ENTREPRENEUR

#technologist #softwaredeveloper

Hey there! I'm Shanif - a young professional with a background in technology and a passion for investing and trading. I've been developing software since 1997 and have been trading options profitably since 2008.

I have a BS in Computer Science and Systems & Information Engineering, and recently earned my MBA, focusing on Quantitative Finance and Entrepreneurship. These days, I focus on generating high returns with options trading and building up a successful mobile software business.

Though I love connecting with people in real life, I have a strong web presence. Feel free to get in touch.

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What goes into a stock’s price?
January 5, 2012 Shanif Stocks

This is a re-posting of an article from Intigril, my site on investing, trading, and personal finance. To view the original article on Intigril, click here.


This is the third article in my guide to stocks. In this article, I show you what goes into a stock’s price, and why prices can change so dramatically. For the second article, which discussed how stock trading works, click here.

Image from guitargoa

Introduction

The wild and seemingly random fluctuations in the market may make you think that a stock’s price is nothing more than a lottery number, but you’d be surprised at just how much goes into determining a stock’s price at any given point.

A stock’s price has to start somewhere, and that somewhere lies in the IPO process that I told you about back in part 1.  Do you remember how I said that when a company wants to sell shares of itself to the public, it usually hires an investment bank to do the dirty work?  Well, part of that dirty work is determining what a stock’s initial price should be.  This, in itself, is a difficult process.

Initial due diligence and research

Image from jannoon028

Consider the fact that, in an IPO, the investment bank will buy all of the newly issued shares in a company, and will then re-sell those shares to the public.  In doing so, the bank has to make sure that it prices the shares low enough that it can find buyers on the first day, but not so low that it loses money in the transaction.  In order to find just the right price for this new company’s stock, the bank goes through a long period of due diligence.

It meticulously pours through the company’s records to see what its sales figures look like, how much money it’s making, what the growth figures look like, who the customers are, what the expenses are, and a variety of other factors that can let the bank predict the company’s future performance.  Once it has all of this information, the bank can create a model to determine the market value of the company – or what it will be worth once its shares are sold.

There are a variety of models used to determine a company’s market value, but most of them will basically take the company’s earnings numbers, predict how fast they’ll grow, discount these future profits back to present day value, and come up with a number that represents the company’s true worth.

Once the bank has done this background work, it contacts potential buyers around the world to have pre-sales meetings, answer questions about the new company, and gauge the level of interest in the company’s newly offered shares.

After it has all this information, the bank combines its estimates about the true value of the company with its knowledge of buyer interest in the new shares (and, at times, contracts that guarantee the sale of shares) to determine the number and price of shares in the new company.

Once it does so, it will create and buy all of these shares from the company in preparation for the IPO.  At this point, the company now has a bloated bank account and the bank has millions of shares that it’s ready to sell to the public on day 1.

Public buyers

Image from Ambro

With these new shares ready, and the bank already having contracted with one of the major exchanges I told you about in part 2, trading in the new company is good to go.  On day 1, the bank will sell its shares to the public.  If it did its job well, it will have excited enough buyers to quickly and fervently scoop up shares in the new company, making itself a hefty profit.

But how do buyers know if they’re getting a good deal or not?

Well, a lot of that has to do with buyers’ own analysis and research, as well as any analysis and research that the investment bank has provided.  When a company first goes public, there’s not a lot of information for analysts to go on – they can check sales figures, growth prospects, customer base – essentially the same things that the bank had to check when first coming up with a price.  With this information, buyers can create their own model of a company and can determine if it is currently a good buy.

At the beginning, it can be difficult to tell whether a new company’s shares are a good purchase or not.  No one really knows where the stock is going to go, so buying at the start can be risky.  That’s why many investors tend to wait until a company has traded for some time before they decide to get in.  After a bit of history, investors will have more information and can improve their estimates for the company’s future performance.

So how will they use this information to influence stock prices? Go to the next page to find out.

Read ahead: How investors analyze company performance to buy and sell stocks »

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resume
Experience
01/2008 - Present
Options Trader
Independent

Founded an invest­ment club focused on gen­er­at­ing con­sis­tent, peri­odic income by using the aid of custom-developed ana­lytic method­olo­gies and com­puter pro­grams to trade options

• Generated an average annualized return of 40%

• Coor­di­nated the research and analy­sis efforts for myself and two partners

• Devel­oped and auto­mated sev­eral quan­ti­ta­tive analy­sis algo­rithms that assist in the invest­ment process by pro­vid­ing rank­ings of pub­licly traded com­pa­nies based on finan­cial fun­da­men­tals, list­ings of stocks with the high­est options pre­mi­ums, and pre­dic­tions of stock move­ment based on trend­ing and momen­tum cri­te­ria. Cre­ated the algo­rithms using the fun­da­men­tal prin­ci­ples of weighted trade stud­ies and later auto­mated them using Ruby on Rails

• Cre­ated a web­site that enables the pub­li­ca­tion of invest­ment arti­cles and pro­vides access to the afore­men­tioned auto­mated algo­rithms, a port­fo­lio man­age­ment tool, and edu­ca­tional resources

• Per­formed mar­ket research on pub­licly traded com­pa­nies, focus­ing on indus­try stand­ing, his­tor­i­cal per­for­mance, com­pet­i­tive advan­tage, and future prospects

• Man­aged legal, finan­cial, account­ing, logis­tics, long-term strat­egy, and invest­ment objectives

08/2010 - 07/2012
Software developer and member of founding team
oGolf

Member of the management team on an early stage startup that developed technology to provide data analytics and game management software for golfers.

• Created a website allowing golfers to review a comprehensive set of analytics about their game

• Developed financial projections and investor presentations, presented the new business and software at conferences, pitched to potential investors, and demoed the product to customers

• Developed strategy and marketing plans for growing the business

• Recruited new talent to assist with software development, marketing, and operations

08/2006 - 03/2010
Associate
Booz Allen Hamilton

Provided information and communications management solutions to public and private organizations as an IT consultant at a large, multi-national consulting organization.

• Man­aged time­lines, resources, and a staff of up to 10 soft­ware devel­op­ers and testers in the tech­ni­cal imple­men­ta­tion of a project man­age­ment appli­ca­tion that allowed over 4,500 users on 500 projects to eas­ily col­lab­o­rate on key deliv­er­ables, orga­nize project sched­ules, review bud­gets, and cre­ate finan­cial pro­jec­tions. Coordinated the efforts of staff from mul­ti­ple depart­ments across the firm to imple­ment a new devel­op­ment process that reduced the num­ber of hours needed to cre­ate and test new soft­ware by more than 50%, elim­i­nated the need for over­time work, and ensured the timely deliv­ery of new func­tion­al­ity. Received a per­for­mance award for ensur­ing prod­uct qual­ity, meet­ing dead­lines, and effec­tively man­ag­ing personnel

• Led and man­aged the tech­ni­cal imple­men­ta­tion, logis­tics, time­lines, and activ­i­ties of myself and two other devel­op­ers in the deliv­ery of a web-based traf­fic sim­u­la­tion engine that pro­vided a test­bed for industry-specific appli­ca­tion devel­op­ers to test their pro­pri­etary algo­rithms. Received a per­for­mance award for “lead­ing the team and ensur­ing crit­i­cal dead­lines were achieved with­out sac­ri­fic­ing quality.”

• Assisted in domain admin­is­tra­tion for a server farm con­sist­ing of Share­Point front-end web servers, Microsoft SQL Servers, domain con­trollers, and a SAN

• Lead devel­oper for a Ruby on Rails and Flex-based appli­ca­tion designed to auto­mate the deploy­ment of SOA-based mil­i­tary ser­vice offer­ings. Imple­mented a REST­ful method­ol­ogy for sav­ing and deliv­er­ing data to a Flex front end

• Par­tic­i­pated in uni­ver­sity recruit­ing and inter­view efforts for the firm. Pro­vided rec­om­men­da­tions that led to the hir­ing of approx­i­mately one-quarter of the total staff on sub-team, as well as the hir­ing of approx­i­mately 30 junior staff straight from college

• Pro­gres­sively increased man­age­r­ial respon­si­bil­i­ties over the course of two pro­mo­tions in three years

06/2006 - 08/2007
Software Developer
Wamily, LLC

Member of the management team on an early stage startup that developed web-based group communication, management, and coordination software.

• Worked with a team of web devel­op­ers to cre­ate an Inter­net busi­ness cen­tered on a web­site that would allow its users to eas­ily man­age and inter­act with their real-life groups in an online setting

• Devel­oped wid­gets for com­mu­ni­ca­tion and col­lab­o­ra­tion, per­mis­sion mod­els and secu­rity imple­men­ta­tions, and user inter­faces for site features

• Cre­ated soft­ware using Ruby on Rails, CSS, HTML, JavaScript, Pro­to­type, script.aculo.us, and MySQL

• Assisted in recruit­ing 500 alpha users and raising $20,000 in angel investments

• Par­tic­i­pated in board meet­ings to determine long-term strategies

05/2005 - 08/2006
Intern Research Assistant
Booz Allen Hamilton

Provided research and development support as a technology intern to a large, multi-national consulting firm.

• Pro­vided a fully func­tional, database-backed web appli­ca­tion for use by over­seas mil­i­tary per­son­nel in a short­ened time­frame of 3 weeks as part of a 3-person devel­op­ment team

• Cre­ated a col­lab­o­ra­tion site that pro­vided Navy lead­er­ship with near-real time crit­i­cal infor­ma­tion to stream­line the deci­sion mak­ing process in the Navy Gulf Coast Region in the after­math of Hur­ri­cane Katrina

• Designed and cre­ated sev­eral web part solu­tions using APIs from Active Direc­tory, Microsoft Map­Point, Microsoft Pow­er­Point, and Microsoft SharePoint

• Cre­ated a Macro­me­dia flash proof-of-concept dash­board for a sta­tus report­ing appli­ca­tion inte­grated with SharePoint

08/2005 - 05/2006
Researcher and Lead Developer
University of Virginia

Developed software, created algorithms, and analyzed information management processes that would optimize the battery life on micro-sensor hardware devices as part of a university thesis project.

• Coor­di­nated the efforts of a five-member team focused on devel­op­ing an approach to opti­mize the use of resources on wire­less sen­sor networks

• Designed, imple­mented, and main­tained a sim­u­la­tion engine capa­ble of sim­u­lat­ing enemy solider move­ment and sen­sor net­work func­tion­al­ity in cus­tomized, load­able, user-defined sce­nar­ios. The appli­ca­tion was writ­ten in C#, sup­ported XML-based load­able sce­nario files, and uti­lized var­i­ous opti­miza­tion algo­rithms (such as Dijkstra’s algo­rithm and A*). The sim­u­la­tion engine pro­vided users with an intu­itive graph­i­cal user inter­face for sim­u­la­tion con­trol as well as the abil­ity to view and report on sim­u­la­tion progress

• Per­formed sta­tis­ti­cal and quan­ti­ta­tive analy­sis on results to deter­mine opti­mal resource allo­ca­tion pol­icy for the tested scenarios

• Lead author and pre­sen­ter of a paper at the IEEE Sys­tems and Infor­ma­tion Engi­neer­ing Design Sym­po­sium describ­ing results

01/2004 - 05/2005
Researcher and Developer
Personal and Academic Projects

Developed a variety of software for a myriad of purposes on several different platforms and programming languages.

• Devel­oped and tested a C# desk­top weight man­age­ment appli­ca­tion using Access as the data­base back­end, and later migrated it to the Inter­net using PHP and MySQL

• Lead devel­oper on a team that cre­ated, doc­u­mented, and tested robot con­trol and com­mu­ni­ca­tion soft­ware for the Evo­lu­tion ER1 robot. The soft­ware allowed users to remotely con­trol the robot by way of a spe­cially cre­ated com­mu­ni­ca­tions protocol

• Devel­oped a pro­to­type for an inter­ac­tive Macro­me­dia Flash map that retrieves exter­nal data and allows users to eas­ily view them in a geo­graph­i­cally orga­nized format

• Cre­ated a dis­crete event queu­ing model sim­u­la­tion of a din­ing facil­ity located on cam­pus using Rock­well Arena, based on data gath­ered and inter­preted by the project group

• Cre­ated a pro­to­type Peer-to-Peer appli­ca­tion based on the Gnutella search and com­mu­ni­ca­tion pro­to­col in Microsoft Visual Stu­dio .NET using C# and TCP/IP socket programming

02/2003 - 09/2003
Branch Manager
College Works Painting

Participated in an internship designed to hone and cultivate the entrepreneurial skills of college students by allowing them to run their own local branch of a large, nationwide business.

• Oper­ated a local house paint­ing busi­ness, which gen­er­ated over $15,000 worth of gross rev­enue in con­tracts with 25+ clients

• Respon­si­ble for sales, pay­roll, recruit­ment, oper­a­tions, cus­tomer rela­tions, and marketing

09/1999 - 07/2002
Volunteer
American Red Cross

Volunteered as a member of the executive management board of the youth community service organization of the Washington, D.C. chapter of the American Red Cross.

• Served as pres­i­dent (2001-2002), vice pres­i­dent (2000-2001), and mem­ber of a local youth com­mu­nity ser­vice orga­ni­za­tion as part of the National Cap­i­tal Chap­ter of the Amer­i­can Red Cross

• Man­aged and coor­di­nated the exe­cu­tion of var­i­ous com­mu­nity ser­vice projects and their logis­tics, includ­ing fund-raising, logis­tics, mar­ket­ing, and man­age­ment of personnel

• Served as one of five United States youth rep­re­sen­ta­tives to the inter­na­tional Youth Exchange in 2000

• Received var­i­ous for­mal vol­un­teer recognitions

• Gained skills in lead­ing multi-person projects, effec­tive com­mu­ni­ca­tion, and time management

Education
08/2010 - 05/2012
Master of Business Administration
NYU Stern School of Business

Completed two years of a rigorous MBA program at a top business school, focusing on acquiring the skills required to improve my trading activities and start a new business.

• Graduated with specializations in Quantitative Finance and Entrepreneurship and Innovation

• First Year Activities: Asso­ciate Vice Pres­i­dent of Tech­nol­ogy for the Stern Hedge Fund Asso­ci­a­tion and Asso­ciate Vice Pres­i­dent of Com­mu­ni­ca­tions for the Entre­pre­neurs Exchange Club

• Mem­ber of the Tech­nol­ogy and New Media Group and the Asso­ci­a­tion for Invest­ment Man­age­ment and Research

• Completed one course on Doing Business in China at the Guanghua School of Management at Peking University

• Studied abroad at Bocconi University in Milan, Italy

08/2002 - 05/2006
Bachelor of Science
University of Virginia

Completed four years of study in the engineering school, focusing on acquiring software development, statistical analysis, modeling, simulation, and data analytic skills.

• Received a Bachelor of Science in Computer Science and double majored in Systems and Information Engineering

• Received a minor in Math

• Part of a team-oriented effort to improve resource usage in sen­sor net­works. Main author of a paper pub­lished at the IEEE Sys­tems and Infor­ma­tion Engi­neer­ing Design Symposium

• Graduated with distinction

• Achieved Dean's List in 3 different semesters

Personal
Languages
English (native), Spanish (basic), Urdu/Hindi (basic listening comprehension)
Analytics
Monte Carlo sim­u­la­tion, dis­crete event sim­u­la­tion, sta­tis­ti­cal analy­sis, com­par­i­tive trade stud­ies, multivariate and single variable regressions, discrete and stochastic decision models
Certifications
Microsoft Certified Systems Engineer (2000). Certified Scrum Master (2009)
Technical
Java, C#, Ruby on Rails, HTML, JavaScript, SQL, and XML
Clearance
Top Secret (Expired)
Interests
Playing the electric and acoustic guitar • Web development • Fitness and weightlifting • International adventures
Skills
Web development
Database Management
Mobile development
Graphic Design
Technical Management
Communications
Network operations
Server operations
Foreign Languages
Data Analytics
contact
Contact info
  • Name: Shanif Dhanani
  • Address: New York, NY, USA
  • E-mail: shanif.dhanani@gmail.com
  • Phone: 703.477.1438

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