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Wednesday, March 26, 2003 |
I just returned from a lecture about poker.
Poker, you say? Yes. Poker. Texas Hold'Em, if you must.
One of our professors here, Randall Heeb, is the winner of the World Series of Poker 2002, and gave a short talk about poker, odds, and life in the high-stakes lane. Randy is also a sharp dresser and a great speaker, and apparently one hell of an economics professor (which I unfortunately did not experience, having exempted the course).
Life is very interesting here. If I had more time, I'd detail what he said, but I have hours and hours of work ahead... apparently one case about an Italian bank, now you know that will be complex...
7:58:31 PM 
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In a brilliant example of how the Internet brings people together, Martin Lloyd at Saïd Business School (Oxford) dropped me a line- he had noticed that I had linked to his site from here, and wrote to say hello. This is why I love the Internet- it is a wonderful communications medium that we now take for granted.
Martin has lots to say about Saïd, business, and life, and I read him regularly. If you're tired of hearing about my time at a French b-school, and are wondering what life is like in the UK, go hither.
7:54:23 PM
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Finance is proving to be an excellent subject, with much more depth that I had imagined. I have always loved reading popular finance accounts (e.g. Liar's Poker, A Random Walk Down Wall Street, and the gripping When Genius Failed), but I've never actually studied the brass tacks of the matter.
But what I have learned in class is the philosophical side of finance: why capitalism allocates resources well, why economic knowledge is necessarily context-dependent and cannot be centralized (unlike scientific knowledge), and why valuation matters (resource allocation, and understading assumptions and their sensitivity). These are really more about "how to think about the problem" than actually solving them. They help to solve the right problem, or, as all airport-management-text readers can say, "do the right things" rather than "doing things right".
In this sense, the fact that Harald Hau is an iconic professor, whose views are so strongly held that they might as well be carved in granite, is something I find admirable. Perhaps that's because my views are rarely so strongly held (Lucky is an ENTP, for those who know what that means), and I wish that I could be more like Harald.
From a more practical level, the process of valuation forces you to think about business models and detail each assumption. This is, by itself, valuable. But playing with your assumptions and finding out how sensitive your model is to changes in different factors gives one enormous insight into the risks. Harald said it more eloquently than I can, and his quote will stay with me for the rest of my career, no matter what I do:
"NPV is not just about a number. It can show how sensitive your business model is to perturbations and shocks."
It is this continuous feeding of nuggets of wisdom that makes me feel as if I belong here.
1:45:55 PM
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Harald Hau's Quotes of the Day from Corporate Finance
This set of quotes is from last Thursday, 20 March. I'm a wee bit busy here, OK?
[at the beginning of class, after displaying the first slide, Harald shines a red dot on the projection screen. Remember that this March 20...] "You will all see that I have equipped myself with a laser pointer, just like the Americans. I can pick out any of you very precisely now."
[on discussing cost projections for a potential project and their impact on the resultant NPV, in a stentorian manner] "So if your engineering department is underutilized, and they can't be fired... then there is no incremental cost!"
[on discussing the effect of depreciation on cost projections on NOPLAT... I just love saying and writing NOPLAT. Try it yourself. Now say it with a German accent. It's even more fun.] "But depreciation doesn't make our cash register go ring ring, it's just some number in some accountant's head..."
1:07:56 PM
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© Copyright 2003 Lucky Goldstar.
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