MBA v CFA

That’s how two Wharton professors, Daniel Gottlieb and Kent Smetters, model their students in a recent paper that tries to explain why so many business schools have policies – typically adopted by student vote – that prevent students from disclosing their grades to employers. Seems reasonable!

We construct a model with students, schools, and employers. Students prefer larger postschool wages but dislike studying. Schools are heterogenous in their selectivity (reputation). Under disclosure, employers can observe both a student’s grades and the school’s selectivity; under non-disclosure, an employer can only observe the partial signal of the school’s selectivity.

That model leads to a bunch of equations (no charts, sorry) with conclusions that again seem pretty reasonable. The driving force for preferring a non-disclosure policy turns out to be that mean post-graduation pay has to be higher than median pay – and the authors think that this is likely at a selective school where the top students can be very valuable, but less likely for a less-selective school where everyone is clustered closer to average ability. If the average value of a Wharton student is higher than value of the average Wharton student, then making it hard for employers to figure out who is actually valuable will let everyone get paid for the optionality:
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Having said that, the chance to soak up the market moving insight of a one Professor $Honey will not last. Read more »

If you’re one of Moynihan’s mini-mistmakers and a slowdown in staffing, dwindling office supplies and your MD’s refusal to make eye contact have left you convinced that you’re among the 10,000/40,000/30,000 people whose brief yet brilliant tenure at Old BAC will soon be toasted over rounds at Phil’s Tavern, you may already be thinking about your next move. And it may have occurred to you that dropping a few hundred grand for two years of team building exercises, team learning projects, team drinking challenges, and individual scamming on undergraduates might be preferable to finding another job in banking / moving back in with your parents. Well, good news: no one else has thought of that yet.
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As we mentioned a while back, part of my training as a new Dealbreaker editor involves getting a CFA charter so that I can use past returns to guarantee future results. To that end, I’ve signed up for the December Level I exam. Thanks for all of your helpful advice on studying, by the way – I didn’t get to read all of them, but I’ll just go ahead and assume that the overall gist was “read every hundredth page of the books, guess C when in doubt, and drink heavily before, during and after the exam.”

Nonetheless I did get the books last week, so I opened them up to see what I’m getting myself into. Study Session 1 is ethics. Coming from a job on Wall Street, this was all new to me. I was particularly interested to see the CFA’s a refreshingly straightforward fiduciary standard in its code of ethics:
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If yes, did you get the plain boring old one or the one with the tassels? Read more »

In a few short weeks, many financial services employees will begin the soul-crushing, life-sucking process of studying for Level I CFA exam given in December. So you that you don’t look back and realize you wasted 4+ months of your time on earth, most of you are probably hoping to pass. And sure, that’s a good goal. Cute, even. But if you want to really make a name for yourself and not be had by a would-be lawyer, you’re going to have to do better than that. Like going into labor during the exam better. Read more »

John Taft, the Chairman of the Securities Industry and Financial Markets Association and the CEO of RBC U.S. Wealth Management, said he’s hearing firms are planning to cut back due to the skittish market and softening economy…He said staff reductions will likely affect all levels—even those with years of experience and expensive MBA degrees. “I think the paper value of an MBA might be overstated,” said Taft. “For it to be useful, it needs to form part of a wider package of skills and attributes, and more than a mere credential next to your name.” Taft said on the job experience in the capacity to perform in the workplace is more important than whether or not you have your MBA. [CNBC]

Until 2007, investment manager Andrew Oberwager and his girlfriend Karolina Stefansi were a happy, highly educated couple in love. Oberwager was a PM at Columbus Circle Partners, who had earned the right to not only put the letters C, F, and A after his signature, but M and D as well, having graduated from Harvard Med school before getting into investing. Stefanski, left, was a former Playboy model from Germany, who had earned her journalism degree from Suffolk University (the $33,000 tuition for which Obes covered). Thing were good. Then MDCFA maybe supposedly started an affair with a chick from Texas he met online, a relationship Stefanski was not cool with even though it probably meant nothing to Oberwags (i.e. he didn’t put her through vet school) and she took it to mean that upon breaking up, she was entitled to write herself a check from his account for $80,000.

Stefanski…contends the blank check was for her personal use. She wrote it out for $80,000 when she decided to return to Germany….Attorney Kurosh Marjani is arguing, however, that Stefanski had no authority to write out a blank check for $80,000. The blank check was meant to pay for household expenses, Oberwager testified Tuesday

Also? He wants the $33,00 back, too. Plus interest. Read more »