LBS is currently experiencing an upside breakout in inbound financial modeling questions.
I recently had an old friend from business school over to visit, who happens to be a sell side analyst, and while we were outside enjoying a cigar on an unseasonably warm day he asked me:
“How do buy-siders use sell side models?”
Then, the very next day, a loyal reader of LBS asked if I would write an article exploring the differences between buy side and sell side financial modeling.
OK, I get it. Time to do an article on financial modeling.
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There are an infinite number of strategies that an investor or buy side analyst can use to deliver alpha. While I’m an advocate of value investing, there are also technical investors, growth investors, GARP investors … if you can dream it, there’s probably an investing strategy that matches it.
Of course, some people can dream up strategies that would make the average person go, “Huh?” These people have taken data mining to an extreme and can come across like the village idiot rambling on about aliens and probes.
Then again, some of those crazy investing philosophies have just enough truth to have become part of Wall Street’s myths. While I don’t recommend bringing folklore up in your next interview, it’s good to have an understanding of the all the strategies out there, no matter how crazy they might sound.
Besides, some of these are kind of funny. Without further ado, I present some of Wall Street’s most famous (or is that infamous?) folk stories:
- The Hemline Index
- “Sell in May and Go Away”
- Sunspots and the Market
- Darts vs. Pros
- Dogs of the Dow
- Super Bowl Indicator
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