“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).
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