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.

Experimentation

When I give presentations about teaching, I always urge the audience members to experiment as much as possible. It is hard to make improvements if you are not willing to try new things. I am always reminded of Albert Einstein’s definition of insanity: doing the same thing over and over again and expecting different results.

Some experiments work and some experiments don’t work. That is just the nature of the game. However, you will never find the winners if you are not willing to risk some losers. Playing it safe is no fun (and provides no benefit).

I tried an experiment with my final exam about two weeks ago. Even now, I am still not sure whether it was a winner or a loser but I found it interesting. I like the fact that I am still thinking about it.

What is the purpose of a final exam? I can think of two reasons. First, it gives the students one last opportunity to influence their grades. There is something about having hope for improvement that keeps students working until the end. Second, the final exam forces the students to review the material and, hopefully, get it better set in their understanding. In other words, they learn more.

I like giving my students an opportunity to improve their grades but my main reason for believing in final exams is that I really want them to leave the semester with all of the knowledge fresh in their minds. The final exam should encourage them to tie all of the material from the semester into a cohesive whole.

Unfortunately, I have often been disappointed in the results of final exams. Students seem overwhelmed by the huge amount of material and flit back and forth during their studies over the various topics without really getting a strong grip on any of it. They just don’t always learn as much as I want from their preparation.

So, at the end of my Intermediate Accounting II test this past semester, I wrote out 49 multiple-choice questions that covered everything that we had discussed that I thought was essential. I tried to gear each question to take about 4 minutes to solve. Although they were designed to be multiple-choice questions, I did not include any answers—just the questions.

Ten days before the final exam, I distributed these questions to my students along with the following speech: “Here is your final exam. These are the 49 questions that I would really love for you to be able to answer on the final exam. When you arrive for the final exam, you will have three hours to answer these questions. I will only make three changes from what you see here:

“1 – I will change the order of the questions.

“2 – I will add four multiple-choice answers to each question along with a “none of the above” answer.

“3 – Most importantly, for each question, I will change one or more of the variables in the question. For example, if the cost is $400,000, I might change that to $500,000. If the life is 5 years, I might change that to 10 years. If the interest rate is 8 percent, I might change that to 10 percent. If the blue method is used, I might change that to the red method. But the question will be fundamentally the same. If you can answer these questions, you should be able to answer all questions on the test.

“If you make sure you can work these 49 questions over the next ten days, you should make 100. But you must understand the problem so well that my changing of the variables will not really slow you down. I realize these are very difficult questions, but they cover the essentials that I want you to be able to work. You’ve got ten days to get these 49 under control.”

I quite honestly was not sure what was going to happen. In the end, the A students missed about 6 of the questions and got 43 correct. The B students missed about 13 and got 36 correct. The C students missed about 20 and got 29 correct. (The D and F students missed more, as you might imagine).

If I had given this test without the pre-test, I am convinced that most would have missed 50 to 100 percent more than they did. Students had clearly gone over the pre-test and learned to work many of the questions. They knew where to focus their attention. However, the number of missed questions was still higher than I had anticipated. Okay, these were 49 extremely tough questions about leases, pensions, cash flows, bonds, deferred taxes, and the like. But I really expected someone to become obsessed and learn them all backwards and forwards and make 100. That didn’t happen. Even with ten days, they just didn’t have enough time for that.

What interested me the most was that this type test had little impact on overall grades. Of all my students, the final exam grade made by 68 percent was within five points of their overall average for the semester. Students with an 82 average made about 82 and students with a 95 average made about 95. Only 32 percent had more than a 5 point difference between this test from their final average. I really had expected a greater number of students to show a greater change.

But, the basic question is still the same-did the students learn more in their studying? That was what I was trying to accomplish. And, I think they did that. Or, at least, I am encouraged enough to try it again. Maybe, this time with 40 questions instead of 49. Maybe, you just can’t do 49 complex questions in three hours even with a ten-day head start.

That’s my most recent experiment and how it worked. What was yours?

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.

Thanks!!!

I began writing this blog almost a year ago. At the time, I seriously wondered whether anyone would ever read it since I had no easy way to get the word out. I decided to write the blog, though, because I thought doing so would force me to think more deeply about my own teaching. In that way, it has been a huge success. I am a better teacher today, I firmly believe, than I was at this time last year because I have taken time to reflect on almost every aspect of my work.

However, I was still faced with the question: does anyone “out there” actually read these thoughts? So, yesterday, I finally broke down and looked at the statistics. Since I wrote the first blog entry last January, there have been 27,398 page views. Wow, that is roughly 27,000 more than I expected. It turns out to be 75 page views seven days per week for a solid year. That is a lot of teachers and a lot of education.

I just wanted to say THANKS!! This could not possibly have happened without a lot of great people helping to spread the word. I cannot fully express my appreciation to everyone who has taken the time to tell someone else about this blog.

I have long been convinced that virtually all teachers want to be better teachers. Often, unfortunately, it is hard to get practical advice. I sincerely hope that this blog has helped some folks become a tiny bit better in the classroom. If so, then my time has been well spent. If we all work to make tiny improvements in our teaching, the whole world will improve in an amazingly short period of time.
**

At the end of a semester, a few of my students will often write to talk about the goods and the bads of the semester. A student wrote me 3-4 days ago and made a comment that I found interesting. “I want to let you know that one of the greatest parts of the class is that you allowed us to fail initially, but then helped us to see our error(s) and eventually we learned to succeed on our own.”

Probably the essential question in teaching (at least to me) is “how do you get away from simply conveying information and requiring memorization so you can move to the more difficult task of creating understanding and critical thinking?” Can you think of a more important question for education as we enter 2011? It is not 1954—we cannot afford an education process that continues to resemble 1954.

I find that my students are hungry for the right answer so they can copy it down – ready for later memorization. They can get very frustrated at me when (during our conversations) I respond to them “Nope, that answer is wrong; try again and give me a better answer.” In fact, I like asking questions where I’m not sure what the right answer really is. I want them to convince me that they have figured out the right answer and can stand behind it.

Virtually every History student knows that the Emancipation Proclamation was issued by Abraham Lincoln on January 1, 1863. Why wasn’t it issued on the first day he took office? Why wasn’t it issued on the first day of the Civil War? Why wasn’t it issued on the day that Lee surrendered? To me, those are fascinating questions. Give me a good answer that makes sense. Don’t just tell me what is on the top of your head so I won’t fuss at you. That is not thinking—that is just guessing.

If you have read this blog for long, you know that I don’t believe in trying to surprise my students. I am not sure that anything is served by that. So, 48 hours in advance, I might have given my students the following “conversation starter:” “I believe that the Emancipation Proclamation was one of the key factors in US history. Why did President Lincoln issue the Emancipation Proclamation on January 1, 1863?”

After about a week in class, my students would come to understand that I wasn’t going to ask them that question – they would have already made a list of five bullet points to read to me as an answer. We would just be back to conveying information, this time from student to teacher rather than the other way around. Booorrrring.

I’d prefer to start off the conversation with a related question like “when do you think it first occurred to Abraham Lincoln that he should issue the Emancipation Proclamation? Do you think he woke up one morning in 1855 and said ‘you know, if I ever become president, I think I will free the slaves?’ Where do you think this idea came from?”

I don’t have a good answer for this question but I do think the conversation can help the students (and teacher) understand the man, the times, and the Emancipation Proclamation.

Education can be so much fun if you get away from the obsession of “knowing” a right answer. Let the students stumble around for awhile and you’ll be delighted to discover that, with a little guidance, they can develop enough understanding to think their way to their own reasonable answer.

And, after graduation, isn't that what they are going to have to do in the real world?

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

Congratulations!!

Yesterday, I carried out my very favorite activity of every semester. I sent an individual email to each student who made an A in my class this semester just to congratulate them. As teachers, we push our students unmercifully to succeed. We are after them constantly to do the work necessary to make an A. We push and prod them to give us an excellent effort. We complain when they disappoint us.

Therefore, I think those students who take up our challenge and do the work we ask of them deserve our acknowledgement. I believe they should get more than an anonymous A on a grade report. So, before I turn my grades in to the school, I send each A student an email so they know that I did notice.

In my classes this semester, 14 percent of the students in my introductory class (a relatively low number for me) made an A and 35 percent of the students in my intermediate class (an all-time high) made an A. I sent each of these students an email something like the following:


Wednesday afternoon

To: Mr. X

From: JH

I am very pleased to let you know that I have finished grading the final exams in Accounting 201 (Financial Accounting) and you earned the grade of A for this semester. Only 14 percent of the students in this course managed to earn an A and you were one of those. Congratulations!!! Your work for the semester was outstanding. I am pleased for you and believe that you should be very proud of yourself. Although a lot of people have taken Financial Accounting with me over the past 40 years, very few of them have been able to say that they made an A. You now belong to a relatively exclusive club. To do this well in Financial Accounting requires a lot of hard work and (hopefully) some deep thought. Your work was excellent and it was, very much, a pleasure to have the opportunity to work with you. I really hope you will carry this success with you into the spring semester. Nothing pleases me more than to hear that my former students are knocking the top off of their subsequent courses. You can do it – you are very bright and hard working. So, make it happen.

As I am sure you know, for about the last 12-15 years, I have asked every student who has made an A in one of my courses to write a short essay (a paragraph or two will be sufficient) to explain how you managed to make that grade when so many (equally bright folks) failed to do consistently excellent work this semester. I hope you will write this up and forward that essay to me in the next few days. Think about it a little bit. What should those other students have done differently? As you know, I will share your thoughts with the students for next semester in the hopes that they can replicate your success. What can you tell a rising 201 student to explain to them what I want? I am always frustrated that some students simply never catch on to what I am looking for. I honestly believe that everyone can make an A in 201 if they will do the work in the proper fashion. I need for you to explain what that proper fashion is. All I ask is that you be totally honest. The grade is already in – so, tell them the truth.

Have a great holiday. Enjoy your vacation – you have earned it. If I can ever be of assistance, please just let me know.

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.

Turducken? Meh! I want a TurBacon Epic

We survived Thanksgiving with the Unknown In-Laws. The Unknown Wife, her mom, and her sisters are all good cooks, so we easily put on a couple of pounds.

Many of you have heard of the Turducken (a dish consisting of a de-boned chicken stuffed into a de-boned duck, which itself is stuffed into a de-boned turkey).

But these folks have gone several steps better - the TurBacon Epic: a 20lb pig stuffed with a 8lb turkey, a 6lb duck, a 4lb chicken, a cornish hen, a quail, bacon croissant stuffing, and 10 lbs of bacon wrapped around all the layers. It's "only 79,046 calories and roughly 6,900 grams of food coma inducing fat.

To quote Yakov Smirnoff, "What a Country!"

Pension Seizure Precedents

One of the problems with out of control government spending is the way it affects the behavior of government itself. Like any other junkie, the government convinces itself it needs "just one more" fix and will do anything to get it. Again like a junkie, the government will prostitute itself and steal from friends and family to keep the drug supply coming.

We see a glaring example of the later when governments simply grab private property in order to pay off their own debts. We have already seen the precedent for pensions being seized by government. Just last week in Hungary the government grabbed $14 billion in private assets. Over the weekend, the Irish government decided to take 15 billion Euros from the future pensions of its citizens to give to the banks. Now France is taking 36 billion Euros from the pension fund to keep its bloated and unsustainable welfare state afloat for just a little while longer.

People need to understand that the United States is not immune to the same financial pressures that caused Hungary, Ireland and France to take these desperate measures. If you are counting on a future pension from the state, you might wish to start making alternate plans. In most states, there is effectively zero chance that you will get everything promised - the state government pension funds are already over $1 trillion in the hole. The gap will only grow as additional obligations are incurred but little new money is available to meet them from the state budget side. It would be completely unsurprising if the more desperate and foolish states attempted to raid these pension funds to "invest" in more unemployment payouts or other attempts to fund general budget spending.

Of course we won't have that problem with Social Security since it is funded entirely by current taxes. Since no such pension fund exists, we don't have to worry about the government grabbing it. Of course that raises the question of which assets the will try to take since the same financial imperatives and the same junkie behavior are at work in Washington as in Budapest, Dublin and Paris. That said, we need to be vigilant for any sign that similar asset seizures are imminent here in the United States since the precedent has already been set. We have been warned by events across the pond.

New Video on Risk and Return

I've posted a new video on Risk and Return - it covers the typical material presented in and introductory class from the math of risk and return (Expected returns, standard deviations, covariance and correlation) through Markowitz Portfolio Theory and the Capital Market Line through the CAPM and the Security Market Line. it has a table of contents, so you can skip around. Click on the video below to see it - it's a pretty big file, so it might take a while to load.


In case you don't want to view the whole thing at one sitting (it's a bout 90 minutes), the video is organized as follows (I reference the numbers in the Table of Contents):

1. Sections 1-13 (roughly from the beginning to 38 minutes in - the "math" risk and return (Expected Returns, Standard Deviation, Covariance, and Correlation)
2. Sections 14-25 (from minutes 38 to 75): Markowitz Portfolio Theory and the Capital Market Line
3. Sections 26-32 (Minutes 75 to the end): Systematic and Unsystematic Risk, The CAPM and the Security Market Line

I hope you find it useful. Comments (of course) are welcome.

Happy Thanksgiving

It looks like Unknown University is all but deserted the day before Thanksgiving. I finally decided to quit swimming against the tide, and canceled classes for today (I usually only get about 30% attendance on the day before Thanksgiving in the best of times, so it's no big loss).

Instead, I told the students that I'd put up a video with the lectures for the week on Risk and Return. Once it's done, I'll post a link here. I'm pretty happy with it - it runs the gamut of topics from the calculations for standard deviation, covariance, expected returns, etc... to Markowitz Portfolio Theory and the Capital Market Line to the CAPM and the Security Market Line.

Although I don't use all this material in my intro class, I expect to use it in my investments class this spring. So, this should allow me to go a bit faster and cover more material there.

Unfortunately, I have to wait another hour before the video software is done rendering the final version and I can go home. Then it's off the the Unknown In-Laws house tomorrow for turkey overload and football.

Here's wishing you all a Happy and safe Thanksgiving

Kissing Up is Good Practice

It's important to be good at the technical aspects of your job. But the "soft" stuff may be even more cirtical - the ability to get along with coworkers (and more important, with bosses) has a lot to do with eventual career success.

Tow researchers (Ithai Stern at Northwestern University and James Westphal at the University of Michigan) recently published a study in Administrative Science Quarterly titled "Stealthy Footsteps to the Boardroom: Executives’ Backgrounds, Sophisticated Interpersonal Infl uence
Behavior, and Board Appointments (here's an ungated copy). They lay out several effective ways of "kissing up" to the boss:

• Go with discomfort: Preface compliments to the boss with something like "I don't want to embarrass you, but..."
• Frame it in question form: Ask for advice - it's just as flattering as a compliment. goes down a lot easier
• Bait and switch: Start out by disagreeing with the boss and then gradually warm to their opinion. Instead of being a "Yes Man", be a "'No,' then 'Yes'" man).
• Go around the corner: Find a third-party (best if it's a close confidant of the boss), and talk admiringly about the boss. Odds are, it will get passed on.
• Look for common ground: Pick a topic (anything from parenting to religion to politics) and make unsolicited statements and opinions about the matter that you think are also held by your target. Positive impressions will lower the red-flags on future praise.
• Look for common groups: Bring up social affiliations that you may have in common.

All in all, pretty clever stuff. Not that I'd ever use any of these, but if I were to...

Happy Thanksgiving From the TSA

Luckily, we're not flying this Thanksgiving - we live a mere 2 hours from our families. But in case you are, here's a pretty funny clip from SNL.


Now take off you D**n shoes!

Annoying or Amusing?

I had the genuine pleasure this past Thursday of speaking to 150 new faculty members in the Virginia Community College System. It is always a treat to work with people at the very beginning of their teaching careers. They have such a wonderful opportunity to help change the world.

One of the themes that I explored with the group was the idea of improvement. If you continue to improve as a teacher, year after year, you will get very good and eventually become great. And, the amount of annual improvement doesn’t have to be huge. In connection with their teaching, I suggested that every person work toward making a mere 5 percent improvement per year. That is doable and at that rate, in not too many years, you can become the best teacher in your building.

However, a great majority of teachers get better for awhile but eventually plateau. Many people who were B- teachers two decades ago are still B- teachers. I find that troubling. Why doesn't a B- teacher eventually become an A+ teacher?

There is a point where it simply becomes easy to say “I am what I am and I am never going to get any better so I’m not even going to try.” As you can imagine, that is not an attitude that I like. As far as I’m concerned, if I am not dead, I should be working to get better.

The question comes up, then, as to what causes a teacher to plateau. I have known a fair share of people who were good teachers and then suddenly began to become disgruntled. After that, they never got one bit better.

When does that happen? I have a theory. When you first start teaching, it is easy to find your students amusing. My students are all about 19 years old and I occasionally refer to them as puppies. They are just beginning to try out the responsibilities of adult life. As with growing puppies, this time can often be a very humorous period of transition.

However, there can come a time when those same students and those same actions can become annoying. A student will say something bizarre and instead of finding it amusing, the professor finds the student’s ignorance to be annoying.

In fact, if a professor ever says to you, “students simply aren’t like they used to be,” that is a clear sign that they have gone from viewing students as amusing to annoying.

If you find students in general to be amusing, then you are willing to do the work that is necessary to continue to improve. Five percent improvement is clearly a possibility. But, if the students have started to annoy you, then improvement becomes a much more difficult task. It is very easy, at that essential moment, to hit that plateau where your days of improvement cease.

So, wherever possible, I try to view the actions of my students as relatively amusing. And, even though they do incredibly dumb things at times, I try to avoid staying in a constant state of annoyance. The reason is fairly obvious. I really do want to get better. I want to get 5 percent better by this time next year. And, that is hard to accomplish if everything the students do seems to annoy you.

Yo Momma is a Data Miner

Having a lot of data makes research easier - we now have more data in easily readable formats than ever before, and an amazing amount of computing power on our desktops (I have far more horsepower on my desk than NASA had in total in the 1980s)..

Unfortunately, there's a flip side to that coin - we can easily find variables (or specifications) that seem to "predict" returns (or just about anything). In reality, we're often just overfitting the data.

Here's a pretty good piece on the topic titled "Yo Momma is a Data Miner", by David Leinwebber in which he fits a polynomial time-series regression to the S&P 500 with surprising (if you don;t follow what he's doing) good results - particularly since he's using things like the sheep population and Bangladesh Butter production as regressors.

I Did Not Know Damodaran Had a Blog

Aswath Damodaran has written a couple of excellent textbooks (on valuation and corporate finance), both of which are among my core reference materials. He also wecasts his valuation class at NYU (available here)

But I didn't know that he also has a blog - Musings on Markets. Just a quick glance over the last couple of months gave me several good articles to read:

High Dividend Stocks: Do They Beat the Market?

Capital Structure: Optimal or Opportunistic?

What if Nothing is Risk Free?

He doesn't update regularly (but who am I to talk). In any event, check it out.

HT: Finance Clippings

Making The Grade

I was cleaning out some to the 1500+ emails I've let accumulate in my gmail account (unlimited space leads to sloppy housekeeping), and I came across this old (but still excellent) piece titled "Making the Grade", by Georgia Tech physics professor Kurt Weisenfeld:

IT WAS A ROOKIE ERROR. AFTER 10 YEARS I SHOULD HAVE known better, but I went to my office the day after final grades were posted. There was a tentative knock on the door.
""Professor Wiesenfeld? I took your Physics 2121 class? I flunked it? I wonder if there's anything I can do to improve my grade?'' I thought: ""Why are you asking me? Isn't it too late to worry about it? Do you dislike making declarative statements?''

...Time was, when you received a grade, that was it. You might groan and moan, but you accepted it as the outcome of your efforts or lack thereof (and, yes, sometimes a tough grader). In the last few years, however, some students have developed a disgruntled-consumer approach. If they don't like their grade, they go to the ""return'' counter to trade it in for something better.

What alarms me is their indifference toward grades as an indication of personal effort and performance. Many, when pressed about why they think they deserve a better grade, admit they don't deserve one but would like one anyway. Having been raised on gold stars for effort and smiley faces for self-esteem, they've learned that they can get by without hard work and real talent if they can talk the professor into giving them a break.

Read the whole thing here - it'll be part of my next semester's syllabus.

We Shouldn’t Take It For Granted

Topic One: On this coming Thursday, I will be having one of the great pleasures of my life. I will be leading a 3 1/2 hour teaching workshop for 150 new teachers in the Virginia Community College System. When you are given the opportunity of working with 150 new teachers, you realize that you are looking at a group that can truly make a difference in the lives of an almost countless number of students for decades and decades to come. This truly is an honor for me.
**

Topic Two: This past Friday I sat in my office for about 30 minutes and talked with an official in the Afghanistan government. That certainly is not a traditional part of my job. However, his daughter is a student at the University of Richmond and he was on campus visiting her. Because I knew the daughter, she brought her father by so we could meet.

We talked about the progress being made in Afghanistan and he immediately started talking about the problems caused by illiteracy in his country. His point was that for nearly 25 years, the country was without a formal education system. First under the Russians and then under the Taliban, schools as we know them were often nonexistent. Can you imagine, he asked, what it is like to go 25 years without education? An entire generation is lost.

Instead of producing doctors, engineers, accountants, and the like who could serve as the leaders to help pull the country out of poverty, an entire generation basically went without education. And, what can most people really do without education? I do not know if this is accurate but I found the following on the Internet: “The overall literacy rate in Afghanistan is reported to be 28.1%; according to an Afghan Ministry of Education report, ‘In rural areas where 74 percent of all Afghans live, however, an estimated 90 percent of women and 63 percent of men cannot read, write and do a simple math computation.’”

That is a staggering set of statistics. If you simply stop and think of how limiting those numbers are for the people, the challenges faced by the entire country seem overwhelming.

How hard it must be to try to create a peaceful, prospering country with those kinds of statistics working against you.

There is a lot of criticism of the educational system in the US and, most certainly, improvements can be made. However, regardless of what you think of US education, no one can deny how important it is to the growth and prosperity of our country. Sometimes it is easy to say “oh, I’m just a teacher” and view the job as unimportant but those of us in education need to constantly remind ourselves of how essential our job is. If you are a teacher, never take it for granted. Our country needs great education. As teachers, we each have students who are depending on us to help them read and learn and go out into the world and make a difference. And, through that learning, they will be able to help continue the building of a great nation.

I couldn’t help thinking, as I sat and talked with the Afghan official, that I wished every teacher could hear what he was saying about the total loss that comes from lack of education. There are a lot of the world’s problems that I cannot do a single thing about. However, when it comes to helping to educate the next generation, that is a challenge that I can personally address—even as soon as Wednesday—when I walk back into class and make a little difference in the lives of my 64 students. I want to be part of the solution and not part of the problem.

Entrepreneurship and Satan's Learning-Challenged Little Brother

Although most people know him as the creator of Dilbert, Scott Adams may also be one of the funniest writers around. Here's a recent piece that appeared in the Wall Street Journal Online where he talks about dissatisfaction as a major driver of entrepreneurship:

I wasn't suffering alone. Many of my co-workers already had active side businesses and ambitious expansion plans. The guy in the cubicle behind me was running a concert equipment rental business. Across from me was a guy running a computer tech support business. We had Amway dealers, Mary Kay sales people, inventors, authors and just about any other business you can imagine. That's not counting all of the business plans in the incubation phase. I think we all understood that working in a cubicle and being managed by Satan's learning-challenged little brother was not a recipe for happiness.

Actually, it was a hamster-brained sociopath of a boss that made me think about going into academia.

Read the whole thing here. - it's good for a laugh (and it makes a lot of good points, too).

The Fun of The Exam Continues

It seems like every semester, I get at least one student who bombs an exam (or two) and reacts in a way-over-the-top manner. Last semester, it was a senior finance major (with a pretty high GPA) who suffered from anxiety attacks. She drew a complete blank during my Advanced Corporate Finance midterm. She subsequently appeared in several professors' offices wondering tearfully if she should change her major in her senior year. We eventually talked her down off the ledge, and she even subsequently took my Student-Managed Investment Fund class, where she did just fine.

But this semester took the grand prize. The 80/20 rule says that 20% of your students cause 80% of your problems. That would be true this semester if you counted ONE student alone as my 80%. She (we'll call her Brittany henceforth) is to put it succinctly, a bit of a Princess - high maintenance, dressed entirely in designer clothes, vocal, bossy to her friends, and simply not doing well in the class. BP informed me two weeks into the class that she's taking 18 (or is it 20) credits this semester because she needs to graduate this spring. So she "really really really needs to pass this class." She constantly whines in class about the workload because she has soooo much on her plate, and complains about any thing that doesn't pass her standards (by which she means, anything that she doesn't understand easily). And nothing is ever her fault.

Her first exam grad was a 55. The most recent exam (the second of four) was a 58. The rest of the class seems to be getting it -- in fact, as I recently posted, the class average was one of the highest I've seen on this exam in about ten years of teaching. The class has really respodned to the challenge - they've not only stepped up their game, they seem to have realized that complaining to me about the workload is like trying to teach a pig how to sing (i.e. they expend effort, accomplish nothing, and both they and the pig (that's me) get annoyed). Except for Brittany the Princess - she's used to getting her way with whining and intimidation, so she keeps trying.

After she got her exam back, (it was handed back Monday - the drop deadline for the class), she came to my office wondering if she should stay or drop. She wanted assurances that if she was "close", I'd give her the minimum passing grade (since it's required, all she needs is a D-). Unfortunately, I couldn't give her any such assurances - I said that I often make the cutoff for the various grades somewhat lower than what's in the syllabus, but that's done on a case by case basis after looking at the overall class performance, and that whether or not she should stay in the class is a decision that only she could make. So far, there's nothing new to the story - pretty much standard stuff we've all seen many times.

Then the fun started.

BP goes out into the hall and starts sobbing and wailing. That's right, wailing. You could hear her almost on the other side of the building. Of course, I stay safely in my office - there's no way on God's Green Earth I'm going out to deal with that, because there are (like Bear Bryant said about passing the football) only a few things that can happen, and most of them are bad. Luckily, one of the female staff from one of our institutes came out and said "honey, why don't you go into that empty classroom so that you'll have some privacy" (read: "so that you won't be such a spectacle"). The staff worker said that she figured that the student in question was used to using the "cry out loud and maybe you'll get what you want" card. Shortly thereafter, several of her classmates (the ones who she hangs with) came in to my office and said "don't worry about Brittany, UP - she'll be fine. She does this to get attention and to see if she can get you to give her what she wants).

Unfortunately for my blood pressure, she decided not to drop the class.

Ah well - another day in academia. At least I'll have more Brittany stories to share as the semester progresses.

The Unknown Students Nail an Exam

I've been teaching the undergraduate core finance class this semester, . If you've been teaching for a while, you know that it's easy in that class to get discouraged by students who are (pick any or all that apply) unmotivated, unable to do simple math, whiny, unwilling to be stretched, never darken your office doorway, etc...

This semester, I made a conscious decision to really push my students - since the first week of September, they've two exams, three very involved problem sets (with a lot of curves thrown in - the typical one takes about 3-5 hours to complete), eight online quizzes, and short pop quizzes (they typically last 5 minutes or less and contain 1 or 2 basic questions on the material to be covered for the day's class) on average every other day, and almost constant cold-calling in class (in a 50 minute class, I typically call on 15-20 students). I like to think that I've set the bar at a far higher level than the other sections of the intro class being taught this semester. In fact, some of my students have told me that I've brought the class together - they're getting together in study groups of as many as 10 at a time (and there was supposedly a study group the night before the first exam of almost twenty students).

I've also made a decision to teach in full-blown crazy mode. Those who've heard my bloviations over the years know that I'm a flaming extrovert that tends toward (in my better moments) impressions of Ahnuld (I Am The Denominator!), Mister Rogers, Kermit The Frog, Inigo Montoya, and various characters from the Simpsons, South Park, and Monty Python, often in rapid succession. The last few years, the Unknown Son's illness had really taken a toll on my zest for teaching (and it showed in my evaluations). While he passed away almost 18 months ago, it's only been this semester that I've really felt like the "old" me. So, teaching has been a real pleasure.

Well, my class just had their second exam, and to put it bluntly, they did more damage to the exam than the Republicans did to the Democrats in the last election - they knocked it out of the park. There was the usual variation in grades, of course (one student got a 23 - It's never when your grade approximates your age), but on the whole they performed better than any comparable class I can remember going back to the late 1990's.

So, there is hope. It's nice to see that when you set the bar high (and meet the students more than halfway), they respond to the challenge.

Teaching Is Serious Business

I was asked, about four years ago, to write an essay on teaching. The following was my response. I believed this then. I believe it now. Joe


Teaching is serious business. We have wonderfully bright and talented students at every school. They have almost unlimited potential. For most, this is their one shot at college; they deserve nothing less than an excellent education,
an academic experience that challenges them to excel from their first day to their last.

Faculty members have a responsibility to the world to coax the very best from their students because they will certainly become the next generation of leaders. Where they go from here, what they accomplish, how they impact the world, depends in large part on how much we are able to push and nurture their development. I want every student to leave my class at the end of the semester saying, “I had to work very hard but I am so amazed by how much I learned.” Anything less is unacceptable.

If a teacher challenges students to think and do their best, word gets around campus quickly, but having a tough reputation is both good and bad. When students walk into my class on the first day, they tend to be very quiet and pay attention right away. On the other hand, I am always so disappointed when a student says to me “I hear you are a good teacher, but I didn’t take your class because I know you are very demanding.” Isn't that just incredibly sad? I think all of college education (as well as the world in general) will be better when students become convinced to sign up only for classes where teachers push them each day to do their best.

During each semester, I occasionally point out to my students that the grade of A, according to the University catalogue, reflects “outstanding” work. A student does not earn the grade of A for a good effort, only for consistently outstanding work. That’s a great goal; it inspires a wonderful level of effort. Grade inflation has hurt college education across this country and could be fixed simply by faculty members saying, “You earn an A when the work that I see is truly outstanding.” Don’t fool yourself; students are well aware of the difference between “good” and “outstanding.”

I use the Socratic Method. I call on every student every day in class. I don't ask them to regurgitate material; I ask them questions that I believe will cause them to think and reason—on the spot. That is what adult life is like. I then follow my initial question with others based on their answers. If I don’t get good replies from a student, I don’t just nod and smile; I demand better of them. A student once compared my class to a contact sport. Students should be ready, willing and able to discuss and debate issues. This is college, not high school.

I want a reasonable effort from my students because students get back based on what they put in. I expect them to study four to six hours each week outside of class so they’ll be ready to participate in class discussions. I use carrots and sticks. I say, “Good job!” when a student gives me a thoughtful, well-conceived answer, and I say, “Listen, you can do better than that!” when a student gives me a bad answer. I don’t view that as being disagreeable, although I do realize that it injects a bit of tension into the class. But this is not Sesame Street; a bad answer is a bad answer. There is only one primary goal in my class: to improve each student’s ability to think, reason and understand. Students realize how capable they are, but human nature loves to take the easy path.

A good basketball coach adapts to the talents of his or her players. A good teacher does the same. You cannot take an identical approach with every student. Some love to be pushed and pushed hard. They enjoy “in-your-face” challenges. Others are more fragile. You have to coax and nurture them. So toughness comes into my class where toughness is necessary. You teach each student, not each group. However, every student needs to be willing to prepare and to think. That is not negotiable.

One of the keys to becoming a good teacher is learning to walk into a room of students and “see” what is happening to the individual members: Billy needs a few extra seconds to formulate an answer, Susan loves to be called on, Andy doesn’t know what is happening right now, Ellen is not prepared. You have to be able to adapt to your students on the spot every day. What a wonderfully exciting job.

Our students can do amazing things, but if we don’t challenge them fully, they will never realize what marvelous talents they truly possess. Signing up for demanding classes might hurt a student’s GPA, but which is more important: developing a good mind or a good GPA?

Terry Pratchett Quotes

Before J.K. Rowland, Terry Pratchett was the best-selling British fantasy author of the 1990s. He's written more than 60 books (either by himself or in collaboration with a coauthor). In fact, while I was at the recent FMA conference I made a comment "There can only be... one thousand" at a reception,a and found that an Irish friend of mine was a fellow Pratchett-phile.

So imagine my enjoyment at finding out there's a repository of Pratchett quotes titled the Pratchett Quote File (you can also get it in a test file here). Here's one that struck home (note that the Unknown Wife and I just celebrated our 20th anniversary):

Sam Vimes could parallel process. Most husbands can. They learn to follow
their own line of thought while at the same time listening to what their
wives say. And the listening is important, because at any time they could
be challenged and must be ready to quote the last sentence in full. A vital
additional skill is being able to scan the dialogue for telltale phrases
such as "and they can deliver it tomorrow" or "so I've invited them for
dinner?" or "they can do it in blue, really quite cheaply."
-- (Terry Pratchett, The Fifth Elephant)

Unfortunately, skimming through the quote file just burned an hour and a half of my time. I guess I really don't want to start grading the 70 exams currently sitting on my desk (each of which has 10 pages of work in it). Unfortunately, I just gave the exam tonight, and I want to give them back on Wednesday (it's the drop date for the semester).

The Shadow Knows

Today's topic is Shadow Inventory - the foreclosed or soon to be foreclosed properties that banks are stuck with and which are not listed for sale. As a result, they are not found in any formal listing of housing inventory when existing home sales are reported. This has been a problem for a long time, as we mentioned many months ago in Household De-formation.

The media's silence on this issue has been almost total. Probably because any reasonable discussion of the topic would severely undermine the illusion of stability they are trying to project. This weekend, the Wall Street Journal took a stab at estimating the damage. Their conclusion is that it would take 107 MONTHS to clear the shadow inventory at current sales rates. Obviously not a number that the bankers and their apologists in government and media are anxious to publicize.

Over the summer, banks appeared to be making some headway. The government’s mortgage-modification program helped some people get current on their payments, taking their homes out of the foreclosure pipeline. At the same time, homebuyer tax credits helped boost sales. Combined real and shadow inventory fell to 91 months of sales in May.

Lately, though, a new wave of defaults appears to be coming in, in part related to the high rate of failures on government modifications. As of September, some 1.9 million homeowners had missed one payment on their mortgages, up 14% from March. Meanwhile, home sales have slowed sharply with the end of government stimulus.

The government "assistance" was never going to help many people, much less actually succeed on a large scale. However, it was helpful for the banks - aiding them in concealing the collapse of their collateral for another year or so (i.e. another Bonus Cycle).

But the good news is that we can expect the housing market to start to recover - in another eight or nine years.

Irony

I regularly get together with a couple of guys from my church. We've been going over a book titled "Twelve Steps for Recovering Pharisees". It's main theme is that we are pretty much all hard-wired to find ways be judgmental twerps who try to make ourselves feel superior to those around us. So this cartoon from XKCD hit the spot.

I Don't Seem To Have a Lot of Empathy

I just took an empathy test (the Baron-Cohen Empathy test) - I scored a 23. A high-functioning Autistic or someone with Aspergers typically scores about a 20. Maybe my wife is right, and I am simply not that empathetic. However, she could have been kidding (if so, how would I know?).

HT: Vox Popoli

Conversations

If you have followed this blog for long, you know that my favorite saying about teaching is "Teaching does not come from years of doing it. It actually comes from thinking about it." Unfortunately, it is easy to get trapped into thinking superficially about teaching. “Why are students so lazy?” “Why can’t students read?” “Why do students seem incapable of thinking?” I’m not sure that kind of thinking does anyone much good.

A few days ago, a friend and I had a long conversation about teaching, just a general conversation about what works and what doesn’t work for us. We talked about our goals and our frustrations. When is the last time you had such a conversation? Really, a conversation about how teaching is actually done. Find someone in your building or in your school who truly likes to think and talk about teaching and make it a point to have such conversations on a regular basis.

As part of my recent conversation, the question was raised (now that we are half-way through the current semester) as to what we expect from our students each day. My now we have trained them (either on purpose or by accident). When you walk into your classroom, what do you actually expect to get from your students? If all you expect is for them to sit there quietly and take notes, you will probably get your wish. But, shouldn’t learning require more than that from students? If all students have to do is sit quietly and take notes, then education by television or the Internet is the way to go.

My answer to that particular question, after a bit of thinking, was that I wanted three things from my students.

First, I want them to be engaged. I want them on the edge of their seats ready to participate at the drop of a hat. I don’t like comfortable students. Comfortable students tend to be lazy students. Comfortable students don’t seem to like to do the depth of thinking that I want.

Second, I want the students engaged 100 percent of the time. One of my all-time favorite teaching books is One L. Scott Turow, the author, talks about his first year at Harvard Law School and this famous teacher who taught by the Socratic Method. He made the point that everyone was on the edge of their seats practically holding their breath until the first student was called on. The teacher had the habit of interrogating that one student for the rest of the hour. Therefore, after the first question, every other student started to daydream or think about other classes. When I read that 20 years ago, I thought it was ridiculous. I don’t want one student to be engaged. I want all of them to be engaged all of the time. My classes are 50 minutes long – I’m convinced that people (even young college students) can stay focused for that period of time.

Third, as I have said often in this blog, I want my students prepared. I think 100 percent of good teaching has to start with student preparation. College is for deep thinking and complex learning. When I ask students about a capital lease or a deferred income tax, there is no possibly way they can come up with a legitimate response off the top of their head. This has to be something they have thought about and considered in advance. Without the preparation, what are we able to do in class? Darn little.

It was a good conversation about teaching. I went back to my own teaching with some new insights into what others think as well as what I think. You don’t need those conversations every day but it is hard to get better as a teacher without some of those conversations.

New Video on Time Value

As I mentioned before, I've been doing a bit of work with screen recording software. Previously, I'd done a 4-video series on how to use the BA 2+ calculator. Well, I'm at it again.

This semester, I'm teaching the undergraduate core finance. I plan on making a series of videos on the main topics that I can then use in upper-level courses. That way, I can eliminate the need to take valuable class time for going over prior material. Instead, if the students feel the need for a review on (for example) Effective Annual Rates, they can simply watch the video. Eventually, I hope to have a library of videos on many of the major topics we cover in the intro course.

Here's the first one - on the basics of Time Value. This one covers problems and concepts related to Present/Future Values of single lump sums. If you find it helpful, let me know.

You can see my other videos at the following site - the BUS424 folder contains a number of lectures I made for my Fixed Income class. Feel free to use and share them.

It Is An Honor

My good friend Paul Clikeman furnished me with these lines from Pat Conroy's book The Prince of Tides. This is the way that we should all feel every day when we have the good fortune of being able to go into a classroom to try to help our students to work and learn and understand.

Savannah Wingo: "You sold yourself short. You could’ve been more than a teacher and a coach."

Tom Wingo: "Listen to me, Savannah. There’s no word in the language I revere more than teacher. My heart sings when a kid refers to me as his teacher and it always has. I’ve honored myself and the entire family of man by becoming one.

Incentives Matter

(1) – I had my first test of the semester last week in Financial Accounting. If you would like to see a copy of that test, drop me a note at Jhoyle@richmond.edu.

(2) - Several weeks ago I heard part of a story on National Public Radio. It was about British sea captains who were transporting prisoners to Australia in the 1700s. Unfortunately, many of the prisoners were dying along the way. So, the British government changed the way they paid the sea captains. They began to pay only for each prisoner who arrived in Australia alive. Not surprisingly, the death rate dropped to nearly zero almost immediately.

The punch line of the story was that incentives matter.

I am a believer that you can encourage people to do almost anything if you figure out the right incentives. With an incentive that matters, people can practically leap tall buildings in a single bound.

Like every teacher, I get frustrated by my students on occasion. I give an assignment and they don’t do it or they don’t put significant time into it. Assuming that the assignment is not too tough for them, why don’t they do better? That is an easy answer. They don’t have any incentive to do better.

I once asked a class: “if I gave you each $1 million to make an A on our next test, how many of you would make an A?” Every hand in class was raised quickly. So, it was not a question of ability – with the right incentive, everyone will do enough work to make an A.

Assuming that you don’t have a lot of extra millions to give out, what incentives can you use? Historically, teachers often fall back on the old standby “this is likely to be on the test” to motivate students to work. However, that is such a negative incentive. It tells the students “learn this or else.” That is hardly a way to build excitement for learning.

Personally, I prefer not to use incentives at all. I think learning should be fun and the reward of knowledge and understanding should be enough to motivate students to do the work that is necessary.

At the same time, I realize that is a bit naïve. Students are humans and they will always put their energy where they perceive the greatest immediate benefit. So, at times a more tangible incentive is needed.

On Monday and Wednesday of this week, in my financial accounting class, we covered accounts receivable. The weather has been cool and rainy and the students have seemed especially lethargic. The next test is not for 2-3 more weeks. I could tell that many of them were going to defer thinking about accounts receivable until that next test. I needed to get them cranked up. Last night, I sent them an email saying that I was going to start class off on Friday with one quick question on accounts receivable. No penalty if they missed it but I would give them 2 bonus points on their next test if they got it correct.

I’m hoping this will be the incentive they need to focus their attention on this topic. Two points is not a lot but it provides them with a tangible reason to learn this material now and not wait until the night before the test.

I will write later and let you know if this bonus question works or not. However, I am convinced that appropriate incentives do work. So, if you are having a class that is not responding in the way that you would like, step back and consider what incentives they have for doing better. Perhaps changing those incentives a bit will change your results.

VALUING YOUR STUDENTS WORDS

I have been tied up with the start of a new school year and have not had time to post anything. So, a good buddy of mine (and great teacher) Steve Markoff of Montclair State wrote the following. His words are ever so true and he says it better than I could have.

Thanks Steve!!!


We’ve probably heard the expression that you were born with two ears and one mouth, so we should listen twice as much as we talk. I remember the first time I heard this from an elementary school teacher over 40 years ago. Just how does this apply to teaching? How can we use this to become better teachers?

In order to listen more, we need three things:

1. Someone to listen to,

2. Something to listen to

3. A reason to listen


For too many of us, the answer to number 1 is “me”; after all, we have all the academic and professional qualifications along with all of the knowledge from our years of accounting – who better to listen to? It took me a long time to realize that there was someone else worth listening to in this exchange – the students.

So, now that we have someone else to listen to, we need something to listen to. As long as I am talking, there is nothing else to listen to except the sound of my own voice. What else is there to listen to? Answers to questions, that’s what. The math basically looks like this: more asking = more listening. If you ask a question, then you are going to get a response, and THAT gives you something to listen to. Have you ever thought about one of those people who you think of as “great conversationalists?” If you really take notice, all they mostly do is ask questions about YOU and open their ears and listen. Most of the time it is YOU doing the talking, but they are getting all the credit. Students frequently tell me know what a great teacher or explainer I am, when in fact I am mainly just asking and not doing that much explaining in the first place.

So far 1 and 2 sound easy, but one thing I’ve learned in life is this: People can know what to do and how to do it, but, unless they have a reason WHY they should do it – they won’t. When someone isn’t doing something, it’s one of three things. They either: a) don’t know WHAT to do – that’s easy – explain what you want done, b) they don’t know HOW to do it – also easy solution – train them. Show them how to do it. If they still aren’t doing it, then the solution is WHY – they don’t have a good enough reason for doing it.

A lot of us know that we SHOULD be asking more questions, and HOW to go about it, but we don’t have a compelling reason WHY. I’ve found that once I TRULY WANT TO HEAR my students, and then I have a good reason why. I have a real love affair with what is on the minds of my students. I can’t wait to hear what they have to say in class. As long as I honestly WANT TO HEAR them, I will be a better listener and, accordingly, since it is questions that start that process, I will naturally want to ask more and more questions.

So, if you want to ask more and tell less – create that COMPELLING REASON to listen – truly value what your students say. After all, if they had the winning LOTTO numbers, you would listen pretty closely, wouldn’t you? Well, they might not have that, but they have something that I think is worth its weight in teaching gold. Fall in love with what they say – the rest will become easy.

You have 2 ears and one mouth – so ASK twice as much as you TELL – my elementary school teacher gave me great teaching advice!

The best analogy of the day

I'm a regular reader of the Rabbit Room, a blog run by a group of Christian artists mostly around the Nashville area. They're a pretty amazing group of people - artistically talented as painters, writers, and musicians, mature, deep and thoughtful in their faith, and (importantly in terms of keeping me coming back) funny as all get out.

Recently they had a weekend get together where they had a numbr of speakers (and some kick-hiney food). One of the speakers was Walter Wanegrin, who wrote a book called The Book of The Dun Cow, a very powerful story where the protagonists are all animals fighting against Wyrm, the source of all evil in their world. It's insightful, thought provoking, and funny.

One of the bloggers expressed how inadequate he felt felt discussing literature wit Wanegrin (note: this came from the blogger - by all indications, Wanegrin is an estremely humble and engaging fellow). Anyway, here's the quote:

I felt a thousand things as he spoke, which I feel incapable of putting into adequate words. I feel like a clever monkey trying to explain to Beethoven (who is deaf and dead) the joys of flinging poo.

Every once in a while, you hear a phrase that just sticks with you. I think this one qualifies, and I've been there.

How The Financial World Views Itself

A former student of mine who works at a hedge fund just sent me this. For what it's worth, he says it's pretty accurate

My favorite is how the traders view sales. Note: the image originally came from MacroMan.

Need Some Inspiration?

There are times when every teacher needs some inspiration. There will always be days where everything goes wrong and the idea that anyone actually learns anything in your class seems remote. We all need inspiration now and then and I believe you should not ignore those needs. We are human.

One recommendation—the next time you are down and out about teaching, go to the video store and check out a movie from 1988 titled Stand and Deliver. You cannot possibly watch that movie without getting excited about the joys of teaching. It is the true story of a Los Angeles high school math teacher in a very poor area who drives his students to succeed on the AP test for calculus. He pushes them so hard that his students are accused of cheating because they do so well on the exam. They all forced to take the test a second time and they come back and pass it again.

No matter what the problems they encountered, the teacher did not let his students give up. He willed them to succeed.

It is just a wonderful story of how one teacher is able to make such a difference in the lives of so many young people by pushing them to be great. Watch it one night and you will be a better teacher the next day.

Spam, Spam, Spam, Spam

A couple of years back, I was on the train (coming back from a consulting gig), and, being an extrovert, I started talking with a guy sitting next to me. He was a "stock tout". In other words, he was one of those guys who sent out emails pushing one stock or another. He claimed it was a pretty profitable business.

Now I have some evidence backing him up.
Here's a pretty interesting piece on the market effects of internet stock spam spam. A couple of years ago, Well, Frieder and Zittrain did a study titled Spam Works: Evidence from Stock Touts and Corresponding Market Activity. They found that on spammers "touting" (i.e. pushing) a stock has some pretty significant effects on the touted stock's price and trading volume. Here's the abstract (emphasis mine):

We assess the impact of spam that touts stocks upon the trading activity of those stocks and sketch how profitable such spamming might be for spammers and how harmful it is to those who heed advice in stock-touting e-mails. We find convincing evidence that stock prices are being manipulated through spam. We suggest that the effectiveness of spammed stock touting calls into question prevailing models of securities regulation that rely principally on the proper labeling of information and disclosure of conflicts of interest as means of protecting consumers, and we propose several regulatory and industry interventions.

Based on a large sample of touted stocks listed on the Pink Sheets quotation system and a large sample of spam emails touting stocks, we find that stocks experience a significantly positive return on days prior to heavy touting via spam. Volume of trading responds positively and significantly to heavy touting. For a stock that is touted at some point during our sample period, the probability of it being the most actively traded stock in our sample jumps from 4% on a day when there is no touting activity to 70% on a day when there is touting activity. Returns in the days following touting are significantly negative. The evidence accords with a hypothesis that spammers "buy low and spam high," purchasing penny stocks with comparatively low liquidity, then touting them - perhaps immediately after an independently occurring upward tick in price, or after having caused the uptick themselves by engaging in preparatory purchasing - in order to increase or maintain trading activity and price enough to unload their positions at a profit. We find that prolific spamming greatly affects the trading volume of a targeted stock, drumming up buyers to prevent the spammer's initial selling from depressing the stock's price. Subsequent selling by the spammer (or others) while this buying pressure subsides results in negative returns following touting. Before brokerage fees, the average investor who buys a stock on the day it is most heavily touted and sells it 2 days after the touting ends will lose close to 5.5%. For those touted stocks with above-average levels of touting, a spammer who buys on the day before unleashing touts and sells on the day his or her touting is the heaviest, on average, will earn 4.29% before transaction costs. The underlying data and interactive charts showing price and volume changes are also made available.

If you're not convinced (or even if you are), I have a couple of names of people who are related to the former finance minister of Nigeria who need your help getting money out of the country (and are willing to share the profits with you). I'll give them to you for a small finder's fee. Just send me the routing number on your bank account and I'll take care of it electronically.

HT: The Psi-Fi Blog

Of course, with a title like that, it was inevitable

Be A Student

If you are always the king, it is very difficult to understand what it is like to be a peasant.

Most college professors that I know have spent a long time being the experts in the classroom. They are the ones who walk in each day with all the knowledge. They are the people in charge. Trust me, that gets to be a very comfortable feeling. At times, teachers can forget the feeling of being a student.

Consequently, whenever possible, I try to take classes where I am the student. I prefer to take classes in subjects where I have little or no knowledge. Over the years, I have taken classes in jewelry making, Russian culture, portrait photography, creative writing, and ballroom dancing. I think I managed to be terrible in all of those classes. I like being the person in the room who is worried about looking stupid. I like sitting through a 75 minute class where I am bored to death after 10 minutes. I like taking a class where I listen to a teacher and try (sometimes hopelessly) to figure out what he would possibly be explaining.

If you have forgotten what it is like to be a student, it can be very difficult to be a good teacher. When is the last time you took a class so that you were the student and not the person in charge?

A few years back, I took a two-day class in large format photography (think Ansel Adams or Matthew Brady). For some reason, I really wanted to do well so I spent the first day of the class taking careful notes and making sure that I understood every step. I asked questions and focused my attention on every demonstration.

At the end of that first day, each of the four members of the class took two pictures with one of those huge cameras as we crouched under a black cloth. The teacher was going to develop those pictures overnight and we would critique them the following day.

I came back, the next morning, with great anticipation. I had been so careful to do everything correctly and I really wanted to see the finished product. I was so optimistic. When we walked in, the teacher informed us that “three sets of pictures were great but one set did not come out at all.”

Immediately, I felt my stomach clutch up as I mumbled to myself “Oh please, don’t let me be the one who messed up. I tried so hard to get it right.”

The pictures did not have names on them so the teacher held up the first batch and one of the students identified them as her pictures. I am now down to 1 chance in 3 for being the incompetent fool. “Okay,” I said to myself “you were so careful—surely, your pictures were fine. Surely, someone else made a mistake.”

The teacher held up another set of pictures and one of the other men in class held up his hand. Now, we are down to the final set of good prints. By elimination, the dummy will now be unmasked and the other three people and the teacher will know who failed to learn the lesson. I can actually hear my heart beating – no one wants to appear stupid. “I want mine to be good; I want mine to be good” I silently chant, almost in prayer.

Well, the last prints went to the other remaining student and I was left to confess that I was the person who apparently couldn’t complete the assignment. Everyone was nice and told me that such things often happen with these big cameras. But, one person in the group looked dumb, and it was me.

When I went to my own class the next day, where I was once again in control, I looked out at my students with a bit more awareness. No matter how hard you try, sometimes things go wrong and you feel stupid and feeling stupid does not often encourage learning. At least on that one day, I was a bit more careful with my explanations and I had a little more patience when the students did not grasp the concepts immediately. On that day, I was a better teacher. And, I was a better teacher for having been a student—not 40 years ago but on the previous day.

Take some classes. Take hard classes. Be brave and put yourself into the student role. The king and the peasants really need to work together and if you are always the king, it is very difficult to understand what it is like to be a peasant.

Here We Go Again

All good things (and summers) come to an end - we're starting back up at Unknown University. For the first time in four years, I get to teach the undergraduate introductory course. For many faculty, this would be a bad thing (a lot of my colleagues simply don't like teaching the core course). However, I find it to be one of m favorite classes - it's easy, and I get to be an energetit and somewhat goofy evangelist for the Finance Department.

While putting together my syllabus, I went looking for an appropriate quote or two (I usually stick a few in there, if only for my own amusement). I came across a perfect one for the Unknown Daughter. As I've mentioned before, she's extremely bright (I know, I'm biased). But she also hangs out with a great bunch of kids - she and her closest three girlfriends are all smart, creative, and nice. They now can have a group motto.

The quote (attributed to Mark Twain) is:

Knowledge is Power
Power Corrupts
Study Hard
Be Evil

Even better, you can buy a t-shirt with the motto at Cafe Press.

Writing Assignments

I want my students to learn to write well. Good writing skills should be a requirement for any college education, regardless of the major. Writing well helps people think more logically. Sentences must follow sentences in a pattern that makes sense. Words need to be positioned so that ideas are clear. The message must be delivered in a fashion that can be understood by the intended reader. Today, the writings of many college students seem to be influenced heavily by Twitter and instant messaging.

How can a teacher assist students in developing good writing habits? I use a four-step approach. I grade each of these steps individually but I put the most emphasis on the finished product that comes from the final step.

First, students need something to write. I instruct them to create a problem or a question (within our discipline) that needs to be addressed. I give them guidance on arriving at their question. They then write a letter or memorandum to describe this issue in an understandable fashion. The reader must be able to comprehend the various aspects of the problem and the reason that it needs to be resolved.

Second, the students do the research necessary to arrive at a reasonable resolution for the problem they have created. Every person writes a response to explain the answer that they believe best solves the problem. Again, clarity is essential. The reader must be able to understand the recommendation and the rationale for following that approach.

Third, these first two writings assignments are collected in class and immediately given back, but to a different student. This second student is assigned to critique every aspect of the problem that was raised and the proposed solution. The critique should look at both the technical answer provided and the first student’s use of the English language. This reader must search for anything that prevents either of the first two assignments from being perfect. I have always felt that requiring an evaluation of this type makes both parties more careful. The original writer feels the pressure of having a peer assess the work. The second student must provide a critical evaluation of the technical answer and the written communication, a task not always encountered in school.

Fourth, the critique letter is given to the first student. Hopefully, the student will see the reason why some portions of the original letters were not clear or where the technical material was inaccurate. This student is given the opportunity to rewrite the first two assignments based on the advice provided in the critique. Students can make whatever changes they feel are needed. They have a chance, before they turn in the final letters, to have another member of the class provide advice.

I want each student to see the elements of what they wrote that were judged by their reader to be unclear and needing additional work. I am not an English professor but I have been well pleased by the improvements that I have seen between the original letters and the final versions.

What Do You Really Want to Accomplish?

When is the last time you took a pencil and paper and wrote down (in a sentence or two) what you wanted to accomplish in your classes? Here, at the start of a new academic year, it might be a profitable way to spend 5 minutes. I always tell my students “if you don’t know where you want to go, any road will get you there.”

Probably, any time in the first 30-35 years that I taught, I would have written down something like “I want to help my students come to understand and appreciate financial accounting so they can use it in the real world to help make good decisions.” That is a worthwhile goal and every word is still true for me today. However, in recent years, I have become more and more convinced that I want to do more than teach students a bunch of stuff. Somehow I feel that there is another plateau to this teaching gig that I am not yet achieving. Could I be doing more?

So, as the 2010-2011 academic year begins, I have added a few additional words to my goal: “I want to help my students become smarter people.” Is that even possible? Colleges are all about creating better educated people. Can they also increase the smartness level of their students? I personally think it can be done but it takes a lot more time and energy.

How do you increase smartness? Whenever I consider such questions, I always go back to my favorite quote about learning—one that I reflect on virtually every day. In his wonderful book, What the Best College Teachers Do, Ken Bain talks with one highly successful professor about his teaching style. “’It’s sort of Socratic . . . You begin with a puzzle—you get somebody puzzled, and tied in knots, and mixed up.’ Those puzzles and knots generate questions for students, he went on to say, and then you begin to help them untie the knots.”

You puzzle the students; you tie them into knots. And, then you begin to help them untie those knots. What a glorious description of what education can be—learning that I think not only educates but can actually makes the student a smarter person.

Yesterday in class, we discussed two small accounting rules. My students could have easily “learned” these two rules in 5 minutes or less. Instead, we took the rules apart, piece by piece, looking for connections and contradictions trying to figure out their purpose and how they were supposed to achieve that purpose. After 50 minutes of questions and debates, I asked the students another question, one that seemed unrelated. The students were able to take the understanding they had developed and figure out how to use it to resolve this final question. That was my ultimate goal. They were able to figure out something new on their own.

Were they actually smarter people? Well, after just 50 minutes, they probably weren’t really any smarter. But, if we are able to create those puzzles and knots for an entire semester and work to figure out how to untie them, then, yes, I do hope they will become both educated and smarter by December.