Advanced Investments

Rated 5 out of 5 by from Very Well Explained and Organized I have a strong background in the math that forms the basis for many of the quantitative measures used in finance, but I had not studied the finance measures before. I got this course to better understand these financial measurements, such as Beta and the Sharpe Ratio. I found Professor Slezak's lectures to be very well organized and very clear. I only had the audio version and found that the notes gave me all I needed to supplement them. By the end of the course I had achieved my objectives of understanding the quantitative measures. The math used and as explained by Professor Slezak is really not that hard; he does an excellent job of going just deep enough to explain the concepts. The sections on bonds is really just based on some straight forward present value equations; this is high school level algebra. I now understand what the duration measurement means; I had a misunderstanding before. The sections on evaluating securities are more involved, but should be understandable to someone with some basic courses in probability and statistics. These sections were for me the most valuable part of the course. If you're not willing to make some effort to understand the math, then this class is not for you. But if you have any background at all, then the course does an excellent job. You should not be intimidated. I would have liked it to have gone further into more examples of using the measurements. But that said, I now have enough to do much more on my own and to better understand more advanced discussions and explanations.
Date published: 2020-04-10
Rated 1 out of 5 by from Not sure how useful or relevant this is I am sure Professor Steve is very talented and smart. However, there is too much emphasis on statistics, which will leave most listeners confused. Overall no useful purpose. Do not waste your time. Sorry to write such a negative review, but that is how I would rate this.
Date published: 2019-08-03
Rated 4 out of 5 by from Probably should not be done in CD/Audio as there are tons of equations and calculations. You can still follow and get the concepts, but if you really want to drill down and understand it well, get it in DVD.
Date published: 2019-06-22
Rated 4 out of 5 by from A healthy dose of skepticism I bought this specifically to learn more about options and understanding the value of "betting against" the market. I like his approach- part technical, part conceptual, part warning to ensure we have a "buyer beware" approach when dealing with financial "professionals." The sections where he has to cover the mathematical formulae are necessary, but even he is pushing to get through them. He knows they're dry stuff. Be prepared to rewind and review a few sections as needed. I appreciate his humor and find it actually helps underscore some of his points very nicely. There is plenty of breadth and depth to this lecture series. I'm about 1/3 through it and am doing 1-2 lectures 1-2 times/week. I know at least 3 people I would recommend this to for different reasons.
Date published: 2019-01-27
Rated 5 out of 5 by from Extremely well taught I spend my commute to work each day listening to the great courses. I find them educational and a great use of my 30 minute commute.
Date published: 2017-09-16
Rated 2 out of 5 by from For Advanced Investors -- Duh, Huh? This course was mostly about mathematical equations. Yes, the Capital Asset Pricing Model was the topic of one lecture. However Investopedia can help you get your arms around CAPM in about 5 minutes and I'm not sure this course ever does. Re: the notion that this course should not receive below 4 stars due to the invaluable information, remember, there are lots of quant jocks working for very large research houses and money management firms. Notice that when they run their discounted cash flow analyses, no two firms come up with the same "fair value" for a given stock. It is not as cut and dried as x sub one plus x sub two plus x sub n. If Advanced Investments is all about CAPM, appropriate return for a given level of risk, etc., there are lots of tools created by very smart people that are available to investors. Sharpe Ratio, Sortino Ratio and Treynor Ratio are a few such tools that people could make use of if they had some basic instruction. This course was not helpful to that end.
Date published: 2017-03-17
Rated 5 out of 5 by from A great course for the mathematical inclined This is a great course for those who have taken the introductory courses on finance and investments. The course has many formulas and may be a bit intimidating for those who are not mathematically included. It is definitely and advance courses, as mentioned in the title.
Date published: 2017-02-27
Rated 4 out of 5 by from Beware!!! This course is a serious course on a topic with widespread utility, well presented, and with an excellent lecturer. It addresses bonds, stocks, and derivatives (calls and puts) in a college-level, technical manner. However, there are also significant warnings: First, understanding the content of this course depends on understanding basic college-level probability and statistics and on understanding least squares linear regression. Although the course addresses these topics in Lectures 7 and 16, if you are not already comfortable with these topics, you may not get as much from this course as you hope. Second, there are lots and lots of calculations in this course. This renders the audio version of this course largely ineffectual. Unless you are already a professor of finance, you will need to see the calculations in the video version in order to follow what is being said. You may also want to stop the recording and physically work out some of the calculations yourself. Third, just reciting the calculations makes this difficult to follow. Consider this typical discussion from the 22 minute mark in Lecture 10. “In the Caa case, if the cumulative entry for the two years is 40%, then the probability that it survives until t equals three is 1 - 0.4 or 0.6 or 60%. And what is the probability that it defaults during the third year? If the entry for two years is 40% and the entry for three years is 48% then the probability it defaults in the third year is simply the marginal probability, it’s 48% - 40% which is equal to 8%. Then out of the 60% of the times that it gets to Year 3, only 8% of those times does it default in the third year. That is, the hazard rate for the third year is 8 divided by 60 or 0.133 or 13.3%.” You really can’t follow this on audio while driving a car. In short, in order to follow this course effectively, you must be comfortable with probability, statistics, and linear regression, you must use the video version, and you must frequently stop the recording to work out example problems on your own.
Date published: 2016-12-08
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Advanced Investments
Course Trailer
Investment Decisions and Goals
1: Investment Decisions and Goals

When it comes to wealth, more is better. But how important is liquidity to you? How important is risk? How important is being able to leave a legacy to members of your family or to causes you hold dear? As preparation for the course, consider these and other personal goals.

31 min
A Framework for Investing
2: A Framework for Investing

Learn how to layer various types of active management strategies on top of a passive market portfolio. Professor Slezak outlines three primary strategies: timing the market, reallocating money across sectors, and picking stocks that may outperform their sector. He also describes shorting and arbitrage.

30 min
Mistakes Investors Make
3: Mistakes Investors Make

It's easy to fool yourself when making important investment decisions. Examine three common cognitive errors: framing, biased self-attribution, and seeing patterns where none exist. These natural human tendencies highlight the need to avoid emotional or illogical reactions to financial information.

31 min
The Characteristics of Security Returns
4: The Characteristics of Security Returns

Review concepts from probability and statistics that are essential to know in investing. Focus on formulas that measure three characteristics of an asset: its expected return, its return variance (or volatility), and the covariance (or correlation) of its return with the returns on other assets.

32 min
The Theory of Efficient Markets
5: The Theory of Efficient Markets

Is it possible to make money by actively trading in the market? According to the efficient markets hypothesis, you are better off as a passive investor, because prices almost always reflect true value. Explore three versions of this theory, including the weak form, which holds that prices follow what is called a random walk.

31 min
Evidence on Efficient Markets
6: Evidence on Efficient Markets

Continue your study of the efficient markets hypothesis by investigating data from actual markets. Focus on momentum phenomena and volatility anomalies as possible evidence of market inefficiencies. Are these real opportunities to beat the market or only illusions that snare overconfident investors?

31 min
Valuation Formulas
7: Valuation Formulas

Explore one of the most basic building blocks of any financial valuation method: the concept of the time value of money. Obtain formulas for present value, future value, and net present value. Then use these tools to solve a problem in retirement planning.

35 min
Bond Pricing
8: Bond Pricing

Investigate bond pricing, which compared to stock pricing is beautifully predictable-if complex. Understand why interest rates vary across different bonds. Practice calculating the bond price for a given rate. Then take the price as given, and determine the yield to maturity.

32 min
The Term Structure of Interest Rates
9: The Term Structure of Interest Rates

At a given moment, interest rates vary with the time to maturity of different bonds. Examine the yield curve and the term structure of interest rates, learning how to weigh your investment choices. Discover that bond prices are a window to the expected future performance of the market.

33 min
The Risks in Bonds
10: The Risks in Bonds

Learn how to think about the risks of owning bonds. Start by considering interest rate risk. Then examine how default or credit risk affects the yields on bonds. While most investors only want to consider highly rated bonds, significant return can be earned by bearing default risk.

32 min
Quantifying Interest Rate Risk
11: Quantifying Interest Rate Risk

Get an intuitive feel for the features that raise or lower interest rate risk on bonds. Practice calculating duration, and discover that the time to maturity may not be particularly close to the duration of a bond. This underscores the importance of focusing on the duration of your bond investments.

31 min
Value Creation and Stock Prices
12: Value Creation and Stock Prices

Consider how the equity returns on two firms that are essentially in the same business can be very different based solely on differences in capital structure. Both can be efficiently priced, but one will have a higher equity return due to its higher leverage and resulting risk.

32 min
Present Value of Growth Opportunities
13: Present Value of Growth Opportunities

Use the formulas developed in Lecture 7 to analyze the present value of a firm under different scenarios. By employing a simple model, you will be able to identify how managerial decisions in a well-run company can lead to increased stock price.

34 min
Modeling Investor Behavior
14: Modeling Investor Behavior

Good investors are not necessarily those who can find good investments, but those who can predict what stocks others will pick. Learn how economists model investor behavior, focusing on the indirect utility function, which can predict people's aversion to variations in outcome.

32 min
Managing Risk in Portfolios
15: Managing Risk in Portfolios

Investors do not-and should not-hold just one security at a time. Explore strategies for combining securities into a variety of optimal portfolios. For any level of risk, such portfolios have the highest average return; and, for any level of average return, they have the lowest risk.

32 min
The Behavior of Stock Prices
16: The Behavior of Stock Prices

Learn to use regression analysis to quantify the characteristics of a security, particularly its risk and possible mispricing relative to an asset pricing model. One of Professor Slezak's goals is to introduce techniques that allow you to analyze data that is widely available on the Internet.

30 min
The Capital Asset Pricing Model (CAPM)
17: The Capital Asset Pricing Model (CAPM)

Study the characteristics of an equilibrium asset pricing model. Then build the most popular version-the capital asset pricing model (CAPM)-which allows you to measure risk for a portfolio. According to CAPM, the cross- section of returns is driven by common risks that cannot be eliminated through diversification.

33 min
How to Exploit Mispriced Securities
18: How to Exploit Mispriced Securities

Explore three steps for exploiting mispriced securities. First, investigate the strategy of short selling. Then, develop a measure of mispricing called alpha. Finally, use information about a stock's alpha and its volatility to form an optimal risky portfolio.

30 min
Performance Evaluation
19: Performance Evaluation

How do you know if an actively managed portfolio is producing worthwhile results? Survey several performance metrics: the Sharpe ratio, the Treynor measure, Jensen's alpha, the M-squared measure, and the information ratio. The measure you need depends on how you are using the portfolio you are evaluating.

35 min
Market Making and Liquidity
20: Market Making and Liquidity

Probe the nature of liquidity, learning how it is defined, how to measure it, and when to pay the market price for a liquid security. Many less-well-known stocks may be less liquid. But because they are less well-known, they are more likely to be mispriced, presenting potential trade opportunities.

32 min
Understanding Derivatives
21: Understanding Derivatives

Begin your examination of derivative securities, first by defining them and then by looking at option contracts called "puts" and "calls." Also examine how a lack of transparency in a type of derivative called credit default swaps contributed to instability during the financial crisis of 2008.

31 min
Using Derivatives
22: Using Derivatives

Investigate two uses for options: speculation and hedging. Follow the steps for betting on the direction of movement in the price of a security. Then see that hedging is less risky and can be compared to buying insurance. Learn that the important variables in a hedge are the hedge ratio and the option delta.

30 min
Pricing Derivatives
23: Pricing Derivatives

Continue your study of derivatives by looking at the two most popular strategies for pricing options: the binomial method and the revolutionary Black-Scholes formula. The key insight of these pricing models is that you can build structures out of existing securities that behave just like the underlying option.

33 min
Trade Opportunities or Risk?
24: Trade Opportunities or Risk?

Return to the capital asset pricing model introduced in Lecture 17, evaluating its effectiveness. Then analyze alternatives to CAPM along with anomalies that are at odds with existing models. Close by putting the course into perspective, stressing the wisdom and profit of trusting the market in the long term.

33 min
Steve L. Slezak

As a professor, my job is not to simply provide information or to tell you what to think. Rather, I think my job as a professor is to teach you how to think for yourself.


University of California, San Diego


University of Cincinatti

About Steve L. Slezak

Dr. Steve L. Slezak is Associate Professor of Finance at the University of Cincinnati and Director of the university's Carl H. Lindner III Center for Insurance and Risk Management. He earned his Ph.D. in Economics from the University of California, San Diego. Before joining the University of Cincinnati, he was on the faculty of the finance departments at the University of Michigan and The University of North Carolina at Chapel Hill. Professor Slezak's honors from the University of Cincinnati include the Harold J. Grilliot Award for Exemplary Service to Undergraduate Organizations and the Michael L. Dean Excellence in Classroom Education and Learning EXCEL Graduate Teaching Award. He also received the Weatherspoon Award for Excellence in MBA Teaching at UNC, Chapel Hill. Professor Slezak's teaching focuses on investments, risk management, and insurance, and his research examines the adverse effects of informational problems on managerial incentives and risk management. The results of his work have appeared in top-tier finance and economics journals, including The Journal of Finance, the Journal of Financial Economics, The Review of Financial Studies, and the Journal of Economics and Management Strategy.

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