The Financial Databases course provides you with training on the Bloomberg terminal, accessing a database edited by the leading financial information provider Bloomberg L.P. You will become highly skilled in using this database. Under conditions set by Bloomberg itself, class members can also undergo the Bloomberg Program Certification routine.
The Portfolio Management Simulation
The financial environment teaches us a harsh lesson: underestimating or even ignoring risk leads to trouble - sooner or later. On the other hand, every one of us looks at risk in a very personal way.
That is why the MCF runs the Portfolio Management Simulation, a special project that requires students to think, act, and behave like money/asset/portfolio managers. The rationale behind the project is simple and effective at the same time: getting better in investing also means getting to know our investing selves better.
The first step of the simulation consists of creating an Investment Policy Statement. MCF students have to answer some key questions about their own likelihood or aversion towards risk taking.
The second step consists of navigating the vast sea of the financial markets. MCF students are equipped with the primer financial database in the industry, namely Bloomberg, and they use it in order to set up and run a portfolio. They must aim for a performance that faithfully mirrors and closely sticks to the abovementioned Investment Policy Statement.
The Portfolio Management Simulation comprises a set of rules and guideline. Among them:
- Setting up a manageable portfolio: no more than a given number of securities, including cash.
- Asset allocation as equities (including shorting), government and corporate bonds, currencies, commodities, ETFs and Real Estate investment vehicles.
- Limits to the weight of a single holding on total portfolio.
- Limits both to the frequency of trades and to total portfolio rotation too.
- Frictional costs and tax effects of all trades must always be taken into due consideration.
- Full accountability and transparency.
The third step consists of preparing a final report after the portfolio liquidation. This report details the pros and the cons of the performance achieved, and highlights the lessons learned in the overall experience.
