Thursday, April 12, 2007

ANALYST PREAMBLE

ANALYST PREAMBLE:

We the unwilling, led by the unknowing, are doing the impossible for the ungrateful. We have done so much for so long, with so little knowledge that we will one day qualify to do anything knowing nothing. Be proud to be an ANALYST.

The above preamble was sent by an analyst through email among an analyst e-group. Below is my response to this preamble.

My response:

From
Dr. K.V.S.S. Narayana Rao
Professor
NITIE

I appreciate this preamble.I published a paper arguing that the text books on security analysis were not written properly and I circulated this paper to all text book authors in USA. After we study a text we cannot do an analysis in which we have confidence. I feel in this respect technical analysis is much better. Fundamental analysis is described in very ambiguous manner. Financial forecasting is not covered properly in the texts. DCF model is criticisized in the texts. There is no adequate explanation of determining target prices.

But the work being done by analysts "led by the unknowing" is useful to convey some useful and valuable information to the traders and investors. That is why research departments are being maintained. Many of us join the departments not unwillingly, but with a big hope.

To improve the analytical part, my proposal is that the analytical methods are documented in a such a detailed manner, that every investor and trader can understand the methodology. That does not mean every investor and trader can do his own analysis. Analysis to identify one share that satisfies a specified analytical method requires analysis of a large number of shares. This is time consuming. Hence professional analysts come out with research reports on those scrips which pass the screening test of the method. Because investor/trader knows the method he can study the report, convince himself that the analysis is appropriate and do his trading/investment with conviction. Such an approach and attidue on the part of analyst community will reduce ambiguity to some extent, and we will all be more comfortable psychologically in our participation in this activity which is basically a risky situation. What I mean by risky situation is that our judgments are sometimes right and sometimes wrong. We are the same persons, our methods are same, but sometimes they succeed and sometimes they fail. People laugh at us and criticize when we fail.

Thanks to the analyst for bringing out an issue that troubles some of us.

Narayana Rao

3 comments:

Vidhya Ram said...

Dear N Rao,

You have done a great effort and a good start.

NITIE is know to be one of the best institute in Asia for IE and Supply Chain management. So the future efforts should be to make it the best in the world.

The direction ahead would be in understanding what the industry wants and need from the course at NITIE rather then what the foreign universities like Stanford have in there curriculum. Rather specifically we need to understand what the Indian industry aspires from at institute like NITIE.

Please note my findings fro the Stanford website:
"INDUSTRIAL ENGINEERING AND ENGINEERING MANAGEMENT

-- ABET ACCREDITATION CRITERIA APPLY --

The Department of Industrial Engineering and Engineering Management is concerned with how best to organize resources -- people, money, and materials -- to produce and distribute successful products and services. Degree programs in IEEM are designed to equip students with strong theoretical backgrounds, but are oriented toward applied problem solving.

Areas of teaching and research specialty in the department include:

Production and Operations Management -- The design, scheduling and control of production and operating systems using mathematical, computational, and other analytical techniques.

Financial Decision Making -- Use of financial models and analytical procedures for evaluating investment and financing decisions by firms.

Engineering Risk Analysis -- Engineering design decisions under uncertainty, systems reliability, and economics of safety and risk management.

Organizational Design, Control, and Management -- Behavior of the individual, the work group, and the organization as they relate to issues of design, motivation, attitudes, productivity, performance evaluation and control.

Engineering Management -- Management of technology and other issues peculiar to technology-based firms.

The Bachelor of Science in Industrial Engineering is planned to serve those students whose long-run objective is the planning, design, and implementation of complex economic and technological management systems where a scientific or engineering background is necessary or desirable. Engineering fundamentals are stressed. There is also a heavy emphasis on the use of mathematical and statistical modeling.

Sophomore year courses include: probability, engineering-economy, accounting, and computer science (two quarters). Junior year courses include: statistical inference, introduction to operations research (two quarters), quality control and assurance, manufacturing systems design, and organizational theory and management. Senior year courses include: introduction to financial decisions, analysis of production and operating systems, introduction to information systems and electives. In addition, an IEEM senior takes a one-quarter group project course which gives the student the opportunity to formulate and solve problems and implement solutions for organizations in the surrounding community.

In addition to the B.S.I.E. degree, the IEEM Department offers a Master of Science degree in Industrial Engineering and Engineering Management"

The thing to be noted is that even a institute like Stanford doesn't offer a course on Industrial engineering alone but offers a course on "Industrial engineering and Management". Further the course that is offered is to undergraduates while that at NITIE is for post graduates.

Hopefully my comments would be acknowledged and noted.

Best wishes

Regards

Vidhya Ram said...

Dear N Rao,

More then the restructuring of the course branding of NITIE is a major problem. This is a fact agreed by cooperate as well as the alumni.

I think the efforts should be at a proper brand positioning. The name of the institute can be changed to National institute of Management.

With proper branding NITIE would give a tough fight to institutes like IIM's and ISB.

Please also acknowledge the fact that the entry level for NITIE is first class engineers, which is a major plus point for NITIE.

Regards

KVSSNrao said...

Dear Mr Vidhya Ram

Thanks for posting your comments. My curriculum proposal is for industrial engineering in general around the world. My understanding of history of the subject is that scientific management and industrial engineering got separated. Industrial engineering could not maintain its focus and drifted into various areas and diluted its brand.

But your comments prompt me to study the history in much more detail.

Coming to specific NITIE context, now that NITIE has an Industrial Management course, it is more appropriate that Industrial Engineering course has more focus on IE. When I was a student at NITIE, we were told that 3 streams were available for choice. IE, Production Management and Systems or Systems and OR.

Regarding NITIE branding, it is definitely an issue many are advocating. My own thinking is that we are not able to connect the areas that we teach, provide training and research with achievements of alumni in that area. If we are able to do that, emphasize the areas that we specialise in and then show to the world how our alumni are achieving excellent results, our brand speaks for itself.

For example, we taught Information systems subjects may be even in third and fourth batches and some of our alumni are now managing directors and directors of various IT companies. But NITIE is not in a position to link NITIE areas with their achievement and position NITIE as a very key player in IT industry.

Let me think more deeply about your comments. My comments are more in the nature of acknowledging your suggestions.