After reading The Accidental Investment Banker by Jonathan Cree, I decided my first blog on investment banking and corporate finance was due.
From my understanding of investment banking, many people simply don’t understand it. Is it banking? Is it investing? Is it Gordon Gecko in the movie Wall Street or is he a trader? What is the difference between an investment banker and an equity trader? What do investments bankers actually do?
One finance degree short of an answer, it took me a fair while to truly come to grips with the concept of investment banking. However, now that I have, I feel the short summary below will give a very good indication to those considering a career in investment banking or those wishing to understand investment banking better.
What is investment banking and what do investment bankers do?
As companies grow, they need capital. In many cases, in order to raise capital and for other related advisory services, companies go to investment banks. Investment banks provide a range of services relating to the raising of capital and act as advisors to the world’s corporate leaders… Continue reading What is involved in a career in investment banking ?
What factors move the stock market? What about individual stocks? How do interest rates affect the stock market and what does this have to do with the Consumer price index and inflation?
Many people know that economic factors such as corporate profits and interest rates tend to influence the movement of the broader stock market. However, I found it particularly interesting to actually analyse how these factors move the market and whether one should follow such trends when purchasing individual stocks.
Corporate profits and GDP
A drop in the Gross domestic product (GDP), the market begins to fear a recession and a subsequent drop in corporate profits. With worsening economic conditions, the market may enter a recession resulting in reduced demand for many company’s products.
Following on from this, many company’s earnings will be affected and the corresponding company stock price will fall (rationale outlined below). Thus, when the GDP and corporate profits fall, the market will suffer.
Continue reading Stock market beginners – What moves the stock market and stock prices?
Whilst reading Getting started in consulting by Alan Weiss, I came across the following 11 steps to go through to create a business plan that is likely to attract investment. I have listed them below:
1 – Company Particulars – Make sure to note the name of the company, the address, the type of public or proprietary company that it is (eg proprietary limited liability company), and the contact details of the company.
2 – Officers and Shareholders – Include the names, addresses and positions of each of the relevant people.
3 – Brief Description of the firm – It is important to give a brief (1-2 sentence) introduction to the company. It should describe the products or services the company offers, the type of company and the target market. An example would be “Baker and McKenzie is an international law firm for medium to large organisations and specialises in mergers and acquisitions and environmental law.” Continue reading 11 step guide to create a business plan to attract investment