Investment Style Questions Flashcards
What are the main factors to consider before giving investment advice?
- what are your growth goals?
- what is your investing time frame?
- what is your tolerance for risk?
- are there any other constraints that have to be considered?
Let’s say you had $10 M to invest in anything. What would you do with it?
What are the goals of the individual?
- going for high capital gains over 30-40 years: diversified portfolio including: index fund, physical assets, bonds and real estate.
If you owned a small business and were approached by a larger company about an acquisition. How would you think about the offer and how would you make the decision?
The key terms:
- price
- the form of payment: cash, stock or debt
- company plans and your plans.
There are lots more factors to consider - ethics and company identity.
Are there any possible deal breakers?
Can you talk about some recent trends or events in the technology sector that have piqued your interest?
- Something that has piqued your interest:
- explain why this has happened:
- impact on the market as a whole:
Let’s say you could start a business of any type and you had 1 million to get started, what would you do?
I would want a business that did the following:
- good margin
- niche market
- market with a reliable revenue stream
- little startup capital
coffee shop speciality: niche, loyal customer base, dependable, coffee van so no business rates.
Can you talk about a company that you admire and what makes them attractive to you?
Nothing - London, phone startup, startup, carl pei.
Improved margin business, good customer base, purple cow product, range from high to low price products.
Let’s say you were going to start a laundry machine business. How would you assess its viability?
- location: high density, how many customers they get, how much per customer,
- upfront capital & debt: machines, electric and water, rental/lease, service machines
Tell me about a recent M&A deal that interested you?
Pitch me a stock.
Qualcomm, chip maker which will do well in the AI boom. New technology with their laptop chips that are highly efficient. Not built on the old architecture of x86 – intel and AMD. Large stake in the AI market and large success in the mobile market
- P/E
- EBITDA
- Revenue
1. Give the name and a summary of what they do
2. Brief overview of the financials and the profitability
3. Long term trend
4. 5- 10 years could be great for the company
Can you explain the subprime mortgage crisis?
- Banks made mortgage loans to people who missed payments or were in no position to pay them of.
- This was due to borrowing being so easy as interest rates were so low.
- At the same time the mortgages were no longer just loans but sliced up and packed into securities that were traded, acquired and sold to investors.
- A typical package contained a mix of credible and subprime mortgages.
- Banks acquired these and argued that even if some of the packaged assets were risky, some of the asset still had value.
- In reality no one knew how much these assets were worth.
- As unqualifed homeowners started to default on their mortgages people began to sell the assets and overnight the value of these securities plummeted to 0.
- As a result, some banks values approached – and quite a few failed.
- This was all due to the valuation of the asset being too complex for most people to understand.
Do you agree with the 2008 Bank Bailout?
There are arguments on both sides but no. While I understand the ripple effects and ramifications for everyday person if their bank fails. I don’t generally like the idea that some business should receive special treatment. If a business fails due to its own failing it should not be recovered. Protection can still be given for those who have their money in that institution.
