Tuesday, October 27, 2009

The Race to Keep Up

How is it possible for MBA students to keep up with what's going on in the world of finance, to keep up with headlines and industry news stories--when they have case groups, final exams, recruiting events, and meetings with professors? How is it possible for corporate-finance associates or even well-established VP's in finance to keep up--when they have strategy meetings, budget deadlines, client presentations, pitchbooks, hundreds of e-mails, and a burdensome in-box?

Yet everybody expects everybody to be on top of financial events, trends, updates, innovation, new products, and even financial gossip. Keeping up with what's going on and having a view or special insight about financial events can make a difference--in a promotion, bonus, or (for students) in getting an offer. Those who are in the know tend to stand out and are often relied upon to teach or show others.

The world of finance evolves and changes as quickly as markets are updated, as quickly as money is transferred from one end of the globe to the other, and as quickly as one time zone closes business only to open up minutes later in another time zone.

MBA students and professionals in finance today should probably be aware of Obama's plans for financial regulation, should understand what might be driving recent upticks in equity markets or general behavior in bond markets, should be aware of general trends in the decline in the dollar (or the China's insistence on keeping its currency de-valued), should understand why it's important for banks to maintain large cushions of capital, and should be aware of the recent death of Lazard CEO Bruce Wasserstein, one of the most prominent M&A bankers over the past 25 years, and its impact.

MBA students and professionals should probably be familiar with recent industry talk about the growing influence of high-frequency equity traders or the necessity for a clearinghouse or settlement system for those infamous credit-default-swaps.

It's a constant, maddening struggle to keep up. Consortium students say it's a challenge to keep up when a group paper is due tomorrow or exams follow thereafter. Even MBA professionals say they must find precious time to keep up with headlines and trends. Are there tools and short-cuts to perform well in the day job and be an expert on current events?

Reading financial publications cover to cover daily would help. But who has time to do that? Is there a short cut to determine what's important, what should be skimmed, and what should be read?

It's helpful to scan all headlines of the Wall Street Journal and the Financial Times everyday and then assess what's important or not. Both the Journal and the Times have news summaries and digests that summarize news items. Both also provide clues of who's reading what by reporting the most popular stories in their online editions.

Skimming headlines is a quick, easy, five-minute way to keep up, although this won't provide depth in relevant topics. So it's necessary to scan to determine what's necessary for follow-up. If you have an interest in private equity, then if you see a headline about Blackstone, KKR or the Carlyle Group, you should note to follow up later. If you have an interest in high-yield markets and you see headlines about trends in pricing or new issues or changes in ratings at certain companies, then you should note to follow up later.

Some financial magazines are excellent sources for keeping up and providing perspective--especially for finance professionals who need information, who need it in appropriate depth and who need it presented in a sensible, summary manner. They include Institutional Investor and Investment Dealers' Digest magazines. (See http://www.iimagazine.com/ and http://www.idmagazine.com/.) The problem is these magazines are often inaccessible and expensive. But banks, trading firms, and business schools make them available or provide a means to gain online access to them.

The articles in both are detailed, but the topics cover all aspects of corporate finance, banking, trading, and investing. They are especially good at covering hedge funds and private-equity firms, where general information about them is hard to come by.

Just as much, they cover the people and firms. Sometimes bankers have said they have learned more about their institutions by reading about them in Institutional Investor. Few professionals have time to read all the articles. Yet it's an advantage to know what's being written about or discussed and to know if you need to become an expert in the topic, you know where to go to get a quick tutorial.

Other publications cover finance adequately, although not in the same depth as those above: BusinessWeek, The Economist, and Bloomberg. For some busy students or busy VP's, scanning and assessing the headlines in those publications will suffice. For sure, those periodicals are more accessible and less expensive. Bloomberg covers people, firms, and funds very well. The Economist provides a concise summaries of finance theory, events and product and incisive insight.

For corporate and investment bankers, Dow Jones has just unveiled a new site that will help students and professionals to keep up with deal flow, IPO's in waiting, new ventures, private-equity transactions, and who's who this week or month. The site, www.dj.com/product-investment-banker.asp, is being launched and will require subscription, but serious bankers or students of banking should explore it.
Don't minimize the value of networking. That helps people keep up, too. Being out and about, talking to peers, colleagues, classmates, and clients can help you be informed and up to date. Cornering an expert at a corporate event and asking him/her about a certain market, firm, or product (and his/her views) can be an optimal tutoring session on the latest. Attending industry-related seminars, symposia, and events also help in keeping up. These events often provide fat handouts on an esoteric subject. You may not have time to read them thoroughly, but grab them and know you have a ready summary when you need them.

Keep in mind, nevertheless, trends, perspectives, events and topics change steadily. Almost weekly. What was in the Journal's headlines last week are long gone by next month. So it's better to have a consistent approach and a steady habit to stay on top, keep up, and assess the whirlwind of financial activity around us--without becoming overwhelmed by all the information or being slowed down by all that might be unimportant.
Tracy Williams

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