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On one level, it’s a little disturbing that my high-effort, high-stress business school experience can be reduced to such a simple, clear, and exactly descriptive metaphor. On the other hand, it’s convenient, and we’re all about efficacy and efficiency at b-school. So, here it is. Businees school really _is_ like a portfolio of risky securities!
In a major exception from my usual practice, I’m actually going to try and explain what it is that all this means. What, 2/3 of my readers are asking, is a portfolio of risky securities? Well, it’s pretty much what it sounds like: it’s a stock portfolio. An agglomeration of stocks that you — yes, you — own. It’s risky because, well, stocks are risky. They might be worth more tomorrow, they might be worth less, so you might end up with a profit or a loss on your stock transaction. The individual stocks change value in certain ways, and the whole portfolio changes value in related ways that I’ll get into later. Make sense?
So, how is b-school like a portfolio of risky securities? Well, imagine that the market return — the return you’d make if you invested in all of the stocks in the market — is the mean return from business school, mean return being some function of grade, activity leadership, and job placement. Just like you want your portfolio’s return to exceed the market return, you want your b-school return to exceed the mean return of your classmates. Just like in the stock market, you don’t want to make more than other people because you want those others to lose; you want to make more because more is good (stop me before I go all Gordon Gekko here).
In the stock market, you can increase your returns by investing in riskier securities (riskier securities have a greater return than securities with lower risk because the market demands more return for putting up with the risk, so the companies represented by the securities have to step up and deliver high returns or be unable to raise money by issuing more equity, or stock). In business school, you can learn more by taking harder classes, or by being more involved in activities, or by looking harder for a job. All of these increase your risk because they take time away from other activities, leaving you open to not getting such good grades, or not getting a job or internship, or letting your clubmates down. If you’re overcommitted, you can get some great experience but you can also flunk out.
Now, with a portfolio of securities, you try to get securities that don’t all vary in the same way. If you own an airline stock, whose value may go down if the price of oil (and, thus, jet fuel) increases, you can “hedge” your portfolio by also owning, say, ExxonMobil, whose value will go up if the price of oil goes up. You can do the same in b-school too; I may take two Marketing classes to balance out the effect on my GPA of taking another Finance class, for instance. You try to balance out the potential gain in knowledge but loss in GPA by taking easier classes from which you may learn less.
It can get more complicated than that, too. If you own stock in a company and you think the company could make more money if they took on more debt, you can effectively take on that debt on behalf of the company by borrowing to buy that company’s stock. If you can borrow money at the same rate as the company, what’s the difference between owning 100 shares of stock in a company that’s borrowed 40% of its value and owning 100 shares of stock in a company that’s not borrowed anything but you borrowed 40% of the value of the shares? None, it turns out. You can leverage your b-school portfolio too. Think a course isn’t giving you enough knowledge transfer? Take on more of the group work and learn more, but at a cost of borrowing time from your other activities.
Now, in the stock market, there’s an ideal portfolio for you — based on the market’s return and your tolerance for risk you build up a set of stocks. Is there an ideal portfolio for a b-school student? Perhaps one can pick the classes and activities that offer the best balance of learning and experience and a tolerable risk of flunking out and driving yourself to complete exhaustion. Most students already understand the concept of hedging a hard class with an easy one, and most students already understand the concept of leveraging their educational experience by putting more or less effort into different classes. Seems reasonable, then, that we could model an ideal class schedule. A good challenge for me next semester, when I get to pick my electives for the fall, eh?

The Marshall Career Development Office has a program in which, every year, they match a small number of students with volunteer alumni mentors. About a month ago, on somwhat of a lark, I applied.
It was a lark because I didn’t really think I’d get it. There are a ton of qualified, ultra-competitive people in my class, and I figured they’d be right on the ball; there are also a number of really bright career-switchers who could use a push in the right direction. Between those two groups, what kind of a chance does a middle-of-the road, reasonably erudite, reasonably set-in-his-ways marketer stand?
Well, I’m always one for a fight, so I put my hat in the ring. Even wrote my first ever “non-crappy cover letter”:http://cleverbird.com/pwyky/CoverLetter for it. And, apparently I got the mentor; out of over 90 applicants, I was one of just 19 selected.
So I now have a really talented alumni mentor, a smart guy who started his own communications business that finds really interesting and unique approaches to marketing. I’m very much looking forward to meeting him and learning new ways to approach the marketing industry. Maybe he can help me find a unique way to package me! At any rate, it’s great to have another opportunity to take everything that Marshall offers. Now, if only Marshall was better at offering a good night’s sleep!

Finance scares the stuffing out of me. Not only is it hard and often non-intuitive, it’s also something I’d like to be good at. Budgeting, planning, starting and buying companies — all of these are applications of Finance. Wouldn’t it be wonderful if I had any idea what I was doing in the class? I’ve got a midterm tomorrow and I haven’t a clue as to what grade I might get.
Now, there’s plenty of other liberal arts majors at Marshall, so that at least gives me hope that there’s a bunch of people out there in the same boat as me. But who wants to count on their friends’ failure to make them look good in comparison?
And then there’s the people who, no matter what, will make me look bad — the former market analysts, bond traders, and portfolio managers. But I know how to be as good as them. You see, I’ve watched carefully, I’ve paid attention to all of the little things, and I’ve learned something tremendously important. Something that may change the way that Finance is taught forever. Something that will allow you, the reader at home, to also become as good at Finance as the professionals. This secret, provided to you by this blog at absoloutely no added charge, is:
# Liberal arts majors all say “fEYE-nance”
# People who’ve worked in the Finance industry all say “FIHnance”
# Therefore, to be good at Finance, one must learn to always say “FIHnance”
It’s a simple method, and I’m sure it will work; the correlation between pronunciation and past employment (and thus skill in the area) is simply too strong. While my classmates have been wasting hours with past years’ tests and textbook problems, I’ve been practicing my pronunciation. Tomorrow I’m going in there, saying “Yes, Professor Draper, I’m ready for my FIHnance midterm,” and Professor Draper will give me a knowing look, I’ll be implicitly welcomed into the brotherhood of Those Who Understand Finance, and, my test, well, I’ll undoubtedly get the grade I so richly deserve.