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?