 9: “Reaping Rewards by Increasing Risk”
R
Oct. 28:
Risk, Reward and Volatility analysis
Week 11:
Thinking long-term
T
Nov. 2:
R
Nov. 4:
Read chapter 10: Assault on the Random Walk
Statistics and the Random Walk
Chapter 12: “Three Eras of Market Returns”
Week 12
Scandals and the shaping of sentiment
T
Nov. 9:
Group presentations on scandals
R
Nov. 11:
Group presentations on scandals
Week 13:
T
Nov. 16:
R
Nov. 18:
Read chapter 13: “Life-Cycle Guide to Investing”
Advanced Statistics Concepts
Week 14
T
Nov. 23:
R
Nov. 25:
Read chapter 14: “3 Giant Steps Down Wall Street”
Thanksgiving Break
Week 15
T
Nov. 30:
R
Dec. 2:
Final Summary, Statistical Analysis
Final paper due