Day 5

I arrived this morning at nine o'clock for the last time. When I walked in and spoke to Mr. Dorflinger he explained to me about a new stock that entered the market yesterday called linked in. Linked in is a new social networking website for professionals designed to help make business connections. The projected stock value of this stock was somewhere around thirty, but when it hit the market yesterday the highest price reached was in the one-hundred and twenties. Mr. Dorflinger told me that this is sometimes typical for stocks to do and that he expects it to be in the eighties by the end of the week. After this I finished reading about municipal debt. I learned how the debt can be analyzed and how it is taxed. After I finished with municipal debt I broke for lunch. When I returned from lunch I began to look into the options section. Options are the most basic derivative securities. I learned how depending if an individual buys or shorts a call or a put their potential earnings or loss varies. 

Day 4

Today at nine o'clock Mr. Dorflinger assigned me the hardest section of debt, municipal debt. This section was so long that I could not even finish it. The municipal section opened with introducing me to two of the main kinds of municipal debt, general obligation bonds (G.O bonds) and revenue bonds. G.O bonds are backed by the full faith, credit, and taxing power of the municipality, typically ad valorem taxes. Revenue bonds use their proceeds to build revenue producing facilities. After learning about the tier one bonds in municipal debt I took a lunch break. When I returned from lunch I read about the last kind of municipal bond known as a special tax bond. Some examples of special tax bonds are build America bonds, moral obligation bonds, and double barreled bonds. Municipal debt is also issued in short term notes, such as tax and revenue anticipation notes.

Day 3

Today, once again, I arrived at Mr. Dorflinger's house at nine in the morning. When I walked in the door he already had my material for the day waiting for me. After a quick review of corporate debt, money market debt, and equity, Mr. Dorflinger gave me an overview of U.S government debt. After the overview I hit the books. Through reading about government debt I learned that it is the largest most active trading market in the world. The three main securities in government debt are treasury bonds (T-bonds), treasury notes (T-notes), and treasury bills (T-bills). T-bonds' maturities range from ten to thirty years, T-notes range from on to ten years, and T-bills range from one week to fifty-two weeks. Outside of these three securities there are multiple other securities that are classified as government debt. Some of these are treasury strips, pass through certificates, treasury inflation protection securities, and collateralized mortgage obligations. Any time and individual or a firm purchases these securities they are cleared through the Federal Funds as supposed to a clearing house like corporate debt. Also the Federal Reserve itself actively buys and sells government debt to control interest rates. 

Day 2

I again arrived at Mr. Dorflinger's house at nine a.m, and today he really let me spend much of my time working and reading on my own. I first finished reading the corporate debt section I started yesterday, asking Mr. Dorflinger for help with understanding parity prices concerning subordinate debentures. After a long help session I fully grasped the concept of parity prices and how they change depending on the current price of the common stock as well as the current price and par value of the debenture. Once I completed the corporate debt section, it was a perfect stopping point for lunch. After lunch I moved on to another form of debt called money market debt. Money market debt functions differently than corporate debt because it only trades in short term financial instruments called papers. Banks are the primary buyers and traders of this security because it is too expensive for individuals to buy. When I was finished with money market debt I moved on to my last unit for the day, equity. Equity is made up of three parts; common stock, preferred stock, and special securities and financial listings. The equity unit was by far the smallest and easiest unit to understand. Tomorrow I plan to return to the debt section and learn about government debt.

Day 1

Today I arrived at Mr. Dorflinger's house at nine a.m. Right when I arrived I was given a binder full of the material I will be studying this week. After we discussed in more detail the week to come Mr. Dorflinger walked me through a normal day for him. First he showed and explained to me the computer program he uses to  track and decipher all securities trading on every market. After a brief overview, Mr. Dorflinger demonstrated to me how he selects a potential security he wants to buy or trade, and then what aspects of the security he looks at to make his decision. A couple of the points we discussed were how the security has traded over the last six months as well as the net asset value of the security today. After a walkthrough of the program and the explanation of how to decide whether to invest or not in a high yield security, I began to read the material I was given. I started with the debt section, and after a large overview of the different types and ways debt can be traded it was time for lunch. After lunch I moved into the next section of debt which was corporate debt. I learned about all the different types of bonds that are classified as corporate debt. Some examples of corporate debt are adjustment bonds, convertible bonds, and commercial paper. It was 3:00 when I finished the corporate debt section, a perfect stopping point for the day.