1. What do we use to rate the quality of CEFs?
I don't use a rating guide at all. Remember that these are portfolios of securities of a (presumably) less risky nature so an absolute rating of quality might be a little hard to believe in. I look at the range of price movement over a minimum of three to five years to assess risk based on the current price, and try to avoid buying at extremely high historical levels, when possible.
* The next issue is reasonableness of the yield vs. the amount of leverage used. Avoid excessively high or low leverage in the same way that you avoid excessively high or low yields.
* The relationship to NAV is certainly important to consider, but don't let it become the primary issue.
* The S & P Stock Guide is still the one. Most of the information you need is provided, toward the back of the book.
* A significant issue, and this is something you need to develop, is confidence and experience with these securities both generally and specifically. It takes time and patience.
* Remember, the ability to trade is a secondary benefit of income CEFs.
Yes, absolutely. I focus on the right hand columns of the Stock Guide ( Earnings per Share) to make certain that there are no recent negative numbers (a recent operating deficit). It's not uncommon for companies to pay a dividend for a while after they begin leaking oil. A dividend cut or omission won't be far behind. We want both, profits and dividends.
Always keep in mind that a bad quarter, in a generally profitable long term picture, sets the stage for those good quarter to quarter comparisons that Wall Street gets all excited about down the road. Such earnings surprises always make the news, and often cause a severe decline in market price.
3. Explain ethical decision you had to make?
Ethics, trust and integrity are often challenged in an investment banking job. Look at the sub prime crisis, the near collapse of the mortgage giant, Fannie Mae, and the restatement of financial accounts of several investment banking firms in recent years. It is often unethical (or even unlawful) practices that are the main contributors to situations like these. Discuss an instance when you had to make an ethical decision ? what did you take into consideration? How did you finally come to a decision? These are insights into how you work and what the firm can expect from you in tough situations.
A) An organization achieves a proprietary position in its industry
► A) Hyper-competitive strategies are about how to compete in fast changing business environments.
► B) Innovation in terms of bases of competitive strategy
► C) Hyper-competitive strategies are about building bases of sustainable differentiation.
► D) Hyper-competitive strategies acknowledge the bases of competitive advantage may not be sustainable and that disruption of the status quo may be important.
D) Hyper-competitive strategies acknowledge the bases of competitive advantage may not be sustainable and that disruption of the status quo may be important
The recession and the stock market fall are still fresh in everyone?s mind. And being a person in the financial business, you are bound to experiences during the stock market fall. This question is asked not as much as to know whether you can handle such situations.
The best way to answer this question is to be truthful about any situation that you came across as the stock market fell.
7. Tell me Why is game theory useful in developing competitive strategy?
► A) Game theory emphasizes short-term tactics to be employed in competitive strategies rather than a long-term strategy.
► B) Game theory is about thinking how competitors will respond in both the short term and the long term.
► C) Games assume competition between different players so game theory is especially useful in describing how competition occurs.
► D) Given the inter-dependence of competitors, game theory helps an understanding of how the decisions of one competitor affects upon another.
B) Game theory is about thinking how competitors will respond in both the short term and the long term
8. Can you explain What are the most important qualities for an investment banking career?
To answer this question perfectly, you would have to go back to your books and understand the concepts that were taught to you in business school. Make sure that you put across the point that being good with numbers, being in the knowledge of current and past market status, and having a good financial strategy that is unfailing are some of the most important qualities for a career in investment making.
The quality of forecasting the future market and the capacity to analyze and mitigate the risk involved and finally to have good returns in hand .
* Absolutely, and that is totally a function of the amount of experiences that is reflected in the overall methodology. The science is a near-equal partner with the management art that applies it to the day to day decision making, and all of this takes place within a structured and well thought out portfolio investment plan.
* However, it is not rocket science, and not even one fancy formula is necessary to do it profitably.
* Interestingly, I think that there is more Psychology than Mathematics and Finance involved, on both an individual and on a group basis, but that's all covered in the book.
* In my experience I've found that engineers and attorneys have the most difficulty with it while retailers and generalists have the least. The three people who I personally know have been using the approach since 1979 are a Restaurateur, a Dentist/Orthodontist, and a Manager.
10. Explain How often have you found that the S & P rating was totally wrong?
Within the Brainwashing book methodology, there are management controls (checks and balances) that warn of problems at the companies we invest in. Specifically, a cut in or elimination of the dividend, and an S & P downgrade of the stock below investment grade. Rarely is there a situation where serious trouble won't come to our attention in time through one of these mechanisms.
I can think of only three glaring instances over the years where an Investment Grade Rating held up to the very end: Ames, Enron, and Friedman's. But, and key to the overall methodology, major individual portfolio disasters were avoided because of individual security % of portfolio diversification rules that must never be violated and which must always [absolutely always] be calculated using The Working Capital Model.
Also, in each instance, profits had been made on the security more than once prior to the disaster.
11. Do you know What is the ATH decision, and what is it used for?
* Most of the investment world worships the bottom line market value of portfolios, and such a focus (without an understanding of too many things to mention here) causes a book full of problems. Within the Working Capital Model method of portfolio management, market value is compared with net deposits to determine if and when a portfolio is at an All Time High Profit Level. * When it is clear that an ATH has been achieved, the portfolio should be looked at carefully to cull the worst performer, at whatever the realized capital loss happens to be. Issues that have fallen below investment grade must be eliminated eventually, and this is the least painful time to do so.
* Be careful not to get carried away with this process. Examine weakness in fundamentals, not in market price, and if you have a choice between more than one loser, pick the one that loses the least capital... it will give you more to work with than the others.
* Major losers (although quite rare) need to be dealt with or your Working Capital Totals will become unrealistic. Again, when the portfolio value is at an ATH, in spite of that holding, it is the right time to bite the bullet.
* Oh yeah, an ATH Profit Level may or may not also be an ATH Market Value... you folla?
12. Explain What value is our stock trading at? Trading volume compared to bulge bracket firms?
Before going for an investment banking interview, go through the financial profiles of the bulge bracket firms and identify the highlights. Be aware of the rankings of the investment banking firms in various segments, such as advisory services or asset management. Stock movements are often a reaction to the latest happenings and have less to do with the company?s fundamentals. Study the recent stock price movements and be ready to answer questions related to a sharp movement in the share price or jumps in trading volume.
14. How to secure investments? Describe daily flow of work?
You have to make sure that you have done your homework and know the ins and outs of the business. The best answer, of course, is to take the traditional way of investing a part of the money in the growing companies, while creating a small nest egg in government and government subsidized companies.
15. Explain your investment bank strategic in general? Way of work? Methods you take?
As and when the interview moves ahead, you will be asked several questions that seem ambiguous but are basically questions that are aimed at knowing whether you are aware of the circumstances and situations in the investor market, and what your responsibilities as an investment banker for an individual, family of company.
The other questions that can be asked are about your knowledge and use of signs and tools for evaluating the market direction, for example ? stocks or foreign exchange market software.
The inverse of the P/E is the earnings yield of the company. You can compare the earnings yield to fixed income yields and/or dividend yields to get a feel for how cheap the stock is. So a P/E of 50 can be interpreted as an earnings yield of 2%, while 8 can be interpreted as 12.5% earnings yield.
B) Concentrating on differentiation as the primary means of achieving competitive advantage
C) Providing a high perceived value service or product to a selected market segment which justifies a substantial price premium
18. Investing seems complicated. How do you get started?
The first step is to determine what you want to achieve with your investing, whether it is in the short-term or long-term, with Seattle-based independent advisory firm. Are you primarily saving for retirement, which means you may not access that money for decades? Or is there some other major goal, like an expensive dream trip, that you would like to take in a few years?
19. What do your customers need and how do you know for sure?
It is not enough to tell investors there is a need for your product, you need hard facts and real-world examples to prove it.
20. How well do you know your competitors in business investment?
Do not try to make your business look unique by telling investors you have no competitors. If you do, investors might conclude there is not really much of a market for your business. Instead, be specific about the companies you are up against.
21. What is your competitive advantage in business investment?
It is not enough to tell investors your customer service is better, you need to show what makes your business different and special. Do you keep in touch with customers through social media? Or do you offer free shipping on online orders?
22. How do you define your target market?
Be sure you can clearly identify the market segment you are targeting and explain how you will reach it. If you are selling coffee to young urban professionals, you should discuss your audience's growth potential, consumer preferences based on bottom-up and other research and the best marketing channels.
23. What is your business most sensitive to?
To show investors you really understand your company, point out potential vulnerabilities and how they might affect you. If the price of gasoline or a particular material goes up, what does that mean for your business? Identifying potential risks-and your planned responses to them that will show investors how well prepared you are to run your business.
24. What have you already accomplished in business investment?
Be sure to focus on your accomplishments so far, such as clients you have secured, distributors you have reached out to, new hires you are bringing on board. Small-business owners often spend too much time talking about the story behind their product and the difficulties they went through developing their business rather than homing in on their milestones and achievements. Investment is about certainty. You want to provide certainty.
25. What do you need the money for?
Investors like to know their money will be used to build products, hire employees or add to the business in some other tangible way. Entrepreneurs often make the mistake of talking about more general plans for the funding, such as marketing. You need to be able to show the milestones that will be achieved with this round of funding.
