Just received my desk rotations equity trading and credit sales. Time to swat up any suggestions. I have been recommended this for equities:
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that book doesn't go into fixedincome at all.. and its explanation of equities is not so great either. It really just talks about the structure of an equity exchange and their products. It does not actually talk about how to generate your own trading ideas, strategies, or analysis.
Reccomended if you have never heard of what a stock is or what the NYSE is.
In the end, understanding the market is just spending time with it. The best thing you can do is to actually know what companies actually do, which ones perform better, and why they perform better.
so heres what you should do.
1) put down the book 2) pick an industry you like that is easy to understand (consumer staples/discretionary = best, utilities = good, healthcare = bad, tech = bad) 3) figure out who the big boys are in that sector and get to know them well 4) compare and contrast them, which company performs better? which really sucked? highly suggest you put everything onto a spreadsheet side by side. (aka comparables analysis) 5) ask why to any phenomena you see that you don't understand. why is stock XYZ kicking ass? why is stock ABC's revenue so consistent? why is stock RST reinvesting earnings? why is stock LMN not growing at the rate of it's peers? 6) make a prediction that you believe in, and stick around for earnings season to see if you were right
.. 7) repeat, repeat, repeat. Try new sectors, new sub-sectors. Compare industries, the overall market, the different asset classes, the different stock indices.
That is how you study the markets.. you jump right in and crunch the numbers. The problem with reading the book is that nothing in the market stays true forever. The market will change and reading old books from even just a few years ago might teach you somethign that was never true in the first place.
1 example is that stocks and bonds move against each other... if stock indices rise, bonds indices will drop and vice versa because stock and bonds are subsitutes for eachother as an investment.. This was how the markets moved for a while but that is not true anymore and there are many reasons why stocks and bonds will move together.
Absolutely agree with Couchy that in today's world everything has become very correlated. HSBC put together a great analysis that shows this. A quick overview of their work can be found here: http://ftalphaville.ft.com/blog/2012/04/19/966691/this-correlated-world/
Credit Training Materials (Originally Posted: 03/01/2013)
So I am trying to put together materials or a primer for students who are interested in credit and I'd like a little help. I'm basically looking for papers, maybe intro text books, Moody's / S&P materials, credit training materials, etc. Anything use to bring people up the curve on lending / credit focused investing.
This could be ABL materials, Senior lending, Mezz debt, whatever.
I have a bunch of materials already, but wanted to throw this out there for others. Would be a good resource for anyone on WSO who is interested in learning about credit or how a lender looks at things. I'll post some of the materials I have over the weekend, but wanted to get the ball rolling.
This may be a bit too broad, but anything about financial statement analysis is key. There is the standby of "the interpretation of financial statements" by Graham. I find it to be a bit outdated, but there are some key portions that are still very relevant. A more contemporary book would be "Financial Statement Analysis: A Practitioners Guide". It is very basic, I am not sure what kind of a starting point you are aiming for, but it is a great introduction and isn't overly academic. There are anecdotes tying the information to the real world which is nice for students to grasp concepts.
Once you have that foundation, you can start getting into deeper waters for more complicated capital structures etc.
Again, hopefully I didn't undershoot what you were looking for.
Little more broad than I was looking, but still useful. No wrong answers here. Just looking for something to help novices who are interested in the space. Thanks!
bump on this, i'm entirely clueless on how they come up with interest %'s other than generally "it's a big company" "it already has too much debt" "it's mezz" - how do they calc an interest rate? i've heard it's generally just looking at comps in the market and then book building or banks competing for business (if it's bank debt)
There is more to credit than mezz/sponsor type debt. Are we looking for the universe where fixed income on a national level comes in to play? Fabrozzi is a classic, but honestly unless you understand a firm's sales cycle and top line it makes picking apart debt services and doing modelling a little useless.
Once a firms sales cycle is figured on a high level, you can dive into books and materials. If anything it might piece things together. There's more to a firm than whether its lenders can clip their 10% coupons.
Here's a start (source: Google)
Lehman - ABS/CDO Primer http://cpbs.wikispaces.com/file/view/ABS+CDOs+-+A+Primer.pdf
S&P - Syndicated Loan Primer http://snde.rutgers.edu/Rutgers/Econ394/Unit3/sp_syndicated_loan_primer…
Milken Institute - Leveraged Loan Primer http://www.milkeninstitute.org/pdf/loan_primer_1004.pdf
Nomura - CDOs in Plain English http://rulibor.com/wp-content/uploads/2012/09/CDO-in-Plain-English-Nomu…
Allen & Overy - Sovereign Insolvency http://rulibor.com/wp-content/uploads/2012/09/Sovereign-State-Restructu…
Morgan Stanley - Credit Derivatives Handbook http://rulibor.com/wp-content/uploads/2012/09/Credit-Derivatives-Handbo…
Citi - Home Equity Loans http://rulibor.com/wp-content/uploads/2011/09/Intro-to-HEQ-Market.pdf
Citi - Mortgage-Backed Securities http://rulibor.com/wp-content/uploads/2011/09/GUIDE-TO-MBS.pdf
Bear Stearns - Non-Agency MBS http://rulibor.com/wp-content/uploads/2011/09/Bear-Stearns-Bear-Stearns…
Citi - Agency Debt Securities http://rulibor.com/wp-content/uploads/2011/09/AGENCYDEBTPRIMER.pdf
Wiley Finance - Credit Derivatives & Structured Credit http://stocksfirst.com/books/trading-econ-investing/Credit%20Derivative…
Good stuff 7x, many thanks.
Index Tranche Credit Trading Books (Originally Posted: 08/16/2011)
Hi there,
Can anyone recommend any good books on credit? In particular, credit correlation, credit tranche trading, CDS, etc.?
I know some products have a "bible" so to speak, and was wondering if there was one book that stood out in particular, although I'll take anything.
Thanks!
Modeling Single-Name and Multi-Name Credit Derivatives by O'Kane is pretty good, though there are some things about market conventions that it doesn't cover in as much detail as I would have liked. VERY quantitative as is to be expected.
O hey Brandon!
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