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Jesse Rodgers

Professor Malcolm Campbell

UWRT 1104

2/17/17

Topic Proposal: Valuation processes of college students and financial experts

Introduction/Overview

How does one measure value? By examining a good or assets current value, future

value, or future utility. When consumers enter a supermarket, say Walmart, and intend on buying Commented [RI1]: Future utility ?
Commented [RI2]: This sounds a little confusing
an umbrella. Is the driving force behind which umbrella they purchase primarily dependent on

the umbrellas fashionableness of functionality? Assuming fashionableness is based solely on the

opinion of clothing designers such as Ivanka Trump, Kayne West or Kim Kardashian. Why do

the opinions of fashion experts effect how people value a consumer good? Is a consumer more

likely to purchase the umbrella because of fashion conformity? Maybe the consumer thinks the

fashionable umbrella is more expensive then the generic one, but will make me seem cooler in

public.

Similarly, some financial experts trade stocks, opting to buy popular stocks because of

their fashionableness or simply conformity rather than on long term value. Naturally, people Commented [RI3]: This paragraph is wordy

expect experts to use some in depth technical analysis in purchasing stocks unfortunately this is

not always the case. Former Hedge fund manager Martin Shkreli compares stock trading to

gambling arguing that it is a pointless endeavor. For example, in the late nineties the dot com

bubble was fueled by fashionableness, delusion, and gross conformity. My topic intends to

focus on whether people of dramatically different educational, socioeconomic judge assets and

or consumer goods in the same way, fundamentally. I will examine two sorts of people financial
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experts and college students. I can accurately determine the ways college students judge

consumer goods since I have plentiful of access to them, and can survey them for detailed

responses. The other group, financial experts, I plan on reading interviews along with a possible

phone interview with a financial expert.

While researching for my proposal, I reviewed multiple books, articles, and used the

UNC Charlotte library database. I used Yahoo Finance, CNN Money and The Economist. I

interviewed my grandmother for more information on how a consumer would approach buying

food, clothes and other goods. I began my interviews with questions so I could absorb as much

information as possible. Interviewing my grandmother showed me that there was an abundance Commented [RI4]: You should use more of your
grandmother
of different perspectives on my topic. Since the interview I have had to narrow my focus even

more.

Sociologists, psychologists and economists all have different theories on how people

value goods. While reading an article about conformity in adolescents, I came across a theory of

conformity that states the value of anything to any individual is dependent on the values of those

closet to that person, or peoples in general. The ramifications of people valuing anything

primarily based on the opinions of others is interesting because it challenges the idea of intrinsic

value. If value exists solely as a derivative of hyper-conformity, are people capable of holding

their own opinions, values or beliefs? In economics, the law of diminishing marginal utility; a

theory that holds every extra unit of an item has less value than the last. For example, every

dollar earned past a trillion dollars, to an individual fortune is worth less than the last. In Finance,

one of the most used methods of valuation is centered around discounted cash flow. Discounted

cash flow is the idea that an asset is only worth the sum of all its future value + dividends. In

terms of consumer goods, this can be illustrated in a pair of shoes value is solely the combination
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of all the days the shoes are wearable and functional. Some publications dealing with valuation

of securities includes The government finance review, The Economist, the Financial Times, and

the Wall Street Journal.

Initial Inquiry Question(s)

Do college students valuate consumer goods in the same way financial experts valuate

stocks? I intend to discuss and explain the connection between simplistic valuation, meaning

valuating shoes, shirts, dress and other consumer goods. It is wildly held that financial experts

take much deeper insight into a stock than a teenage girl deciding to buy a pretty dress because it

matches her spirit. According to Business in action by Thill and Bovee, most indices, hedge

funds, and mutual funds do not beat the market, meaning the value of their investments often

miss the average increases of the stock market as a whole. Often an investor is better off

gambling their money on random stock then placing it with a hedge fund manager. Recently a

former hedge fund manager Martin Shkreli was indicted for securities fraud related to his hedge

fund, where he lost over six million in cash. Looking empirically at the performance of hedge

funds and indices, an investor can honestly ask are these guys really better decision makers then

my little girl maybe I just let her develop my investment portfolio. Determining whether the

experts and amateurs value goods the same puts another spin on the video we watched earlier

in the semester Dont Stay in School. If some of the worlds most credible decision makers use

the same methods maybe in different forms, but the same methods as young adults to value

securities; what good is a college degree. Commented [RI5]: Dont stay ins chool was a good
connection i=to see if its worth it or not
In order to approach my question from the least bias perspective, I have decided to focus

on several sub-questions including: Is math or statistics effective in valuation? What effect do

others have on valuation? Are valuation methods interchangeable? Are the methods able to
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conjure similar results in different circumstances? Can I use a stock valuation method to predict

how much college students will value a consumer good?.

My Interest in this Topic

I have always been curious about the nature of people, and any subject that relates to their

behavior; more specifically, seeks to explain their behavior has my attention. Valuation interests Commented [RI6]: If we can understand people better
we would get along better
me because it means something different for each individual, yet we humans agree on the value

of most things in dollar amounts like a cup of tea, coffee, or water. However, before individuals

translate wealth into quantitative means their values are shifted to an individualistic perspective

am I thirsty for water or soda more? This constant uncertainty an intrinsic value specifically

individual value has me baffled. How can people agree and item is worth x dollar signs, but

personally respond differently to that items availability. Like a coffee may cost only a dollar,

thus we assume its value to all humans at that moment is a dollar, causes an uproar when an

individual coffee addict is deprived of her daily fix. Underlying value is the individual, but the Commented [RI7]: I am confused

groupthink mentality lurks, and that is what my topic tackles in some respect.

1. I know that value is subjective, but there are underlining principles all humans use.

2. What are some of the underlining principles of valuation that all humans use?

Next Steps
I will be using Investopedias stock valuation information to create an investment

portfolio based on the major valuation theories of financial experts to see how effective they are. Commented [RI8]: Youre adding more right?

I will continue to read the newest publications of The Government Finance Review.