Wishes For A Happy New Year

I'm currently in my office trying to wrap up a paper to send off to a conference (the American Accounting Association Annual Meeting, with a deadline coming up next Wednesday). I'm one of only 3 faculty in thebuilding, so it's quiet.

I'll probably knock off about 3 today and spend the rest of the day with the Unknown Family. After all, it is New Year's Eve Tonight.

On that note, here's hoping you all a safe, happy, and prosperous New Year.

Let It Snow, Let It Snow, Let It Snow.

It Looks like the Unknown Family is pretty much shoveled out - I just got finished up removing about 15 inches of global warming from my driveway.

We did the family visit thing as usual this year, with Christmas Eve at my sister's house and Christmas Day at The Unknown Wife's family. They live in an adjoining state, but it's only about 2 hours away, so we did the day trip thing (and slept in our own beds).

Luckily, we got back before the snow started. Given my aging back (a legacy from my father, apparently), I prefer to shovel lighter amounts of snow multiple times rather than do one large one after it's over. So, I was in and out all day yesterday (about 3 times all together). Then I finished it off today. I love being in New England, but it has its costs.

Tomorrow I get back to the gym. For whatever reason, this semester has turned me into a morning person. In September, I found myself waking up at 4 a.m.. The Unknown Wife works out every day from 6-7 at the Y, so I thought I'd got from 5-6 (that way I can be back in time to watch the kids. So, I've been rising at 4:30 every day and putting in about a hour workout. I'm planning on doing a lot of cycling this summer - at least one century (my first) and a handful of 50-60 milers. The first 50 miler takes place on Memorial Day weekend, so I want to be ready to roll once the roads clear up and the weather warms. I've been putting in about 45 minutes to an hour each morning at the YMCA on the stationary bike, along with some light weightlifting several times a week. Except for a few extra holiday pounds, I'm probably at the same fitness level now that I usually am in June. So, I'm optimistic.

As for now, the driveway's clear, and it's time to get back to my office to get some work done - data to crunch, papers to edit, syllabi to write, and graduate students to torture.

Merry Christmas To All

A Merry Christmas to all. It was off to visit my family last night. Now, it's off to the Unknown Wife's Family for the day. Luckily, they're each only about 80 miles away - gotta love living close enough that I can plan on biking to each this summer.

Unknown Daughter liked her presents (some clothes, a rock polishing kit, some games for her DS, etc...). The Unknown Baby Boy (now upgraded to the Unknown Toddler) seemed to like his presents, but being 21 months old, he probably will get as much out of playing with the boxes and paper as he will out of the presents).

As for Unknown Wife and I, we'll buy a big screen TV after the new year as our present. Yeah, that's right - "our" present.

In any event, here's hoping you all enjoy the day, and be careful on the roads - it's a surprisingly dangerous day for driving.

Stick a Fork In Me

I'm done with my grading. Not surprisingly, I handed in grades at 4:45 this afternoon, and got my first email at 7. But for a change, the first one wasn't of the "why didn't I get a higher grade" variety. The student wrote:

Dear Unknown Professor:

I just wanted to thank you again for a really great semester. You really helped me work hard in areas I didn't think I could and pushed me harder than I thought I could handle, but it overall seemed to pay off very well with my final grade. I learned a lot in your class this semester which I am hoping will help with my future finance classes since I am a Finance major.

He struggled all semester, and pulled off a B+ - proof that hard work pays off.

I'll take it. Now back to research.

I have two papers I'm hoping to send to the AAA (American Accounting Association) meeting (the deadline's in 2 weeks), and a third I'm hoping to send to the FMA (Financial Management Association) meeting (the deadline's in about 3 1/2 weeks). So, I have three papers to work on (one's being sent to both conferences).

Of course, I still have to buy something shiny for the Unknown Wife.

Dilbert on "Meeting Pirates"

I wonder if Scott Adams has been spying on our faculty meetings?

The Manslator

Here are two facts :

1. The Unknown Wife and I have somehow managed to stay married for over 20 years.
   
2. I recently took an online test for empathy and scored just above folks with Aspergers and high-functioning autistics.

How can I explain these two facts? It's simply that I married well above my station to a person who's far, far nicer than me.

Having said that, I could have used one of these - I particularly like the caveman voice - kinda fits how I feel in the morning.

HT: The Ace of Spades

I need Some Advice From My Readers - Excel Topics For Class

I'm teaching the investments class this spring, and it's been a couple of years. I'm trying to add a few things to the class, and have pestered my colleagues at Unknown University (and other schools) for some advice. So, I thought I'd use y'all likewise to see what suggestions you might have.

Here's my goal: I want to embed more Excel assignments in my class, since Finance Majors can't have too much Excel exposure. So, I'm trying to add some assignments that expose them to the following concepts (note- those in bold type have been suggested by readers)

• Data Tables
• Pivot Tables & Pivot Charts
  
• IF (and Nested IF) statements
• Macros and basic VBA
  
• Solver and Goal Seek
• Regression Analysis
• Conditional Formatting
  
• Using some of the auditing tools
• Keyboard shortcuts
• VLOOKUP/INDEX/MATCH
  

My goal is to get them comfortable with at least some concepts that can be used to signal to potential employers that they're at least a cut above the typical student. This way, they can have samples of the output they've produced and (if they're smart) copies of the underlying spreadsheets on their flash drive and laptops in their back pockets for interviews. It's no magic bullet, but I figure it can;t hurt.

Some of the projects they might be doing could include (note: I might not get to all of this, but it's good to have aspirations):

• Building pro-forma statement-driven cash flow valuation models
• Profiling industry ratios (taken from Compustat) using Pivot Tables
• Calculating "justified" price multiples using regressions of multiples on industry fundamentals
  
• Estimating betas
• Calculating a variance-covariance matrix
  
• Calculating portfolio weights that yield efficient frontiers using solver (and possibly, some basic VBA)
• Calculating tracking error
• Performance attribution
• Technical analysis/indicators (i.e. moving averages, etc...)
• Describing statistical properties (skewness, kurtosis, etc...) of return distributions
• An event study
  

I've lifted some ideas from Benninga's Financial Modeling book, and also read Craig Holden's text.

So, here's what I'm looking for - can you suggest any additions to the list as far as Excel topics they should cover or projects I can assign? We cover only the equity side of things (no derivatives or fixed income, since they get those in other classes).

Please sound off in the comments.

My Students Are a Mixed Bag

It's that time of year again - the end of the semester. This time around, I'm teaching at both ends of the spectrum - the required undergraduate core class and the student-managed portfolio class.

And it looks like my students performed at both ends of the spectrum, too.

Running the student-managed fund class is always a great gig - it's small (about 10-12) and invariably composed of the best students in the college. They just gave their end-of-the semester presentation to a group of about 30 attendees (including a number of portfolio managers, analysts, and assorted other finance professionals). They probably did as good a job as any group I've seen to date. They were relaxed, professional, very competent, and they looked good in their suits and ties. They did a great job of explaining how they managed the fund and more importantly, why. There were a couple of attendees that made them peel back the curtain on what assumptions they used in their discounted cash flow analyses, and they acquitted themselves very well. In fact, there's a good possibility that one of them may landed an interview with a mutual fund company as a result of his performance (he got pushed pretty hard by a couple of the attendees, and did a great job defending himself). So, all in all, it was an excellent showing.

On the other hand (and after all, I've had a lot of econ training, so there's always another hand), my core finance class didn't do nearly as well on this last exam as they did on the second one. Some of it is probably the material (their math skills are more than a bit lacking, and this section requires more mathematical reasoning), but a lot of it seems like they simply hadn't done the necessary work solving problems. Still, there were some pretty good performances. Overall, it's a bit depressing, but it's given me some food for thought as to how I can approach the material in this section differently the next time I teach it.

Ah well - you win some and you lose some.

Teh Doggehs Rule

So far, I've resisted posting pictures of cute kittens on the blog (mostly because the things I'm likely to post will get me a call from PETA). But I do like dogs - in fact, we had a Boykin Spaniel for years named Merlin (a.k.a. "Butthead"). So, in honor of him, here's a video

HT: Ace of Spades

Dax Locke And an Early Christmas

I was listening to the radio on the way home from my office the other day and heard the story of Dax Locke, a 13 month-old child diagnosed with terminal Leukemia. Since it was unlikely he'd make it to Christmas (it was in early autumn), his family started putting up the tree and the lights. Then the neighbors followed suit, and then the whole town.

For obvious reasons, it stuck with me. So, I tracked it down and found this YouTube video by Matthew West. Caution - it will most likely bring tears to your eyes, so be warned.



And if you're looking for a place to contribute to, this would be a good one. So open your checkbooks and spread a little cheer.