Posted 8:00 AM by Zachary (e-mail)
Wall Street Recruiting: Game On!
All I can say, now, is "finally." Finally, Wall Street summer job recruiting kicks into high gear. Finally, interview season is upon us.

I've known for quite a while that sales and trading was the career for me. This was further confirmed way back in May, when I did pre-Admit career counselling with Michigan's Office of Career Development. I've only grown more focused on this path through the corporate presentations in September, self-directed trips to New York in October and December, and the Wall Street Forum trip in November.

So finally, finally, finally I'll have a shot at earning a summer associate position. It'll all be decided over the next seven weeks:

12/22 - 12/26: Christmas week, and a breath of fresh air after finals. Little to be done here.
12/29 - 1/2: I'll be out in Los Angeles for the Rose Bowl, but my suitcase will be packed with market reviews, 2004 outlook documents, and business magazines.
1/3 - 1/9: The Winter term starts, and the banks start interviewing. I already have first-round interviews scheduled in New York for later in the week, so it looks like I'll be missing a good portion of the first week of classes.
1/12 - 1/16: If I play my cards right, I'll be back in New York this week for more interviews.
1/19 - 1/23: On-campus interviews. Lehman, Morgan Stanley, Deutsche Bank.
1/26 - 1/30: JP Morgan is on-campus. And if things have gone well (knock on wood), this will be a week for second-round interviews in New York.
2/2 - 2/6: At this point, the banks are starting to make offers. The odd bank or two might do second round interviews this late, but that's about it.

And that's the end of the line. Winter A term final exams are in mid-February, and the MAPs start shortly after that. Curtains, take a bow.

So now begins the final leg of the race, a final seven-week sprint towards the finish line. Finally.

Posted 10:50 AM by Zachary (e-mail)
It's a Wrap
Finals week has come to a close, and the term has come to a quiet close. Many first years gathered nearby at the Pizza House for a pizza and beer buffet, and after that we scattered to the wind.

At some point next week, our final grades should be rolling in (I described the MBA grading system here). For the most part, I feel comfortable with how I did in all of the courses; in terms of academic rigor, the MBA program doesn't compare to my MIT experience, but on the other hand, there's a lot more going on outside of class in business school.

Recruiting, for instance. I knew back in July that it was going to be a huge part of my first term, and it truly turned out to be a sixth (and seventh) class. To put it in numbers, the Fall term was fourteen weeks long, and I spent nearly three weeks of it in New York for "informational interviews" and company visits. These visits were more than worth it--I learned a ton more about Wall Street trading than I expected to--and they certainly put the coursework in its proper perspective. Priorities, and all.

Posted 12:06 AM by Zachary (e-mail)
Custom Financial Tools
At 5:00pm, rather than clicking through six or seven websites to get an idea of the day's market action, I open a single Excel file and download all the data into it. Much quicker, and without the annoying popup ads.

I've begun to post my custom Excel templates/macros at www.zacharyemig.com/tools.

Posted 12:09 PM by Zachary (e-mail)
The Term is Over
And so it ends. Wednesday was the last day of classes.

Friday is the Marketing final exam; Monday, the Accounting exam; Tuesday, World Economy; Thursday, Finance; and Friday, 8:00am, the Business Economics final exam. In addition to these five core courses, I took Fixed Income Securities this term, and had its final yesterday.

There's much I can write about the core courses and how they went, but since there are plans afoot to rework them for next year, my thoughts are of limited relevance to future students. Still, once the exam period is over, I'll post some general reflections on my first term of business school.

Posted 9:56 AM by Zachary (e-mail)
Finance Readings
Over the course of the term, for both class assignments and job hunting, I've read dozens of interesting articles, research papers, and source documents related to Wall Street finance. Below is a collection of the best documents, all available for free over the internet. Enjoy!

Asset Swaps
I found a good reference for beginners at the Chicago Federal Reserve:
http://www.chicagofed.org/publications/capitalmarketnews/assetswp.pdf

CDOs
Collateralized Debt Obligations seem to be the hot product on Wall Street now, based solely on the sheer number of people trading them now. I found both Barclays Capital's and JP Morgan's handbooks on CDOs to be useful, and detailed, introductions to the product.
http://www.securitization.net/pdf/barclays_cdoguide_090601.pdf
http://www.mayerbrown.com/cdo/news/JPMorganCDOHandbook.pdf

CDS
I first heard about Credit Default Swaps back in the springtime, during a business conference at CSFB. The Bank of England has a slick guide to what these securities are all about.
http://www.bankofengland.co.uk/fsr/fsr10art3.pdf

Callable Treasury Bond Arbitraging
Believe it or not, there's a fair amount of research which documents pricing anomalies in the callable, US Treasury bond market. A good introduction to the topic is a paper by several professors of business, available here:
http://kuipers.ba.ttu.edu/jfm98(wiley).pdf
The Federal Reserve bank in Atlanta published a paper covering these pricing anomalies and discussing several other issues related to pricing callable bonds:
http://www.frbatlanta.org/frbatlanta/filelegacydocs/Wp971.pdf

Convertible Bonds
I hear convertible bonds mentioned more and more frequently each time I visit Wall Street, so I've devoted more time to learning about them. A good introduction has been published by RMF Investment Consultants in Switzerland:
http://www.rmf.ch/accbfv200q202.pdf

Current Account Balance
This article, published by the St. Louis branch of the Federal Reserve, is a really good primer on the current account balance, its components, and its recent history:
http://research.stlouisfed.org/publications/review/99/09/9909mp.pdf

ELNs
Equity Linked Notes are another security class that I haven't learned much about yet, but I've bookmarked a couple pages for further reading. The Hong Kong Exchange Derivatives Market has an educational article about ELNs, albeit with a Hong Kong focus:
http://www.hkex.com.hk/futures/futuresotherstat/Deriving Equity-linked Notes From HSI Options And Stock Options.pdf
The SmithBarney website also has an example prospectus from an April offering of Intel-based ELKS (Equity LinKed Securities):
http://www.smithbarney.com/products_services/other_investments/structured_products/Elks_41703.pdf

Equity Derivatives
A website in Spain has posted a copy of a 1998 guide to all manner of exotic equity derivatives by Salomon Smith Barney. The document is like an encyclopedia of derivative products, from simple puts to swaptions to "knock out call options" and beyond:
http://ciberconta.unizar.es/bolsa/lecturas/exoticas.pdf

Foreign Exchange
The New York branch of the Federal Reserve is responsible for all of the government's foreign exchange transactions. No surprise, then, that their website has a treasure-trove (pun intended) of documentation of the forex market, the major players, products, etc.
http://www.ny.frb.org/education/addpub/usfxm/

Freddie Mac and Accounting for Derivatives
Freddie Mac recently released a long-awaited earnings restatement that reached $5 billion. This comes after a their publication, in July, of a thorough, independent investigation of the specific accounting violations. The resulting document, available below, is a detailed and readable introduction to Freddie Mac's business, the use of derivatives and options to hedge interest rate risk, and the accounting rules governing derivatives trading (specifically SFAS 133 and SFAS 125), complete with photocopies of primary source documents (traders' notes). Good stuff!
http://www.freddiemac.com/news/board_report/
Along similar lines, the Office of Federal Housing Enterprise Oversight published a 118 page paper last Spring about systemic risk among Fannie Mae and Freddie Mac:
http://www.ofheo.gov/Media/Archive/docs/reports/sysrisk.pdf

MBS
The Chicago Federal Reserve published a very practical guide to advanced CMO analytics using Bloomberg:
http://www.chicagofed.org/publications/capitalmarketnews/cmo.pdf

Repos
Few subjects are as important and as undercovered as repos, I've found. The Atlanta Fed branch has a great introduction:
http://www.frbatlanta.org/filelegacydocs/fisher_2q02.pdf

Swaps
The Fed also has a great introduction to "The Role of Interest Rate Swaps in Corporate Finance":
http://www.rich.frb.org/pubs/eq/pdfs/summer1994/kupnov.pdf

Tying
Considering all the Wall Street scandals in the news, this October report, published by the General Accounting Office, caught my eye. It contains the results of an investigation into the practice of "tying" commercial and investment banking business together (apparently it's illegal for a large bank to underprice certain commercial banking business in exchange for greater investment banking business).
http://frwebgate.access.gpo.gov/cgi-bin/useftp.cgi?IPaddress=162.140.64.21&filename=d043.pdf&directory=/diskb/wais/data/gao

Posted 7:12 AM by Zachary (e-mail)
Hot Off the Presses
From today's Wall Street Journal:
"Brokerage Firms are Beefing Up"

"Wall Street is taking the bull by the horns.

With the stock market up 32% since March and business picking up in spots, some securities firms have started hiring selectively after more than two years of cutbacks and retrenchment.

And with year-end bonuses to be awarded starting next week, many investment bankers expect increases averaging 10% to 20%, the first general increase since the market peaked in 2000.

Merrill Lynch & Co., for example, plans to hire roughly 2,100 brokers during the next three years after thinning the herd by 7,700 since mid-2000. Merrill also is adding investment bankers to beef up depleted ranks in municipal bonds, leveraged finance and other credit markets, according to people familiar with the firm's plans...

At Lehman Brothers Holdings Inc., Chief Operating Officer Bradley Jack is predicting "a new cycle of industry hiring" during the next two years, according to a report this week by Merrill securities-industry analyst Guy Moszkowski. Lehman's employee head count, which bottomed out at 12,083 in the first quarter of this year, has risen to 14,497 because of an acquisition."

Posted 11:43 AM by Zachary (e-mail)
Michigan Weather
October 3 - December 1
I ended my last weather post, on October 2nd, describing how cold it was becoming. Oddly enough, over the rest of the month, and through most of November, Ann Arbor didn't get much colder.

The fall has been cool and (in the past few weeks especially) overcast, but not cold. It was perfect weather for the Ohio State game (did I mention that Michigan beat them, and beat them good?) on the 22nd, but in the last week winter truly arrived.

Ann Arbor saw its first sticking snowfall of the year, albeit a dusting, on Friday. Since then, temperatures have stayed down--lows in the 20s, highs in the 30s, and there's a sense that winter is finally hear. I don't mind the cold, but I do miss the sunshine, since most days are cloudy.

Previous Update: August 15 - October 2