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Friday, May 28, 2010
“EXPLORING THE BASICS” With Mr. Sharath Sury – part 2 of 10
Posted 5/25/2010 by Chinnu S. on Everything-Finance.net
The following contains excerpts from an interview with Mr. Sharath M. Sury on 05/11/2010. Part two of a ten part series begins below.
So, what exactly is a Bear Market? Before I could even ask, Professor Sharath Sury raised an eyebrow and said, "So, you're probably wondering what a Bear Market is, in comparison." I chuckled, but was amazed with his ability to relate to students, as i nodded affirmatively.
Professor Sury continued, "A 'bear' market can be defined as a market in which a particular asset class is experiencing a secular or long term decline either in absolute or relative terms. Thus, if the Russell 2000 is exhibiting steady, declining returns—usually for at least 20% or more, we might surmise that the US small cap equities market (as represented by the Russell 2000) is in a 'bear market' phase."
Eager to learn if some of the theories floating amongst the students were true, I asked Prof Sury, "is it true that a 'Bear Market' is nothing more than a market correction?"
"Good question," Sharath Sury replied, "..[however, Bear Markets' are] to be disinguished from a "correction," which is a drop of approximately 10% from a recent peak to current trough." Sury continued, "A correction may be self-limiting before a return to a bull market or may lead to continued declines, culminating in a bear market."
Natural curiosity begged the question, "When do Bear Markets typically occur in relation to major economic events?" Sharath Sury explained that they "usually occur after the burst of a 'bubble' (e.g., housing, dot-coms, etc.), a major macroeconomic shock (e.g., credit crisis, commodity price shocks, geopolitical instability), or sustained decline in aggregate (GDP) and profits growth.
(...to be continued; Check back soon for part 3!)
SOURCE blog.everything-finance.net/2010/05/14/the-basics-with-mr-sharath-sury—part-1-of-10.aspx
Tuesday, May 18, 2010
“THE BASICS” With Mr. Sharath Sury – part 1 of 10
Posted by Everything-Finance.net 5/13/2010 2:55 PM
The following contains excerpts from an interview with Mr. Sharath M. Sury on 05/11/2010. Although I was nervous (as any fan would have been), struck with awe and inspiration over the simplest of words being spoken by my role-model, Professor S.M. Sury remained humble and was pleased to help as always. Part one of a ten part series begins below.
Recently, I sat down with Professor Sharath M. Sury, 38, whose career in professional finance began after earning an MBA with High Honors from the University of Chicago. I met with Mr. Sury to discuss some of the more common questions the Forum has been asked when students first begin learning finance on a high school or collegiate level.
With an impressive resume that we all hope to emulate (if at all possible), Sharath Sury remains a highly sought after source of financial information and education – and even more so after his recent retirement as CEO from S4 Capital, LLC. Often, we receive emails asking us the definitions of commonly used lingo on Wall Street, and while we realize that these terms may be commonplace on The Street, the average layman’s dialogue may only encompass these words when speaking of sports, or perhaps casually pondered when succinctly mentioned on the evening news.
Let’s briefly explore the intricacies of both “Bull Markets” and “Bear Markets” with valuable explanations from the revered Professor Sharath Sury, and for the sake of: 1) those who have never become familiar with the terms; 2) those who wouldn’t mind a refreshing reinforcement of the terms; 3) avoiding the misuse of commonly used terms while gaining an understanding of the fundamentals for each type of market label; and 4) simply wanting to include “Everything Finance” on Everything-Finance.net.
After asking Professor Sury if he would be kind enough to help us again (as he did with his acclaimed explanation of the Alpha), he agreed without hesitation, and asserted his willingness and desire to help as many students and enthusiasts as time allowed, without regard to how easy or difficult questions will be, and without concern to how much finance education any particular individual has. It is our hopes that having such credible and trusted authorities (like Profs Sharath and Manda Sury ) answering some of our forum newbies’ most common, basic questions will support the members’ faith and belief that there really is ONE place online to have your questions answered by experts in finance [shameless plug: Everything-Finance.net]; that novices, intermediates, or advanced students should never hesitate to ask questions – no matter how “ridiculous” others may deem those questions to be. Professor Sury emphasized that no question is “silly”, or beyond a worthy and accurate explanation by recognized professionals and venerated field experts (as all serious students should have access to). We both agree that this additional avenue of communication is a necessary component in Sharath Sury’s Initiative to bring instructors, professionals, and students together in an effort to help facilitate a new, cautious, and responsible generation of finance enthusiasts that will soon shape the economy of our future.
So, with as much control over my admiration for Professor Sury as I could manage (without being blatantly obvious that I may have been too excited to conduct the interview), I asked him to explain what exactly “Bull” and “Bear” Markets are, and suggested that it could help if he described some of the characteristics associated with each.
Prof. Sharath Sury gave me a reassuring smile and replied, “A ‘bull’ market can be defined as a market in which a particular asset class (e.g., equities or stocks, fixed income or bonds, or commodities, etc.) is experiencing a secular or long term rise either in absolute terms or in relative (to other asset classes) terms. Thus, if the S&P 500 is exhibiting steady, upward returns—usually for at least a sustained growth of 15-20%, we might surmise that the US large cap equities market (as represented by the S&P 500) is in a ‘bull market’ phase.”
Thrilled with how clear and concise his answers are, I may have been somewhat quick to interrupt, but was eager to ask Professor Sury the reason why some news anchors and hosts claim that there is always a bull market to be found. Sharath Sury’s gentle demeanor settled my anxious behavior as he answered confidently: “Because bull markets can also be relative (to other asset classes), it is possible to have a bull market in equities while simultaneously having a bear market [defined in part 2] in bonds, for example.” Mr. Sury concludes, “This leads some commentators, such as CNBC's Jim Cramer of ‘Mad Money’ to speculate that "...there is always a bull market somewhere.”
Pausing to ensure that I wouldn’t rudely interrupt him again, Sharath Sury and I exchanged a smile to acknowledge the humor, but was quick to regain my focus as he continued earnestly, “Sustainable bull markets are predicated upon attractive valuations, strong profits growth (in the case of equities/stocks), strong credit (in the case of fixed income/bonds), and so on.” Sury concedes that it is sometimes difficult to distinguish a genuine bull market from a bear market rally (also discussed in part 2).
SOURCE
Thursday, April 8, 2010
An Examination Of Fundamentals
By Dr. M. Sury
In investing, one can select securities based on “Technical considerations” or based on “Fundamentals”. We say that the decision to select a particular security (e.g. a stock or a Bond or a commodity etc) is based on technical considerations if the information used in the decision process is solely the patterns observed in the historical returns of that security and any associated statistics.
Such an approach believes in the “pattern behavior” and that the company’s performance characteristics are already captured in the series of historical returns. In contrast, those who select a security based on Fundamentals believe that the success or failure of the investment in that security will depend on the Management Team for that security as well as the resources they have access to and how they would use those resources to steer the growth of the security. Information such as the Earnings in the past four quarters, earnings predicted for the next four quarters are most commonly used fundamentals. To be able to compare the earnings of two different securities involved in the decision process, we use PE (or price to earnings ratio). Clearly higher the PE, the price per a dollar of earnings is higher and thus the security with the higher PE is Costlier. Every thing else being equal, lower PE is preferred.
Sometimes, the price P of a security is compared to its assets (also referred to as the Book B ) and the ratio P/B (Price to Book) is used in comparing two securities, especially if the companies are in distress the investor is thinking of a Liquidation value of the remaining assets to decide on the investment.
Other fundamental information commonly used is the Debt to Equity Ratio. Clearly, the fact that debt holders have to be paid prior to holders of equity (in any liquidation) makes a security with higher Debt to Equity ratio to be less favored. It is to be noted that the revenues used to service an existing debt reduce the amount available for either growing the company or to pay dividends to the shareholders.
~ Manda Sury
_____________________________________________________
About Dr. Manda Sury
As a Principal and member of the Investment Committee at S4 Capital, Dr. Sury supervises the Firm’s quantitative/analytic programs and information architecture. In particular, Dr. Sury is responsible for the design and implementation of the portfolio optimization procedures for S4 Capital’s critically acclaimed “Efficient Portfolio Management (EPM)” process.
Dr. M. Sury is a recognized expert in the fields of portfolio optimization, equilibrium-based asset allocation, and active risk budgeting. Among his research interests are investment risk modeling (including the incorporation of non-normal skew and kurtosis, conditional value-at-risk, and regime- or state-dependent performance), alpha-beta separation (analysis and identification of the systematic risks assumed by active investment managers), and the design of high-efficiency, high-speed computational procedures to facilitate complex financial simulations and calculations.
In addition, Dr. M. Sury is responsible for engineering S4’s database architecture, which manages and integrates information across the firm’s global portfolio management, relationship management, and risk management efforts.
Dr. M. Sury had previously held a variety of senior-level technical positions in both industry and academia, including Fidelity Investment Systems Co., Lockheed Missiles & Space Co., AT&T/Bell Laboratories, and the University of Michigan. Dr. M. Sury is a prolific author, with over two-dozen major research publications in the fields of mathematics, optimization, and computer science. He received his M.S. in Mathematics, M.S. in Computer Science, and Ph.D. in Mathematics from the University of Michigan at Ann Arbor.
A loving husband, and father of two, Dr. M. Sury is cited by his son, esteemed professor and internationally recognized expert in Risk Management and Asset Allocation — Sharath Sury, as being the single most beneficial influence in his life.
Monday, March 29, 2010
NEWS BULLETIN! SuryOnline.net Shifts the Focus of its website, Mr. Sharath M Sury, to Expert Author and Contributor, Dr. M. Sury.
Posted by SURYONLINE.NET at 3/18/2010 2:51 PM
The Site Administrators of SuryOnline.net, announced today, that the focus of its website, Mr. Sharath M Sury, will shift to Expert Author and Contributor, Dr. M. Sury.
Additionally, SuryOnline.net will provide a platform for family, friends, and invited guests, to discuss business on every level and subject, from Marketing to Management, and from Accounting to Finance.
We'll also investigate, explore, and discover the rebirth of Entrepreneurism and the recent trends of Entreprenuerial programs in Undergraduate studies.
Check Back Often For More Details!
Tuesday, March 16, 2010
Sharath Sury Wants to Hear From You, Today! Voice Your Opinion and vote!
Posted by SURYONLINE.NET at 3/15/2010 1:19 AM
- Vote for the one of the several Aricles by Sharath M. Sury on Tipd.com, and let your choice be heard!
- You can also call 415-Sharath (* Sury Online advises that long distance charges may apply), and leave a voicemail for the chance to be selected by Sharath M. Sury as one of three messages, monthly, to receive closer attention and examination to, on SuryOnline.net, and/or its affiliate sites.
- So, Be Heard! Sharath Sury Listens.
SOURCEhttp://Blog.SuryOnline.net/2010/03/15/now-you-can-voice-your-opinion--vote-for-the-articles-by-sharath-sury-today.aspx
Saturday, March 6, 2010
Sharath Sury Explains The Alpha to Eager Finance Enthusiasts and Focused Students Online
Posted by Everything-Finance.net STAFF on 3/6/10
SANTA CLARA, Calif. March 6/Everything-Finance.net/ -- With many finance students and enthusiasts eager to solidify the concepts of Alpha and Beta within the context of the recent Alternative Investment Summit chaired by Mr. Sharath Sury, many followers have shown continued interest online, posting comments on various blogs that reveal an eagerly awaiting clarification of this elusive Alpha by an experienced, esteemed professional like Sharath Sury - an internationally recognized expert in Risk Management and Asset Allocation. As a former VP at Goldman Sachs, and CEO Emeritus of S4 Capital, Sharath Sury handled very complex investment portfolios of some of the nation's most wealthy families and individuals. Mr. Sury is has been recognized by numerous notable magazines as one of the top professionals in his field. Also a revered university instructor, Professor Sury has established a forum for the research and discussion of new developments in economics and finance, with an emphasis on risk management and innovation. Who better to answer our audience's questions than Mr. Sury, himself? Everything-Finance.net now has the exclusive, wealth manager's definition of Alpha by Professor Sharath Sury, in his own words:
"In any investment strategy, there are essentially three components to the ex-post return: market related exposure (beta), manager skill or 'risk adjusted excess return' (alpha), and randomness. The goal of any active investment manager is to maximize alpha to the extent possible as this is the portion of the return that is attributable to the manager's skill or strategy. In most cases, it is extremely difficult to know what alpha a manager will produce 'before the fact (ex ante)', however, there are certain clues that can help provide guidance on whether a manager is capable of delivering alpha. Among these maybe: superior execution, highly developed capital market analytic skills, superior processing of public information, ability to exploit systematic mispricings, etc. These and other such sources of alpha are colloquially referred to as 'edge'. Every successful investment manager always strives to maximize their edge, and thus their alpha."
Professor Sharath Sury has also generously extended his hand to Everything-Finance.net, offering his expertise again soon! In the near future Sharath Sury will answer, conceptually clarify, and define additional special investment terms that have significant importance in current and future economic climates. Special thanks to Professor Sury for taking the time to briefly analyze and precisely define these terms in efforts to help students (and enthusiasts, alike) avoid further confusion on what can already be very complicated subject material. This is especially true -- as we've found with the Alpha -- if you're not careful about where, and in what context, you find a certain definition.
About Sharath Sury - Founder and Executive Director of the SCU/Sury Initiative for Financial Innovation & Risk Management (SIFIRM) at Santa Clara University in California’s Silicon Valley, Sharath Sury devotes his time and energy to bringing together thought leaders who can address the development of real-world solutions to the current economic climate. Sharath Sury has worked with some of the brightest and most experienced experts in finance and risk management and aims to bring a greater sense of ethics and responsibility to his profession. Through his efforts, Professor Sury has established this invaluable forum for the research and discussion of new developments in the world of economics and finance and has attracted a renewed spirit of innovation to the industry. Sharath Sury also serves as an Adjunct Professor of Economics at the University of California and Adjunct Professor of Finance at DePaul University in Chicago. Sharath Sury's interest and experience in wealth management began as an Associate and later Vice President at Goldman, Sachs & Co. He later founded and worked at S4 Capital, where he earned numerous accolades for his work.
SOURCE: Everything-Finance.net
http://blog.everything-finance.net/2010/03/06/exclusive-sharath-sury-explains-the-alpha-to-finance-enthusiasts-worldwide-on-everythingfinancenet.aspx
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Posted by Everything-Finance.net at 3/6/2010 11:13 AM | Add Comment
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