Finance
This the finance post. 2-3-2011
Showing posts with label Finance. Show all posts
Showing posts with label Finance. Show all posts
Thursday, February 3, 2011
Finance - BruceF
This note covers my career in business school and finance. There is also a note for people interested in automation and systems development. See: Computer Systems - BruceF
After college I went to grad school at Carniege Mellon University expecting to get my MS in economics and enter the Phd program. At the end of my first year, they eliminated the MS in econ. I took additional courses in business and played the famous "management game" - the first of its kind - in my second year. Received my MBA and entered the Phd program in economics with an emphasis in finance which grew from my MBA course experience. When I was in my fourth year, I asked several of the faculty, which to do first - enter business or teaching - since I wanted to experience the "real world" first hand. They recommend teaching first because it would be difficult to enter teaching from a business background. (I later learned this bias works the other way too.) I therefore accepted an offer to teach in California at Berkeley's Business School.
I arrived in 1965, in the middle of the Free Speech Movement. Exciting and scary times. I taught corporate finance, money & banking, investments (stock market) and cost accounting during my time at Berkeley. One day I sat in with a group of grad students meeting with a fellow professor to discuss research deign. They wanted to interview people to see how they made economic decisions. Their objective was to create models of real behavior in decision-making. I listened for a while and then asked who were they going to interview. The man in the street! I asked why? This caused a reaction, but my professor friend suggested we explore that question. After discussion, they asked what I would do. I said - "If you are going to model behavior, I would want to model the behavior of experts or at least knowledgable people rather than random behavior." Model building is not easy and if you are going through the effort, then I want to model behavior that gets superior results, not just some "jederman" decisions. They changed their objective.
I was married in 1969 and not making good progress on the Phd thesis. Berkeley is a school where teaching in not rewarded, only publishing is recognized for advancement. I loved teaching and did not enjoy publishing - particulary the "how many angles can dance on the head of a pin" economic topics in vogue at that time. It was time to see how things worked in the business world.
I applied to 3 banks in SF and 3 in LA. With my Berkeley background (1960's radical reputation), it was an uphill battle. Finally, FIB in LA made me an offer with a 50% increase in salary. Hello LA. Our first daughter was born 3 months after moving to LA. Unfortunately she was born with a significant heart problem. Because of this problem and the way medical insurance works (or not), I stayed with FIB for 10 years. Career-wise they were good years, but LA is not so good.
I'm trained in operations research (and other stuff) and headed up the bank's OR department (all 3 of us). FIB did not understand how to use OR (LA is not NY); I suggested we realign our work to support the bank's financial planning and budgeting. I set up a commitee to review all major fixed asset investment decisions (bank acquisitions, equipment purchases, computer systems, and any expenditure / program that involved more that $1mm). I did the benefit / cost analysis for all major expenditures and recommended decisions based on the expected financial impact of these decisions. More than once there were touchy issues; conflicts between financial smarts and gut-feel / power struggles often involving computer automation proposals.
The bank was heavily involved in the real estate markets. This caused their earnings to swing wildly with the real estate boom - bust cycle. I was asked to forcast the bank's future earnings for the next 12 months - a moving forecast updated each quarter. I designed and built a computer model to project the bank's earning's for the next 12 - 18 months. I soon found myself addressing the bank's managing committee, suggesting asset portfolio changes and investment strategies to provide more earnings stability. With time I was appointed Budget Director, responsible for planning the growth of 15 bank divisions and reviewing their quarterly financial performance.
When the man who hired me retired, a new Chief Financial Officer from a Chicago bank was hired. I decided it was time to review my career options. The new CFO was a dud but it took management 6 months to figure that out. By then I had moved to the credit side of the bank where I began my computer systems development career.
After college I went to grad school at Carniege Mellon University expecting to get my MS in economics and enter the Phd program. At the end of my first year, they eliminated the MS in econ. I took additional courses in business and played the famous "management game" - the first of its kind - in my second year. Received my MBA and entered the Phd program in economics with an emphasis in finance which grew from my MBA course experience. When I was in my fourth year, I asked several of the faculty, which to do first - enter business or teaching - since I wanted to experience the "real world" first hand. They recommend teaching first because it would be difficult to enter teaching from a business background. (I later learned this bias works the other way too.) I therefore accepted an offer to teach in California at Berkeley's Business School.
I arrived in 1965, in the middle of the Free Speech Movement. Exciting and scary times. I taught corporate finance, money & banking, investments (stock market) and cost accounting during my time at Berkeley. One day I sat in with a group of grad students meeting with a fellow professor to discuss research deign. They wanted to interview people to see how they made economic decisions. Their objective was to create models of real behavior in decision-making. I listened for a while and then asked who were they going to interview. The man in the street! I asked why? This caused a reaction, but my professor friend suggested we explore that question. After discussion, they asked what I would do. I said - "If you are going to model behavior, I would want to model the behavior of experts or at least knowledgable people rather than random behavior." Model building is not easy and if you are going through the effort, then I want to model behavior that gets superior results, not just some "jederman" decisions. They changed their objective.
I was married in 1969 and not making good progress on the Phd thesis. Berkeley is a school where teaching in not rewarded, only publishing is recognized for advancement. I loved teaching and did not enjoy publishing - particulary the "how many angles can dance on the head of a pin" economic topics in vogue at that time. It was time to see how things worked in the business world.
I applied to 3 banks in SF and 3 in LA. With my Berkeley background (1960's radical reputation), it was an uphill battle. Finally, FIB in LA made me an offer with a 50% increase in salary. Hello LA. Our first daughter was born 3 months after moving to LA. Unfortunately she was born with a significant heart problem. Because of this problem and the way medical insurance works (or not), I stayed with FIB for 10 years. Career-wise they were good years, but LA is not so good.
I'm trained in operations research (and other stuff) and headed up the bank's OR department (all 3 of us). FIB did not understand how to use OR (LA is not NY); I suggested we realign our work to support the bank's financial planning and budgeting. I set up a commitee to review all major fixed asset investment decisions (bank acquisitions, equipment purchases, computer systems, and any expenditure / program that involved more that $1mm). I did the benefit / cost analysis for all major expenditures and recommended decisions based on the expected financial impact of these decisions. More than once there were touchy issues; conflicts between financial smarts and gut-feel / power struggles often involving computer automation proposals.
The bank was heavily involved in the real estate markets. This caused their earnings to swing wildly with the real estate boom - bust cycle. I was asked to forcast the bank's future earnings for the next 12 months - a moving forecast updated each quarter. I designed and built a computer model to project the bank's earning's for the next 12 - 18 months. I soon found myself addressing the bank's managing committee, suggesting asset portfolio changes and investment strategies to provide more earnings stability. With time I was appointed Budget Director, responsible for planning the growth of 15 bank divisions and reviewing their quarterly financial performance.
When the man who hired me retired, a new Chief Financial Officer from a Chicago bank was hired. I decided it was time to review my career options. The new CFO was a dud but it took management 6 months to figure that out. By then I had moved to the credit side of the bank where I began my computer systems development career.
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