Note: The content on this page is subject to change before class starts.

Lesson 1: Thinking Like a Hedge Fund Manager

In this lesson, we will introduce investing from the perspective of a hedge fund manager and discuss how investment decisions are shaped by goals, risk, and strategy.

Topics Covered

  • Hedge fund manager’s view of investing

Reading

  • What Hedge Funds Really Do, Chapter 2: So You Want to Be a Hedge Fund Manager?

Lesson 2: How Financial Markets Work

In this lesson, we will review how markets function, how orders move through exchanges, and how different order types affect trading.

Topics Covered

  • How exchanges work
  • How orders enter and execute in the market
  • Buy and sell orders
  • Market and limit orders
  • Market crashes

Lesson 3: Understanding Company Value

In this lesson, we will discuss why company value matters, how market prices can differ from true value, and why future cash flows are important in valuation.

Topics Covered

  • Why company value matters
  • Company as a money-generating asset
  • Difference between value and market price
  • Importance of future dollars in valuation

Reading

  • What Hedge Funds Really Do, Chapter 5: Introduction to Company Valuation

Lesson 4: The Capital Asset Pricing Model

In this lesson, we will introduce the Capital Asset Pricing Model and explain how beta connects stock movement to market movement.

Topics Covered

  • Why CAPM matters in finance
  • Market movement and stock movement
  • Beta as a measure of market sensitivity
  • Using CAPM to estimate expected stock returns

Reading

  • What Hedge Funds Really Do, Chapter 7: Framework for Investing: The Capital Assets Pricing Model

Lesson 5: Using CAPM in Hedge Fund Strategies

In this lesson, we will discuss how hedge funds use CAPM to guide long and short positions and adjust portfolio allocations over time.

Topics Covered

  • Using CAPM for buy and sell decisions
  • Long and short positions
  • Weekly and monthly allocation changes
  • Possible use in high-frequency trading

Lesson 6: Technical Analysis

In this lesson, we will introduce technical analysis and discuss how recent prices, trading volume, and indicators can be used to study stock movements.

Topics Covered

  • Forecasting with prices and volume
  • Technical analysis vs. fundamental analysis
  • Common indicators, including Bollinger Bands

Lesson 7: Working with Market Data

In this lesson, we will discuss common problems in financial datasets and why data quality matters for trading strategies.

Topics Covered

  • Data quality issues
  • Actual prices vs. adjusted prices
  • Survivor bias

Reading

  • What Hedge Funds Really Do, Chapter 12: Overcoming Data Quirks to Design Trading Strategies

Lesson 8: Efficient Market Hypothesis

In this short lesson, we will discuss the Efficient Market Hypothesis and what it means for predicting stock prices.

Topics Covered

  • Why prediction is difficult
  • How markets respond to information
  • Limits of using information for trading advantage

Reading

  • What Hedge Funds Really Do, Chapter 8: The Efficient Market Hypothesis and Its Three Versions

Lesson 9: Active Portfolio Management Principles

In this lesson, we will introduce the tradeoff between broad information across many stocks and deep information about fewer stocks.

Topics Covered

  • Small insights across many stocks
  • Deep insights about fewer stocks
  • Active portfolio management

Reading

  • What Hedge Funds Really Do, Chapter 9: The Fundamental Law of Active Portfolio Management

Lesson 10: Portfolio Optimization and the Efficient Frontier

In this lesson, we will discuss the intuition behind portfolio optimization and the efficient frontier.

Topics Covered

  • Portfolio optimization
  • Risk and return tradeoffs
  • Efficient frontier intuition

Reading

  • What Hedge Funds Really Do, Chapter 10: Modern Portfolio Theory, the Efficient Frontier, and Portfolio Optimization