Financial Modeling Self Study Program

Welcome to IBankingFAQ

I am excited to say that I’ve finished work on my book, How to Be an Investment Banker: Recruiting, Interviewing, and Landing the Job + Website (Wiley Finance) which will be released on April 1, 2013. It was a lot of work but I hope many of you find it useful for the investment banking recruiting process. Basically, the book is an extension of this site covering in greater detail information about investment banking and lifestyle, recruiting and interviewing and the technical stuff that you need to know, including an overview of accounting, finance, financial statement analysis, valuation, modeling, M&A and LBOs.

I’ve also recently launched a website called igokids. This has nothing to do with finance or investment banking but it is my full-time gig so feel free to check it out. igokids is local search and discovery site for everything kid related in New York City (in a nutshell, “Yelp for parents”). I’m proud to say that I developed it from scratch myself, being a totally self-taught programmer. See all the exit opportunities that investment banking can lead to?

I also want to remind you about my financial modeling self study program, which costs only $49. You can learn how to build a financial model in the comfort of your own home or office. Knowing how to build an integrated cash flow model will definitely help you in your interviews plus it is a great way to prep for those dreaded technical interview questions. Click to view more information about the financial modeling self study program.

As always, I look forward to your comments/suggestions/questions and emails (andrew [at] ibankingfaq.com).

How to be an Investment Banker

Random FAQ: Does technical analysis work?

Yes.  No.  Maybe.

I think all three are correct depending on how we define technical analysis.  Academics have known for about 15 years that stocks with positive momentum tend to outperform stocks with negative momentum.  Traders and speculators have probably known this for centuries longer.  If we define technical analysis as using information contained in historical prices (and other information such as trading volume) to predict future prices than there is no question the answer is yes, technical analysis does work.  Most quantitative trading methods (including high frequency trading) is based on this sort of analysis.  In fact, I would go as far as to say that much of what people view as fundamental analysis is actually technical analysis.  I would argue that much of value investing (e.g. buying stocks with low Price/Book Value ratios or Price/Earnings ratios is actually a reflection of technical factors (the stock has gone down in the past) than it is of fundamental factors such as its book value or earnings.

If, however, we define technical analysis as humans looking at charts looking for patterns which they then give cool names, I am more than a little skeptical.  Not because the charts don’t contain good information (they contain the same information used by the computers discussed above) but because I am skeptical that humans can consistently and correctly interpret this information.  I do leave open the possible that certain exceptional individuals can indeed profit from interpreting such charts.

I’ve stated that technical analysis is essentially just momentum investing (I use the word investing loosely).  I think its worth mentioning that virtually all trading is based on momentum investing.  Of course the downside of momentum (from the trader’s perspective) as a strategy is that it works until it doesn’t.   Which is to say you’ve got to get out in time (no easy task), making it a risky strategy.  From the market’s prospective, it is not difficult to see the relationship between momentum and frothy markets.

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