Wednesday, August 5, 2020

From Class Rooms to Class Zooms: Teaching during COVID times!

As some of you who have visited my website and read my bio know, I describe myself first and foremost as a teacher,  and every semester, for the last decade, I have invited anyone who is interested to join in my classes. In December 2019, when I posted my last invite, I fully expected to be teaching corporate finance and valuation, in person, at the Stern School of Business at NYU, in the spring of 2020, and I invited people to join in virtually, albeit for no credit. Needless to say, COVID upended my plans, as it has everyone else’s, and we had to move classes online in early March, and spent the last half of the semester, meeting on Zoom, and taking exams online. As the fall semester approaches, I have the luxury of sitting back and waiting, since I am not scheduled to teach until the spring again. I am thankful that I will not have to deal with the chaos that September will bring to classrooms around the world, in both schools and colleges, but that will not stop me from extending an invite to my classes in the fall.

A Teacher's Lament
I have been a long time advocate of using technology to deliver classes online, and my first attempts to do so date back to the 1990s, well before the appearance of Coursera, EdX and a host of other online platforms. When classes had to be moved online mid-semester in the spring of 2020, I was more prepared than most to deliver my classes online, having had some experience in the game. As this crisis has stretched from days to weeks, and from weeks to months, my office at home has become a home recording studio, but my updated camera still captures me in shades of dishevelment, and my new microphone cannot completely shut out the sounds of home, from my dog barking at the front door, to Alexa notifying me that a new package has arrived, to the microwave pinging.  

That said, this semester was a reminder, in case I needed one, of how much of what I love about teaching comes from physically being a classroom. Don't get me wrong! I love what Zoom, Cisco WebEx, Microsoft Team and Google Classes have created as platforms,  to allow me to teach my classes online, but as I explain in this long-ago session I did on teaching as a craft, there is an element of magic that can show up only in a classroom, and even there only rarely. If you ask me where the magic comes from or how it is created, my answer would be that I do not know, and that if I did, I would bottle it and drink it myself. I am aware, though, when it happens, and it does so suddenly, and in settings and moments where you least expect it, and when it does, there is no experience quite like it.  It is the reason that I would not trade in what I do for a living for any other profession in the world, no matter how lucrative the payoffs. 

I am sure many of you find yourself working in unfamiliar settings, as you struggle to get your job done from home, and juggle multiple roles (parents, teachers, handymen). I also know that some of you were expecting to be back in school soon and have been disappointed to find out that you will be taking your classes online again. The last thing that many of you may want to do is to add another online task to your to-do list, but just in case you do have the time and the inclination, I thought I would give you a look at the courses that I teach (or have taught) and the platforms that I offer them on, to find a course/platform combination that is to your liking. 

Picking your Poison
I have been lucky in my academic life that I have never been good enough at any one area of finance to become a specialist/expert, and have had to develop diverse interests in both teaching and research and different ways of delivering (timing, platform) what I know, to create something resembling a niche.

In 1985, in my very first year of teaching at the University of California at Berkeley, I taught five different classes from corporate finance to investments to central banking, knowing just enough of each to stay one step ahead of my students. In the years since, my primary teaching at the Stern School of Business has been focused on two courses, corporate finance to the first year MBAs, and valuation to the second year MBAs, with occasional forays into undergraduate teaching. Along the way, I also developed the material to teach a third course on investment philosophies that I have never delivered in a classroom at NYU but have taught in shorter programs elsewhere. In fact, over the last three decades, I have unpacked and repacked these three classes and delivered them on every continent, and in different durations, ranging from an hour (yes, really!) to a day to three days. I don’t require much in terms of pre-prep for any of these classes, but there are a few very basic financial building blocks and economic concepts that I draw on repeatedly that I have now packaged into a course that I unimaginatively call my foundations of finance class. 

1. Foundations of Finance
Coverage: I have always thought of finance as a hybrid discipline, with roots in economics, and substantial contributions from statistics, accounting and psychology. In this short class, more a collection of tools and topics than a real course, I look at how the time value of money, an incredibly simple construct built around cash flows and risk, underlies much of what we do in finance, and the mechanics of putting it into practice. I also do a brief introduction to three macroeconomic variables that show up repeatedly in finance, inflation, interest rates and exchange rates, more from the perspective of a practitioner who has to deal with them on a daily basis and less from that of an economist.
Objective: To provide a basic understanding of the building blocks that I will use in my corporate finance and valuation classes. 
Intended audience: If you have no background in finance or economics, the topics that I cover in this class will be useful. If you do, you may find the sessions going over familiar ground, and may find yourself skipping forward. 
Structure: The class is built around 12 sessions, starting with an introduction to how finance views businesses, moving on to the time value of money and a basic introduction to how we value contractual, residual and contingent cash flows and closing with sessions on three macroeconomic variables (inflation, interest rates, exchange rates) that show up repeatedly in financial analysis.

2. Corporate Finance
Coverage: Corporate finance is the ultimate big-picture class laying out the first financial principles that govern how to run a business. Consequently, it covers every aspect of business, from whether and how much to invest back into the business to how to finance (borrowed money or your own) these investments to how much cash to take out of the business (dividends and cash return).
(1) To provide perspective on the core principles that govern investing, financing and dividend decisions, and how choices on one of these dimensions can and often do affect choices on the other.
(2) To get comfortable with the tools, models and theories that lead to the "right" corporate finance decisions.
(3) To understand why managers and owners often choose to deviate from the script and make sub-optimal decisions.
Intended audience: Everyone, from business owners to managers to consultants to investors, but I am biased... 
Structure: This class starts with an assessment of corporate governance (and where power resides in a  company), moves on to how best assess investments, then to financing mix and type and ends with dividend policy. Since it is an applied class, I use corporate finance tools on a diverse group of companies to see how they work.

3. Valuation
Coverage: This class is about attaching a number to an asset, item or investment, and given that broad mission, it draws a contrast between valuing and pricing an investment and develops the tools of each  approach, with intrinsic and discounted cash flows determining value, and multiples/comparable assets driving pricing. 
(1) To value and price publicly traded companies, small and large, young and old, developed and emerging markets, as an investor.
(2) To value and price privately owned and non-traded businesses
(3) To value and price stand-alone assets
(4) To price collectibles
Intended audience: Investors of every stripe, from individuals to venture capitalists to fund managers, equity research analysts, value consultants and financial managers at public companies.
Structure: The class begins with an examination of broad themes that animate valuation and pricing, and then spends a significant portion of time in the weeks of intrinsic value, talking about cash flows, growth and risk, before moving on to pricing and real option valuation. Along the way, we will look at valuation through different perspectives (investors, acquirers, managers).

4. Investment Philosophies
Coverage: This class is designed to provide you with a menu of investment philosophies, from old-time value investing to day trading, with descriptions of the market beliefs that underlie each one, the historical evidence on how well each philosophy as performed, as well as the skills and strengths you will need to make that philosophy work.
Objective: To find the investment philosophy that is right for you, given your risk preferences, strengths and personal make up.
Intended audience: Investors of all types, from individuals to professionals, novice to experienced and young to old.
Structure: In keeping with the idea that there is no one best investment philosophy, the class will begin with the much maligned philosophy of technical analysis and charting, before moving on to value investing and growth investing in its different forms. We then look at trading strategies built around information and arbitrage-based strategy, before ending with a sobering assessment of how difficult it has proved for active investors to beat the market.

Sequencing and Overlap
If you an uninterested in any of these classes, there is clearly nothing more to say. If you are, I can offer my subjective road map through the classes. 
  • The course to start with is the Foundations class, since it is only twelve sessions and covers the basics. Feel free to jump ahead if you find the material too basic or just do the sessions that you are interested in.
  • Of the remaining three classes, the one that I think has the widest reach is corporate finance, since understanding how to run a business is something that I believe everyone can benefit from. Put simply, whether you are corporate lawyer, a marketing executive, a consultant or a strategist, understanding corporate finance can make you better at your job. In terms of sequencing, it also lays the foundations for getting more out of the valuations class and should precede it.
  • Valuation builds on corporate finance, but is most useful to those in the business of valuing companies (appraisers, equity research analysts, M&A analysts), but understanding what drives value can also help entrepreneurs and private equity investors. I think that understanding value can be useful even if you consider yourself more of a trader, but that may be my biases speaking.
  • The investment philosophies class is aimed at people interested in investing, whether they be individual investors or professional money managers. Thus, if you have little interest in actually valuing companies from scratch, and more interest in getting a broad perspective on how to invest money, you can skip both corporate finance and valuation and just take this class.
Will there be some topics that get covered in more than one of these classes? Of course, but in my view (and remember again that I am biased), these are topics that are worth repeating and looking at through a different lens. Thus, I will cover the basics of estimating cost of capital in corporate finance, but with the perspective of estimating hurdle rates for companies that are evaluating projects, and again in valuation, but from the perspective of investors trying to value a company. 

Delivery Platforms
With each class that I teach, I have multiple versions that you can access, and you are welcome to pick the one that best fits the time you have available to spend on the class, and what you hope to get out of it. I have tried to make the content equally accessible in all of the platforms.

1. Regular classes (Free): For the corporate finance and valuation classes, the classes that I teach at Stern are available in unvarnished, but complete, form (classroom recordings of lectures, slides, exams and even class emails). That detail, though, can be overwhelming, since no one was meant to watch a session that last 80 minutes (my regular class time) online, and you can drown in the weekly assignments, quizzes and other components that make for a regular class. That said, this is the closest you will get to a full time class experience in terms of content and if have patience and tolerance, you can make your way through these classes. You can find the entry pages to the classes below:
With each class, you can stream the class from the NYU server, at least for the latest semesters. The spring 2020 class was distorted by the crisis, and if you prefer a more conventional class, I have the 2019 versions listed as well:
As you will see on these pages, each recorded lecture comes with the slides that I used for that lecture and a post-class test and solution. Since the NYU server gets wiped clean every two or three years, I have YouTube playlists of the same classes at the links below:
2. Online Classes (Free): If you don't have the time or the patience to sit through 26 sessions of 80 minutes apiece (and who can blame you?), I have created online versions of all four classes, where I have tried to compress what I would say in an 80-minute session into a 12-15 minute session, and honesty requires me to confess that it was not that difficult, a testimonial to how much padding we put into two-year MBA programs. The webcast pages for all four classes are available below:
The videos are also available as YouTube playlists for each class:
3. NYU Certificate Classes (definitely not free): The regular and online classes that I list above are free, but there are two catches. The first is that they come with no certification, since I have neither the inclination nor the resources to keep track of who is taking the class, how well they are doing and providing the certification. The second is that online classes require self-discipline, since there is no mechanism for me to prod or nag you to keep up with the class. For many of you, these are not deal breakers, and I know of many who have persevered to finish these classes. If you believe that you need both the structure of a real class (with deadlines and time schedules) and certification, there is a third option and that is to take these classes through New York University's Executive Education program. The links to the certificate versions of the classes are below:
  1. Foundations of Finance Online (Included in Corporate Finance and Valuation certificate classes)
  2. NYU Certificate in Corporate Finance
  3. NYU Certificate in Advanced Valuation 
  4. NYU Certificate in Investment Philosophies
These classes have more polished versions of the videos that I recorded for my online class, come with exams and projects, and I do live Zoom sessions every two weeks, with each class, for the clearing up of doubts and questions. They also include quizzes, an exam and a final project, the last of which I will grade and return to you with feedback. Since these are offered through NYU, they come with a price tag, that some of you may find too high. Since the content on these courses is identical to the free online versions (even though NYU has chosen to add advanced to the valuation class and applied to the corporate finance class names), you will have to decide whether these add ons are worth the price that NYU charges for them. And for those of you find that price to be too high, there is always the free version!

The University Model: Disruption Coming?
You can accuse me of biting the hand that feeds me, but I have always though that the university model of education, especially as practiced by research universities, is dysfunctional and ripe for disruption.  If a university were treated as a business, and we were asked to objectively assess its performance, we would give it failing grades on multiple counts. The university governance system stinks, investments are driven by ego and me-tooism, the funding process is unsustainable, and universities seem to revel in mistreating their primary customers, the students, who deliver the tuition revenues that represent the bulk of their revenues. That said, this mistreatment is not a new phenomenon and the university model has endured for centuries, foiling and co-opting potential challengers over this period. As recently as a decade ago, there were some who proclaimed that MOOCs (massive open online courses) would upend universities, but that assault, like others before, failed and EdX and Coursera now operate as extensions of universities, rather than competitors. I argued a few years ago that technology-driven disruptors of education were failing because of a fundamental misunderstanding of what a university degree package offers students, viewing a university education as a collection of courses. At the same time, I offered a cautionary note to my university colleagues that change was already here, undermining the moats that universities have erected against competitors. If you are interested in that presentation, you can click here.

In 2020, COVID may have accomplished what hundreds of years of competitors and critics have not, and exposed the underbelly of the university model. 
  • First, as classes moved online, there were many where students hardly noticed the difference, as classes taught without energy, enthusiasm and engagement in a physical classroom sound the same online, and are easier to mute. 
  • Second, of the many things that students misses after classes moved online, the classes themselves were low down the list, well below friends, college sports and parties. 
  • Third, the fact that most universities were unable or unwilling to cut tuition, even as classes move online, drew attention to the magnitude of the tuition and how little of it is directly connected to student education. 
  • Finally, it forced students and parents, who had been have been conditioned to believe that the only way to get an education is to spend four years at a university, out of their pre-conceptions and to experiment with alternative routes.
My good friend, Scott Galloway, has been vocal in arguing that COVID is the tipping point that is going to upend the university model. He sees a world, where the strongest and most prestigious schools will survive and perhaps even thrive, while many small colleges and tuition-dependent universities will be decimated. While Scott and I agree on the trends and many of the problems with the university model,  I have more hope than Scott does for the model. I  think that COVID provides an opportunity for universities to remake themselves into institutions where real learning is delivered in classrooms, good teaching is valued, and the focus returns to educating students. This change will come with pain, felt disproportionately by the tenured faculty and administrators, who have benefited the most from the existing model, with the question of tenure itself being debated. As someone with tenure, I believe that no one is entitled to a job for life, and arguing that tenure is needed to allow researchers to express themselves freely sounds good, but is disingenuous. Much of academic research is so abstract and separated from reality that it is unlikely to be read, let alone be the basis for a firing. 

The Bottom Line
It has always been true that learning is not restricted to classrooms, and that your education may begin in a classroom, but it finds its grounding when you practice it in the real world, warts and all. There is almost nothing I teach in my classes that is timeless or profound, and I have learned that there is so much more that I do not know about the topics that I teach, than I do. I don't believe that I have either the knowledge or the intellect to answer every question that I am asked, but my job in teaching is to expose the process by which I try to get an answer, misguided and incorrect though it may be. As I have said repeatedly, and in many contexts, I would rather be transparently wrong than opaquely right, and I hope that if you take one or more of my classes, you will not only learn from my mistakes but also develop your own processes for answering the big questions in finance. Good luck and Godspeed!

YouTube Video

1 comment:

Raghu Kulkarni said...

Thanks for great summary of courses you offer, Professor! I know many of my friends had difficulties to understand which of your course to go through and this blog post just helps address that. Thank you for the great service you are doing to world in sharing the knowledge through your four courses, blog posts, YouTube videos & in many other formats. I have been honored & fortunate enough to know about these courses and have been one of thousands of beneficiaries of your Foundations of Finance, Corporate Finance and Valuation Class (Investment Philosophies class has to wait). While I hear your grief on moving classes from physical to virtual world, I also feel a student's lament in not getting to attend classes in-person (at-least a part of me) although I have accepted that I may never get a chance to attend a full-time in-person university class for the rest of life (because life gets in the way). This self-realization has made me adapt to new way of learning things of interest(recorded videos) to keep up with learning needs and this is what motivated me to religiously follow your Spring 2020 Corporate Finance. I myself was surprised to find I missed you walking around & teaching in Paulson Auditorium as you moved to Zoom sessions in second half, but realized what impact an in-presence (or in-presence like for me, my last in-person student experience goes back to 2002) experience can have which a recorded video may not have, only to awake sometime later of my acceptance of virtual learning that it was the same content. As a final take-away, I am questioning myself whether I am suffering from video-phobia & over-spending my time towards videos which is when your final email to Spring 2020 Corporate Finance class came handy(Sorry, I tweaked & added Valuation as well to that) "If you really, really want to master corporate finance (& valuation), don't waste too much time reading books & papers or listening to lectures. Pick another company (preferably as different as you can get from your project company) and take it through the project(& valuation) analysis.". Bottomline, August is Back-to-School time! and I am going back to basics of hands-on, practice, solving post-class problems/assignments with pencil & paper (or craft as you call valuation) to keep me in check and this is where I miss an in-person class. Thank you for motivating just right for me!!