Intersecting Minds: Education, Business and Technology at the North Carolina State Jenkins Graduate School of Management

Liar’s Poker and Indefensible Men

April 12, 2010
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I started reading a new book last night, although I really don’t have time for it. But it came with a high recommendation from my roommate and assurances that it wouldn’t take too long to read, so I decided to give it a whirl. The book is Liar’s Poker, by Michael Lewis. Anyone very familiar with finance will probably have heard of this book. In it, Lewis chronicles the world of high stakes bond traders at the Salomon Brothers investment bank during the 1980’s.

These were critical years for Wall Street, as Lewis explains, because the Fed Chairman at the time, Paul Volcker, decided to loosen up monetary policy and let interest rates float. As a result of this decision, bond prices began to fluctuate much more than they had at any time in the recent past. At the same time, borrowing exploded on the American scene as the government, corporations and individuals began borrowing at record amounts (this is about when the groundwork began to be laid for the 2007-2008 financial crisis).

Even more interesting than the history though is the culture that Lewis describes. The bond traders and salesmen are made to be almost inhuman. They verbally, emotionally and at times even physically abuse the firm trainees as well as their fellow colleagues. The bluster and bravado described is almost unbelievable. And the sense of entitlement about why these people deserved to make so much money is also somewhat mind-bending. Of course, this was the mid-1980’s, a very different time in American culture, but from what I’ve read about the culture of modern day Wall Street, it doesn’t sound as if the industry had advanced very far.

Yves Smith over at Naked Capitalism had a great post about the very same culture that drove Wall Street over the brink during the last few years. Here’s a key graph from that essay, titled Indefensible Men:

Although the word “entitlement” fits, it’s been used so frequently as to have become inadequate to capture the preening self-regard, the obliviousness to the damage that high-flying finance has inflicted on the real economy, the learned blindness to vital considerations in the pay equation. Getting an education, or even hard work, does not guarantee outcomes. One of the basic precepts of finance is that of a risk-return tradeoff: high potential payoff investments come with greater downside.

The whole essay is much longer, but very much worth the time to read to get some insight on the corrosive culture of Wall Street and how it helped land us in this current mess. Liar’s Poker is also highly recommended. Check out the reviews on Amazon.


The Home Stretch: Oodles of Work

April 8, 2010
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We have three weeks of classes left.

Wow. It’s kind of hard to believe those words, but there they are all the same. Here’s a brief look at the projects I have to complete before school is out:

– New Firm Finance, Stonewall Case presentation: This project is the capstone for the class (along with an in-class final exam). In the case, Stonewall Kitchen is an up-and-coming specialty food provider who wants to expand its retail operations. Our job is to determine an overall growth strategy and an accompanying financing strategy that makes sense for the organization.

– Planning and Control Systems: There’s a lot left to take care of for this class. I’ve bulleted a few of the items below –

  • Midterm #2: Coming up on Tuesday, April 13th
  • ITEC: A manufacturing simulation that integrates operations strategy, master production scheduling, materials requirements planning and capacity requirements planning in one go
  • Take-Home Final

– Investments: We have two more assignments left and a take-home final that no one is looking forward to. The midterm in this class was amongst the hardest I’ve taken at NC State. Since the midterm we’ve covered options (Black-Scholes, hedging and valuation) and will turn to hybrid securities next (convertible/callable bonds).

– Practicum: Last but definitely not least, our Practicum group has to put together our final presentation and recommendations as well as writing our research paper and our executive summary of the project. The SCRC presentation will happen on April 29th.

In the meantime, I’ve also picked up some consulting work that will take up about 15-20 hours/week on Tuesdays, Wednesdays and Fridays. Indeed, it seems like the end of the semester is near, but when I peruse my to-do list, the light at the end of the tunnel seems even further away.

But this is what we signed up for when we decided to come to business school, and if we didn’t enjoy it, we wouldn’t be here. It’s precisely this amount and type of work that is meant to prepare us for management in a corporate environment, and that’s exactly what we’re getting.

Back from Spring Break and Into the Home Stretch

March 22, 2010
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Today is Monday, March 22nd, and we are now just 54 days away from graduation. It’s pretty amazing how quickly the time has flown by up to this point, and I know that with all of the work left to do for us, the next few weeks will melt away just as fast.

Now that the finish line is in sight, it’s difficult not to start looking back at all that we’ve accomplished in the last 19 months as MBA candidates. The classes, internships, projects, exams, leadership roles, extracurricular activities, graduate assistantships, and for me, a semester in Copenhagen. We’ve been busy.

Lost in some of the day-to-day and week-to-week hubbub is a realization of just how far we’ve come in our education and our preparation to be leaders in the business world. From my own perspective, I feel so much more comfortable in my projects and assignments this semester than I did my first semester. And at this point, I feel very well prepared to enter my career, and I’m excited for the next opportunities and challenges that my next job will hold.

I’m sure I’ll have much more to say on these topics in the weeks ahead, but it’s nice to pause for a moment and say, “Yes, we have come a long ways.”

Monday Quick Links

March 22, 2010
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Of course the big news of the day is the passage of comprehensive health care reform by Congress and the Obama administration. CNN Money has an article up this morning addressing the impact of the bill on small businesses.

Business Week also takes a closer look at how the legislation impacts both the insurance and pharmaceutical/biotechnology industries. In particular, biotech/pharma scored a big victory in establishing 12-year patent protections for their products. The bill is also expected to introduce millions of new customers to the insurance market through a federal mandate to purchase insurance.

And in the short run, US stocks are up this morning on reaction to the bills’ passage.

In an exceedingly rare event, yields on bonds issued by Berkshire Hathaway fell below yields on US Treasuries. Bloomberg outlines the story, which essentially says investors now trust Warren Buffett more than they do Barack Obama to pay back their debt. The US’ AAA credit rating is also in danger.

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Spring Break Around the Corner

March 11, 2010
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It’s been a few weeks since I’ve had a chance to update the blog! A quick review of what’s kept me from my blogging duties:

  • Planning and Control Systems midterm and kick off to our capstone project, ITEC
  • New Firm Finance midterm
  • 5 days in San Francisco including an interview at the company where I interned this summer: Genentech
  • New Firm Finance presentation
  • Supply Chain Practicum mid-point presentation
  • Investments midterm (probably one of the top 3 most difficult tests I’ve ever taken in my life)

Whew, I get a little worn out just looking what I’ve been through the last 10-12 days or so. But the reward is near because our Spring Break starts this weekend. We won’t be back in class until March 22nd. On the bright side, no class! On the not so bright side, no rest for the weary because I’ll be working on a research paper for our Practicum presentation in April.

However, after making it through this gauntlet, I know I’ll have more time for blogging in the near future, and I’m excited about some of the content I’ll have lined up before we graduate in May. Please keep checking back to see what I have in store!

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Study Abroad Discussion

February 22, 2010
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On Friday, I had an opportunity to sit down with two first-year MBA’s who are planning to study abroad this fall. The conversation is in the YouTube below:

Listening to Derek and Emily talk about their excitement and what they hope to get out of the program was nice for me, too. Their thoughts reminded me again why I was so excited to go to Denmark and what I gained out of the trip on the other end. Cross-cultural immersion is a powerful experience, one that opens your eyes to just how big the world is, and how relativistic expectations and happiness can be. I’m a better, more thoughtful person for having gone through it, and I’m sure that while those two will have their own unique experiences, they will report similar conclusions when they return.

Derek and Emily are in for an amazing trip, and I wish them both the best.

The Krispy Kreme Challenge

February 13, 2010
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North Carolina State is home to many amazing athletic events ranging from football and basketball to soccer and baseball. But none may quite top the Krispy Kreme Challenge. If you haven’t heard of this incredible road race, it more than lives up to its name. To boil it down, participants start at the NC State Belltower, run 2.2 miles to the local Krispy Kreme doughnut shop, eat 1 dozen doughnuts, then turn around and race 2.2 miles back to the finish line. If it sounds disgusting, that’s because it is.

This year, a small group of MBA students decided to participate in the challenge. I was fortunate enough to grab some footage of them before they began:

Unfortunately, I could not pick them out of the 6,000+ participants at the finish line to videotape some of the carnage. But perhaps it’s better that way since many many racers are unable to keep the doughnuts down as they make their way back.

Time Management

February 10, 2010
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This semester so far has been quite different from my first three at NC State and Copenhagen Business School. My class schedule features three purely evening classes from 6:00 pm to 8:45 pm, Monday through Wednesday night. I also have a fourth class, Practicum, which feels more like a part-time job requiring 10-15 hours of work each week.

As a result, my schedule is more haywire this semester than it ever has been, and as a result, my time management and organizational skills have been pushed to the forefront. With evening classes, it always feels like there is so much time during the day to get everything done, but then the homework and projects start creeping up and draining time away. Combine that with making time to search for jobs, working part-time for my Graduate Assistantship (namely this blog), and volunteering when available, and all of a sudden those hours aren’t so plentiful anymore.

But I suppose that’s one of the best habits business school has bred. Don’t procrastinate! There will be interruptions and delays on projects, assignments will get dropped on you at the last minute, and you have to be able to adjust and adapt without getting overwhelmed. In that sense, I think business school, both at NCSU and CBS has done a nice job preparing me for what I will face out in the real world. Speaking of which, I have some research I need to do for an assignment due later this week!

Friday Quick Links

February 5, 2010
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Today’s focus remains on jobs:

– The unemployment situation in this country is slightly worse or slightly better depending on how you look at it. First, the jobless rate fell to 9.7%, which is good news.

– But the bad news is that the economy shed another 20,000 jobs in January, deepening the number of unemployed in this country. By some estimates, almost 18% of the country’s workforce is out of a job or can’t find full-time employment. That is a scary number.

– While the numbers indicate that the US economy is poised to start adding jobs again, this graph from Calculated Risk shows just how far we have to go to climb out of the hole (click link for larger version):

– Meanwhile, the US Senate has reached an “impasse” on financial regulation. Reforming the financial system will be a key ingredient to sustaining a long-term economic recovery for the United States.

All in all a rough week, and more signs pointing to the fact that any type of economic recovery will take an extended amount of time to unfold.

Thursday Quick Links

February 4, 2010
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Today is all about jobs, jobs, and the complete lack of jobs:

– The Bureau of Labor Statistics revised the number of jobs lost during the recession up by 824,000 bringing the total job losses to nearly 8 million people. Mike Shedlock has a nice analysis of the BLS’ Birth-Death model and why this happened over at his website, Global Economic Analysis.

Jobless claims also rose to 480,000 in January, another sign that the employment situation is not improving. Employment will be the biggest drag on any type of economic recovery America hopes to experience. If employers don’t start hiring soon, expect this miraculous bull run in equities to end soon enough.

Royal Dutch Shell announced it will cut 1,000 more jobs on slightly disappointing 4th quarter numbers.

Greece’s debt troubles are continuing to worsen, according to the Wall Street Journal.

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