Marking Time: A new year, a fresh semester and its class time!

As we approach the turn of the calendar year, I have my own set of rituals that prepare me for the new year. Last week, was my data week, where I download and analyze data on all publicly traded companies, listed anywhere in the world, and I will post extensively on what the numbers look like after a most tumultuous year. I also start thinking about my passion, which is teaching, the spring semester to come, and the classes that I will be teaching, repeating a process that I have gone through every year since 1984, my first year as a teacher. And as always, I invite you come along for the ride. 

What I teach...

For a class to resonate and be remembered, it has to be more than a collection of topics, and with each of my classes there is a core narrative that animates and connects the class sessions. If you were to ask me what that narrative was for each of my classes, here is how I would respond.

1. Corporate Finance: Corporate finance is the development of the first financial principles that govern how to run a business. It is that mission that makes corporate finance the ultimate big picture class, one that everyone (entrepreneurs, investors, analysts, business observers) should take. If it looks like I am over reaching, I start my corporate finance class with the simple proposition that any decision that involves money is a corporate finance decision, and by that definition everything that businesses do falls under its umbrella. To make this operational, I build my class around my big picture of corporate finance:
   
   
   I tie every session and every topic within each session to this big picture, and while I am willing to and often do abandon models and theories, I am loath to compromise on first principles. Thus, you and I can disagree about whether beta is a good measure of risk, but not on the principle that no matter what definition of risk you ultimately choose, riskier investments need higher hurdles than safer investments. I end the class with a corporate finance version of valuation, where I tie inputs into value (cash flows, growth and risk) to investment, financing and dividend decisions. 
2. Valuation: It is unfortunate, but for most people, the vision that comes to mind when I say that I teach valuation is excel spreadsheets and high profile company names. Don't get me wrong! I find Excel to be a solid tool in my arsenal, but I am not only old enough to have valued companies with a ledger sheet and calculator but also wary of letting a tool drive my valuations. If you do take this class, you should recognize that I will almost never open and work with an excel spreadsheet in class (though I do have supplemental YouTube videos on using them in analysis) and my interest is in valuing just about anything, not just large public companies.
   
   
   
   In fact, there are three key themes that I emphasize through this class. 
1. Price versus Value: The first is that we need to draw a contrast between valuing an investment and pricing it; the former is driven by fundamentals (cash flows, growth and risk) and the latter by demand and supply (with mood, momentum and liquidity often dominating fundamentals). While intrinsic valuation models try to assess value, pricing is built upon what others are willing to pay for similar investments; in the context of stocks, using a PE ratio and a peer group to attach a number to company is a pricing, not a valuation. 
2. Value = Story + Numbers: The second is that a good valuation is a bridge between stories and numbers, where every number that you use in a valuation, whether it be expected growth, margin or discount rate, has to be built around a story about the company, and every story you tell about a company (its amazing management, its superior platform or loyal employees) has to show up in a number. I will confess that, as a natural number cruncher, it too me a while to learn this lesson, and I try to pass on how I moved up (and continue to try to do better) the learning curve.
3. Face up to uncertainty, rather than avoid or deny it: Uncertainty is a feature of investing/ business, not a bug. One of my biggest issues with old-time value investing is that it viewed and continues to view uncertainty as something to be avoided as much as possible, and takes the view that you cannot value investments, where there is too much uncertainty. That view has led value investors to focus on mostly mature companies and kept them out of the game of investing in young and growing businesses. I take the point of view that uncertainty should not stop you from valuing companies, that your value estimates will have more error in them, but since the market also faces the same uncertainty, your best bargains may be in the midst of uncertainty. It is for that reason that I spend large portions of this class valuing difficult-to-value companies, in what I call the dark side of valuation.
3. Investment Philosophies:  If my classes were children, this class would be my neglected one, since I have never taught it in person at NYU, but it is a class that was born out of an observation. There are only a few investors who have consistently beaten the market over time, and many of them are legendary, but people within this small group are extraordinarily diverse in terms of how they think about markets and investing. That tells me three things. The first and obvious one is that there are no easy ways to beat the market, and anyone who claims to have found one is either lying or heading for a letdown. The second is that the notion that there is only one pathway to investment nirvana is hubris, and that there must be different philosophies that can be successful. The third is that since many of these successful investors have been widely followed, just copying what they do must not work, or we would observe far more imitation Buffets and Simons,  who are successful. In this class, I try (and that is all I can do) to provide a full menu of investment philosophies, starting with technical analysis/charting, moving on to value and growth investing (in both public and private forms), and then on trading on public or private information. I close by looking at bookends of the philosophies by looking at arbitrage, where investors chase (and sometimes catch) the dream of guaranteed profits and indexing, where investors come to an acceptance that stock picking does not work.
   
   
   With each philosophy, I look at strategies that emerge, the historical backing for whether these strategies work and end by looking at the make up that you would need as an investor to be able to succeed with that philosophy. By the end of the class, my objective is not to sell you on the best philosophy but to provide you with a framework where you can find the philosophy that best fits you.

I also offer online classes in basic finance (present value, risk models and measures) and accounting (or at least my version of it) as background to my main classes. If you are at all interested in taking any of these classes, and are wondering about sequence, I modified the flow chart that I used in my September 2020 post to lead you through your choices:

Please recognize that this is just a very rough flow chart, and that you may find pathways through it that meet your needs better.

The Delivery Choices

If you decide to take a class or two, there are three platforms that you can pick from, and which one is best for you will depend both on your preferences and objectives:

1. Stern NYU classes: The first, and the one with the deepest roots, are the classes that I teach at the Stern School of Business at NYU to both MBAs and undergraduates. I normally teach these classes, in person, every spring, starting late January/early February and ending early in May.  This spring, I will be teaching three classes, a corporate finance class for MBAs and two identical valuation classes, one to MBAs and one to undergraduates, but with the virus still raging out of control, I will be teaching the classes on Zoom. The class times for the coming semester are below: 

• Corporate Finance: Mondays & Wednesdays, 12.30 pm - 1.50 pm (New York time)
• Valuation (MBA): Mondays & Wednesdays, 2.00 pm - 3.20 pm (New York time)
• Valuation (Undergraduate): Mondays & Wednesdays, 3.30 pm - 4.45 pm (New York time)

All three classes start on February 1, 2021 and end on May 10, 2021. To sit on the live classes, you have to be a Stern student enrolled in the class, but I plan to record the classes and you can watch those recordings either on my website or on YouTube (where each class will have its own playlist), and access supplementary material (slides, post-class tests). 

2. My (free) online classes: The biggest challenge with following the NYU classes online is that they are not designed as online classes. The lectures are 75-80 minutes long, an eternity for an online experience, where time is measured in seconds, not minutes. I have created 12-15 minute versions of each session, preserving almost 80% of the content in the longer classes, and these online classes are also available on my website or on YouTube. If you do decide to take these classes, there are no hoops to jump through and no cost involved, but there is no credit for classes taken or certification. 

3. NYU certificate classes: If it is important to you that you get more structure, more touch and certification, there is a third option. NYU Stern has certificate versions of the online classes on their website. While the content of the free online and certificate classes are almost identical, you get more polished versions of the recorded sessions, once-every-two-weeks live zoom sessions where you can ask me questions and certificate at the end of the class, if you pass the exams/quizzes and complete the project requirements. The cost, though, is definitely not zero, and if you get sticker shock when you check what NYU charges, please remember that I have no control over or negotiation with you on this price.  

The links to all of these classes are at the end of this post.

COVID Lessons

When I start my teaching in early February, it will be my 58th semester teaching valuation and my 36th teaching corporate finance. Have I changed the way that I teach these classes over the last 36 years? Of course, but with two caveats. The first is the first principles or big pictures that you see for the classes are almost identical to those that I taught my very first semester, which should not surprise you, since that is what makes them first principles. The second is that the changes in content in most semesters has been incremental, building largely on the material from the previous one, with more timely data and a few augmentations. That said, since I believe that you should be able to value companies in the real world , each crisis that I have lived and taught through has left its imprint on classes, sometimes altering ways in which I approach estimating and sometimes altering the way I think about fundamentals. The dot com boom of the 1990s forced me to expand my valuation tools and models to cover younger companies, often with lots of potential and very little historical data. I am open about the fact that I learned to value young company through my struggles in valuing Amazon in 1998 and 1999. The dot com bust crystallized my views on the contrast between valuing and pricing an asset, and how behavioral finance can explain why the two diverge and what causes eventual convergence. The 2008 market crisis taught me that globalization had grayed the once bright lines between developed and emerged markets and the capacity for failures at some companies to spill over into other companies and sometimes the entire market. The last decade, with it influx of user based companies and technology platforms forced me to think seriously about how to value a user, subscriber or rider and extrapolate from there to company value. During 2020, as I watched companies and investors struggle with the after shocks of the economic shut down created by COVID, I wrote a series of fourteen posts (linked below) on what I was learning, unlearning and relearning about corporate finance and valuation. Unlike some market watchers, who have been quick to label the market as crazy, speculative or a bubble, I believe that the movements in market value across companies, regions and sectors have implications for how businesses should be run as well how investors price these companies:

COVID lesson	Basis	Corporate Finance	Valuation	Investment Philosophies
The price of risk is dynamic and volatile	Both equity risk premiums & default spreads went on a wild ride in 2020	Companies need hurdles rates (costs of equity & capital that change to reflect market levels.	Discount rates in intrinsic valaution have to change to reflect current market conditions, and can be expected to change over time.	Investors need to reassess their expected returns to reflect risk free rates & current ERP & default spreads.
Flexibility is an asset (and has value)	Young firms with low capital intensity and more variable cost structures did much better during the crisis than their more capital intensive, high fixed cost counterparts.	When investing, companies have to explicitly incorporate flexiblity into decision making, sometimes taking lower NPV, more flexible projects over high NPV, less flexible investments.	Value has to incorporate the value of flexibility, explicitly through the use option pricing models or implicitly, when comparing pricing multiples across companies.	Investment strategies that create concentrations in manufacturing and captial intensive companies need to be balanced with firms that have more flexible cost structures.
Debt can handcuff even large, established companies & put them at risk.	In the early days of the crisis, established firms like Boeing found themselves in the crosshairs, partly because of their heavy debt loads.	The assessment of how much to borrow has to factor in distress costs much more explicitly, and more value should be attached to keeping a safety buffer.	Since it is very difficult, if not impossible, to incorporate failure risk in a DCF, more effort should be put into estimating the probability of failure and its consequences.	Strategies that concentrate investments in companies with high failure risk (start ups and indebted firms) have to compensate by holding more cash or buying protection against market shocks.

In my valuation class, I will bring in some of the valuations that I did, both of the market (S&P 500) and individual companies during the crisis to illustrate how story telling was key to getting past the near-term uncertainty created by the shut down. In my investment philosophies class, I plan to talk about how the crisis shook my faith and what I had to do to find serenity. 

YouTube Video

Class Links

1. Corporate Finance MBA class (Spring 2021): On my website and YouTube Playlist
2. Valuation MBA class (Spring 2021):  On my website and YouTube Playlist
3. Valuation Undergraduate class (Spring 2021):  On my website and YouTube Playlist
4. Foundations of Finance Online class (Free): On my website and YouTube Playlist
5. Accounting Online class (Free): On my website and YouTube Playlist
6. Corporate Finance Online class (Free): On my website and YouTube Playlist
7. Valuation Online (Free): : On my website and YouTube Playlist
8. Investment Philosophies Online class (Free): : On my website and YouTube Playlist
9. NYU Corporate Finance Certificate class (Definitely not free & offered only in fall 2021)
10. NYU Valuation Certificate class (Definitely not free)
11. NYU Investment Philosophies Certificate class (Definitely not free)

Viral Market Update Posts

1. A Viral Market Meltdown: Fear or Fundamentals?
2. A Viral Market Meltdown II: Pricing or Valuing? Investing or Trading?
3. A Viral Market Meltdown III: Clues in the Market Debris
4. A Viral Market Meltdown IV: Investing for a post-virus Economy
5. A Viral Market Meltdown V: Back to Basics
6. A Viral Market Meltdown VI: The Price of Risk
7. A Viral Market Update VII: Market Multiples
8. A Viral Market Update VIII: Value vs Growth, Active vs Passive, Small Cap vs Large!
9. A Viral Market Update IX: A Do-it-Yourself S&P 500 Valuation
10. A Viral Market Update X: A Corporate Life Cycle Perspective
11. A Viral Market Update XI: The Flexibility Premium
12. A Viral Market Update XII: The Resilience of Private Risk Capital
13. A Viral Market Update XIII: The Strong (FANGAM) get Stronger!
14. A Viral Market Update XIV: It's a wrap, premature or not!

Online Teaching: Promise, Pitfalls and Potential!

I am a teacher. That is how I describe myself to anyone who chooses to ask me what I do for a living. I am not a professor (sounds pedantic and pompous), definitely not an academic (how boring is that..) and don't consider myself anything more than a dilettante on almost every topic that I hold forth on. It is in pursuit of my teaching mission that I have put my regular classes online for most of the last two decades, though technology has made that sharing easier. For those of you who have read my postings before, I usually announce a few weeks ahead of every semester, the classes that I will be teaching at Stern, what each class is about and how you can access it, as I did in January with my Spring 2017 valuation and corporate finance classes. As September 2018 approaches, I was going to skip that ritual, since I will be on sabbatical next year (and if you have no idea what a sabbatical is, more on that later..) but I will be teaching, nevertheless, during the year.

Online Education

I still remember the first semester that I shared a class with an online audience was in the 1990s, when the internet was still in its infancy, we were still using dial-up modems and phones were connected to landlines. I recorded my regular classes using a VHS camcorder onto tapes, and then converted the tapes into videos of woeful quality, but with passable audio. I posted these online, but with only minimal additional material, since sharing was both time consuming and difficult to do. Needless to say, the internet has grown up and made sharing much easier, with class recordings now being made with built-in cameras in classrooms and converted to high quality videos quickly, to be watched on tablets on smart phones. Here, for instance, is my entire Spring 2017 valuation class, with links to the videos as well as almost every scrap of material that I provide for the class and even the emails I sent to the class.

I have long believed that the traditional university model not only is ripe for, but is deserving of , disruption, saddled with legacy costs and a muddled mission. That said, the attempts by online education to upend the university model have, for the most part, had only marginal success and it is in trying to answer why that I started thinking about how we teach, and learn online. In particular, online classes have proved a imperfect substitutes for regular classes due to three shortcomings:

1. No personal touch: This may be a reflection of my age, but there is a difference between being in a live  and watching a video of the same class, no matter how well it is recorded and presented. 
2. No interaction: We forget how much of the learning in a classroom comes, not from lectures, but from interaction, not just between the teacher and students but between students, often in informal and serendipitous exchanges. With online education, the interaction, if it exists, is highly formalized and there is less learning.
3. Tough to stay disciplined: When you were in college, and enrolled for an 8.30 am class, did you feel like not going to class? I certainly did, but what kept me going was the fact that my absence would be noticed, not just by the professor, but by other students in the class. In fact, it is that group pressure and class structure that keeps us focused on project deadlines and exam dates, with regular classes. With online classes, that discipline has to come from within, and it should be therefore no surprised that most people who start online classes never finish them. 

It is perhaps easiest to see the challenges and limits of online teaching by looking at what it is that makes for a good class, in person or online. In my view, the measure of good teaching is that students don't get just content (tools, techniques, models) but that they learn how to create their own content, i.e., the capacity to devise their own tools to meet their needs. In the context of a regular class, you use readings, problem sets, quizzes and exams to deliver the former (content) but the latter (learning) requires a more complex mix of classroom and informal interaction, real life projects and intellectual curiosity (and I believe that it is partly a teacher's responsibility to evoke that). The time schedule of a regular class also puts limits on how much students can procrastinate, and peer pressure, from others taking the class or working with you on assignments, serves to keep most on task. 

With this framework, the challenges of teaching online become clear. You have to find ways to keep students engaged, disciplined and interactive, and you have to do it online. While there are technical solutions to each one of these challenges (great videos for engagement, a time schedule and online exams for discipline, and discussion boards for interaction), and we have come a long way in the last few years, there is still a great deal of work to be done.  

Online Classes: My learning curve

My search for a better way of delivering what I teach online started about five years ago, with a simple first step. I decided to try to take each of my regular lectures, which go for 80 minutes, and see if I could compress it into a 10-12 minute slot and the results were both revealing and humbling. It was not that difficult to compress my classes, a testimonial to how much buffer I build into my regular classes to ramble and pontificate. (If you have been in one of my regular classes or watched one, you probably know that there is nothing I enjoy more than going off on a riff on a topic or news story and I think you need a few of these in a 80-minute class to keep your class engaged.) I also started developing short post-session quizzes with solutions that someone watching the class could take, to check on whether they were "getting" the session material. I organized and sequenced the sessions and you can click to see the online versions of my corporate finance, valuation and investment philosophy classes. 

I was under no illusions that I had unlocked the key to online learning with these classes, and these classes had significant limitations. First, packing material densely into 10-12 minute chunks can make watching even these short sessions taxing. Second, the videos that I made (with the help of a friend who was a camera man) were lacking in bells and whistles, basic talking-head videos with slides in the background. Third, there is no personal touch or interaction, since the videos are recorded. Finally, given the number of people in each of these classes, there was no way for me to give and grade exams, look over valuations or corporate financial analysis (a key ingredients of my regular classes) or provide certification that someone had taken the class.

Valuation Certificate Class

Just over a year ago, the Stern School of Business, which is where I teach, asked me whether I would be willing to teach an online certificate class. My initial response was to say no for two reasons. First, universities always seem to operate at deficits, no matter how much revenue they collect from tuition, and I knew that Stern would extract its pound of flesh from those who took the certificate. Second, I was concerned that if I did do a certificate class, and it became a money generator, that I would be asked to remove my free online classes. Stern must have wanted to do this certificate really badly since they offered to leave my online material untouched, if I agreed to work on the certificate course. It was this assurance, in conjunction with the opportunity to have videos shot in a studio, a platform that would allow me to offer exams and quizzes and discussion boards that finally led me to yes. 

So, what makes the valuation certificate class different from the free online version? It is certainly not the content, since everything I teach in the certificate class is available on my website in multiple forms, but here are a few of the primary differences:

1. Studio-shot videos: A studio, with professionals manning cameras, sound and lights, does allow for much better videos. With the help of a talented group that knows a lot more about editing and animation than I ever will, the final versions of the online classes are better than my online videos. There are, in all, 28 video sessions, with two sessions each week, over a 14 week time period. 
2. Supporting material: In addition to the post class tests and the supporting slides, I have links to papers, spreadsheets, data, YouTube videos and blog posts that go with each session. While I am a realist and know that much of this additional material will go untouched, having it accessible will make it easier for you to use it, if you feel the urge.
3. Live Webex sessions: Every two weeks, through the semester, we will have a live webex session, where you (if you are enrolled in the class) can ask questions, not just about material covered in the previous week's sessions but news stories and happenings. I know it is not much, but it is a step in the right direction.
4. Announcements and outreach: I contact the students in my regular classes about once a day, but I will spare you that level of harassment. You will hear from me a couple of times every week, checking in on how you are doing and keeping you updated on the course. 
5. Exams/Quizzes: There will be three quizzes and a final exam for the class. While they will  be scheduled on specific dates, you can take them any time during a 24-hour time period and if you miss a quiz, the points will be moved to the remaining quizzes. So, if life gets in the way and you are unable to take a quiz, it is not the end of the world.
6. Valuation Project: Each person in the class can pick any company he or she want to value and value it, over the course of the class. Midway through the semester, I will offer feedback, if you want,  to allow you to tweak your valuation, and at the end of the semester, it will become a significant part of your overall grade.
7. Certificate: After the final exam and valuation are graded, you will receive a certificate for the class, if you complete the requirements. If you do exceptionally well (and you will have to leave that judgment to me), your certificate will come "with honors".

There were 66 people who signed up for the pilot version of the class, which started in January 2017 and 39 completed the class in May 2017. I learned as much from my students as I hope they learned from me, and here are a few lessons. First, I discovered that the discussion boards were effective at creative interactive discussions, among the students, if I did my job and organized the boards by topic. Second, in perhaps the most rewarding part of the class, a few students, who found the material both interesting and easy to grasp, took on the role of teachers helping others deal with mechanical and conceptual questions. Since the most effective way to learn something is to explain it to someone who does not quite "get" it, I restrained myself from jumping into the discussion boards, unless absolutely necessary. Third, I was impressed with both the work that was put into and the quality of the valuations that were turned in by those who finished the class. Of the 39 who were certified at the end of the class, about a third did well enough to get "with honors" attached to the certificate. I would have been proud with any of these students in my regular classes.

This fall, Stern will be offering the valuation certificate class to a bigger audience, with a class of several hundred. The good news is that the class will be tweaked to reflect the lessons learnt from the pilot class. I will continue to do what I did for the pilot, with my webex sessions, and provide feedback and grades not only for your exams but on the companies that you choose to value. The bad news is that Stern will charge "university level" prices for the class and I will not try to tell you that it is "worth it", since that depends on your circumstances. It is entirely possible that you will decide that the price charged is too much for a certificate, that you cannot afford it, or that you are more interested in the learning than in the certification, and if so, I hope that you give the free online version of the class a shot. If you are interested in enrolling in the class, the webpage where you can start the process is here. Incidentally, a pilot version of my corporate finance class, also offered as a certificate class, will be run in Spring 2018, and if you are interested, here is that link.

My Sabbatical

I mentioned, at the start of this post, that I would be on sabbatical, and at the risk of evoking envy, I will tell you what that involves. I am taking the 2017-18 academic year (September 2017- September 2018) off from my regular teaching, as I am allowed to do every seventh year. It is an entitlement that people in most other professions don't have and I recognize how incredibly lucky I am to be able to take a paid break from work. I do have a few odds and ends to take care off during the year, including teaching the certificate classes that I just listed and writing the third edition of The Dark Side of Valuation, but I plan to spend much of the year idling my time away, thinking about nothing in particular. That may sound wasteful, but I have discovered that my mind is most productive, when I am not trying too hard to be insightful. At least, that's my hope and if it does happen, that would be great. I  But then again, if I don't have a single creative thought all year, that too was meant to be! 

YouTube Video

My Free Online Classes

1. Corporate Finance (YouTube Playlist version)
2. Valuation (YouTube Playlist version)
3. Investment Philosophies (YouTube Playlist version) (New version will be out at the start of 2018)

Stern Certificate Classes

1. Valuation Certificate (Fall 2017)
2. Corporate Finance Certificate Pilot (Spring 2018)

Almost time for class: My Line Up for the Spring Semester!

If you have been reading my blog for awhile, you should be familiar with the routine at the start of every semester. If I am teaching that semester, I list the classes that I will be teaching, describe them briefly and offer ways in which you can follow the classes online, if you are so inclined. This semester is shaping up to be a busy one, with an MBA Corporate Finance class leading the list, followed by an undergraduate Valuation class and closing with a new online valuation certificate class that will be offered by the Stern School of Business.

Corporate Finance

The most important class that I teach is corporate finance, not valuation. Put simply, this class (or at least the version that I subscribe to) is about the first financial principles that govern how to run a business, small or large, private or public and in any market. That sounds like an ambitious agenda but it makes for a fascinating class, where we break down everything that a business does into three categories: investing, financing and dividend decisions. At the risk of summarizing the entire class into a single picture, these are the questions that corporate finance tries to answer:

For a business to be successful, it has to find a singular objective and then make investment, financing and dividend decisions that advance that objective. We start the class by debating what that objective should be and then move into the investment principle, first looking at how best to estimate the hurdle rates (the threshold for a good investment) in a business and then then at measuring the returns on prospective or actual investments. We follow up by discussing whether there is a right mix of debt and equity to use in funding a business as well as the right type of financing (long term or short term, floating or fixed, straight or convertible, currency) for that business. We finish with a discussion of how much cash should be returned to investors in a business in the form of dividends or buybacks, why a business may prefer one form of cash return over another and how much cash (balance) is too much cash. We end the class by bringing all of these principles together in the value of a business, setting up for my next class (Valuation).

The first session will be on January 30, 2017, and we will meet every Monday and Wednesday from 10.30-12 until May 8. While you have to be enrolled in the class as a Stern MBA to attend the class physically, you are welcome to follow the class online in one of three forums. In each of these forums, I will post recorded webcasts of the lectures late on Mondays and Wednesdays, with links lecture notes and other material. I will also post the quizzes and exams that I will be giving in class online, with grading templates that you can use to grade yourself.

1. My website: The primary platform for my class is on the webpage for the class on my website. A one-page listing of the webcasts and other materials can be found at this link. You can watch the streaming videos or download them and also the slides and other links for each class. You can indulge your voyeuristic instincts by reading the emails I send to the class at this link.
2. Apple iTunes U: If you prefer a more polished and device-friendly platform and you own an Apple device (iPhone or iPad), you should download the iTunes U app from the store and once you have it installed, try entering the code " EXC-JJS-XEA", and the class should show up on your shelf. (If it does not, try this link instead.) As I post the lectures and other material on the site, you should get a notification (if you want) about the posting. If you have an Android device, you have to download the Tunesviewer app to be able to access iTunes U classes. 
3. YouTube: If you want a more minimalist set up, with limited demands on broadband, you can use YouTube and check out the playlist for the class. Again, as classes get posted, you should see them show on the playlist.

Valuation 

This is a class that I teach almost every semester to the MBAs and this semester, I will be teaching it to undergraduates. That said, I teach exactly the same class to both and this class follows the same structure as my MBA classes. It is a class about attaching a number to an asset or business and we will look at both intrinsic valuation and pricing of both public and private firms. 

Since I provided a much longer introduction when I wrote about my Fall 2016 class, you can read it full at this link. The first session for this class will be January 23, and as with the corporate finance class, you can follow the class online, in one of three ways:

1. My website: The primary platform for my class is on the webpage for the class on my website. A one-page listing of the webcasts and other materials can be found at this link. 
2. Apple iTunes U: If you download the iTunes U app from the store to your Apple device, you can enter the code "FHS-KWW-FPK" for the class. If you prefer a direct link, try this one.
3. YouTube: You can use YouTube and check out the playlist for the class. As classes get posted, you should see them show on the playlist.

Valuation Certificate

These postings, listing upcoming classes and offering them online, have been a ritual of mine for more than 20 years and one common query I get is whether I can offer certification. My answer, hitherto, has been no, not only because I have no way of testing or grading what you do or providing feedback. This semester, the Stern School of Business has decided to offer an online version of my class as Valuation certification class, with the following features:

1. Lectures: The class is built around twenty eight lecture sessions, each of which is about 12-20 minutes long. These sessions were recorded in a studio and should much more professional than the online videos that I make and more watchable than my full-length classes.
2. Timing: The class is scheduled to begin on January 30 and go through mid-May, requiring that you watch about two sessions a week. Each session will come with self-test assessment, practice problems, additional readings and other material to supplement learnings.
3. Synchronous sessions: Every two weeks, I will use WebEx for a live Q&A session, where you can ask questions about the four sessions from the prior two weeks.
4. Discussion Boards: If you are enrolled in the class, you will be able to participate in discussion boards organized by valuation topics, posting comments, questions or other links. A teaching assistant will monitor the boards and add to the discussion, if needed.
5. Quizzes and Exams: Just as in my regular classes, there will quizzes and exams. You will be able to take these exams online and I will grade them. 
6. Valuation Project: As in my regular class, each person in the certificate program will be both valuing and pricing a company and I will provide mid-semester feedback on the valuation and a final grade assessment at the end of the semester.

There is bad news and good news with this new offering. The first piece of bad news is that it is not free and you have to decide, for yourself, whether the price charged ($425) is worth the experience (and the certificate). The second is that this is Stern's first try at this type of offering; it will have a few hiccups and the number of students will be capped at fifty. If you are interested, you can find out more about the certificate program at this link and even if you are unable to participate or get into the class this semester, it will be offered again to a larger audience, later in the year. The good news, if you decide to be part of the program is that I will treat you like I treat my regular in-class students. I am not sure that even this is good news, since you will hear from me about once every day and you will be sick and tired of me by May 12.

YouTube Video: Valuation Certificate Class Preview


Links

1. Corporate Finance (MBA):  (a) My website (b) Apple iTunes U (c) YouTube Playlist
2. Valuation (Undergraduate):  (a) My website (b) Apple iTunes U (c) YouTube Playlist
3. Stern Valuation Certificate: Stern entry webpage

The School Bell Rings! It's Time for Class!

As most teachers do, I mark time in academic rather than in calendar years and as September dawns, it is New Year's eve for me and a new class is set to begin. In just under a week, on September 7, 2016, I will walk into a classroom and face up to a roomful of students, not quite ready for summer to end, and start teaching, as I have every year since 1984. This semester, I will be back to teaching Valuation to MBAs at Stern, and as I have in semesters past, I invite you to join me on this journey, as we look at the mix of art, science and magic that makes valuation such a fascinating discipline.

Class Philosophy

I have always believe that to teach a class well, you have to start with a story and that the class is an extended serialization of the story. I also believe that to teach well, you have to, at least over time, make that story your own and mold the class to reflect it. In fact, the valuation class that I will be teaching this Fall has its seeds in the very first valuation class that I taught in 1986, but the differences reflect not only how much the world has changed since then, but also how my own thinking on valuation has evolved. The class remains a work in progress, where each time I teach it, I learn something new as well as recognize how much I have left to learn.

I could give you an extended essay on what this class is about, but I would repeating what I said at the start of the Fall 2015 semester in this post. In short, I said this class is not an extended accounting class (where you forecast entire financial statements for extended periods), or a modeling class (where you become an Excel Ninja) or a theory class (since there is so little of it in  valuation to begin with). Instead, here are the broad themes that underlie this class, all captured in the picture below:

If you find this picture a little daunting, I did do a Google talk that encapsulated these themes into about an hour-long session. 

In particular, this class is less about the tools and techniques of valuation and more about developing a foundation that you can use to build your own investment philosophy. I know that faith is a word that is seldom used and often viewed with suspicion by many in the valuation community, but it is at the heart of this class, both in terms of how you build up faith in your own capacity to value assets and businesses and how you hold on to that faith when the market price moves away from your value.  Since I still struggle on both of these fronts, I cannot give you a template for success but I will be open about my own insecurities both about my own valuations and about markets.

Class Structure

Since my objective in the class is that by the end of it, you should be able to attach a number to just about any asset, I will roam the spectrum. I will start with the basics of intrinsic value, partly because it is where I am most comfortable and partly because it provides me with ways of dealing with other approach. The mechanics of estimating discount rates, cash flows, growth and terminal value are not just simple, but easily mechanized. It is the specifics that we will wrestle with in this class:

• On risk free rates, usually the least troublesome and more easily obtained input in valuation, we will talk about why risk free rates vary across currencies, what to do about currencies that have negative risk free rates and whether normalizing risk free rates (as many practitioners have taken to doing) is a good idea or a bad one.
• On risk premiums and discount rates, we will wrestle with questions of what risks should and should not be incorporated into discount rates and the different methods of bringing them in. In the process, we will examine how best to estimate equity risk premiums and default spreads, and why even if you don't like betas or portfolio theory, you should should still be able to estimate discount rates and do intrinsic valuation.  
• On cash flows, we will focus on why accounting inconsistencies (on dealing with R&D, leases and other items) can lead to misstated earnings and how to fix those inconsistencies, examine what should and should not be included in reinvestment (capital expenditures and working capital) and what to do about stock based compensation.
• On growth, we will start with the easy cases (where historical earnings growth is a good predictor of future growth) but quickly move on to more difficult cases (of companies in transition) and to what some view as impossible cases (like estimating growth in a start-up)>
• On terminal value, the big number in every DCF,  that can very quickly hijack otherwise well-done valuations, we will develop simple rules for keeping the number in check and put to sleep many myths surrounding it.

We will apply intrinsic valuation to value companies across the life cycle, in different sectors and across different markets. We will value small and large companies, private and public, developed and emerging and discuss how to value movie franchises (like Star Wars), phenomena (Pokemon Go) and sports teams. We will talk about why start ups can and should be valued in the face of daunting uncertainty and how probabilistic tools (simulations and decision trees) can help.

About half way through the class, we will turn our attention to pricing assets/businesses, where rather than build up to a value from a company's fundamentals, we price it, based on how the market is pricing similar companies. Put simply, we will shine a light on the practice of using pricing multiples (PE, EV/EBITDA, EV/Sales) and comparable companies not with the intent of improving how it is done. We will also talk about why, even when you are careful and take care of the details, your pricing of a company can be very different form its value.

In the last segment of the class, we will stretch our valuation muscles by talking about how option pricing models can sometime be used to estimate the additional value in a business, such as undeveloped reserves for a natural resource company or expansion potential for a young growth firm, and sometimes to value equity in deeply distressed companies. We will close by looking at acquisition valuation, where good sense seems to be in short supply, and how understanding value can be critical to corporate managers.

Want to sit in?

If you are intrigued or interested, you are welcome to sit in on the class (online and unofficially). While my immediate attention will be reserved for the Stern MBAs who will be registered in this class, you will have access to all of the resources that they do, starting with the lectures but also extending to lecture notes, quizzes/exams and even emails. The bad news is that I will be unable to grade your work or give you a certificate of completion. The good news is that the price is right. There are three ways in which you can join the class:

1. My website: The most comprehensive and most updated center of all things related to this class at this link. You will find the webcasts, lecture notes, past exams, reading and even the emails I send on this class here.
2. iTunes U: Just as I am not an Excel Ninja, my capacity to deal with html is primitive and my website's design reflects that lack of sophistication. If you prefer more polish, you can try the iTunes U app in the Apple app store. It is a free app that you can download and install on your Apple device. Once you have it installed, click on the add course and enter the enroll code FER-SFJ-AKA. Like magic, the class should pop up on your shelf. If you don't have an Apple device, you can get to the course on your computer using this link. If you have an Android device, you can use a workaround by downloading this app first. Like all things Apple, the set up is amazing and easy to work with.
3. YouTube: The problem with the first two choices is that they presuppose that you don't have a broadband constraint, perhaps a phone internet connection or worse. My suggestion is that you use the YouTube playlist that I have created for this class at this link. The nice thing about YouTube is that it adjusts the image quality to your connection speed. So, it should work in almost any setting.

Since I have made this offer for almost 20 years now, predating the MOOC boom and bust, I can offer some suggestions. First, it is a lot of work to watch two 80-minute lectures a week, try your hand out at working through actual valuations and finish the class in fifteen weeks, if you have other things going on in your life (and who does not?). My suggestion is that you cut yourself some slack and take more time, since the materials will stay up for at least a year after the class ends. Second, watching a lecture online for almost an hour and a half can be painful and for those of you who find the pain unbearable, I do have an alternative. A couple of years ago, I created an online version of this class, shrinking each 80-minute session into 10-15 minute sessions and this class is also available on my website at this link, on iTunes U at this link and on YouTube. Third, whichever version of the class you take will stick more if you pick a company and value it and even more, if you keep doing it. 

The End Game

I would love to tell you that I live a life of serenity and that I am sharing for noble reasons, but that would not be true. I am sharing my class for the most selfish of all reasons. I am a performer (and every teacher is) and what performer does not wish for a bigger audience? If I am going to prepare and deliver a class, would I not rather have thirty thousand people watch the class than three hundred. If you get something of value from this class, and you feel the urge to repay me, I will make the same suggestion that I did last year. Learning is one of those rare resources that is never diminished by sharing. So, please pass it on to someone else! See you in class!

Links

1. Entry Page for the Valuation Spring 2016 (on my website)
2. Webpage for the Valuation Spring 2016 class webcasts (on my website)
3. iTunes U for the Valuation Spring 2016 class (Enroll code on device: FER-SFJ-AKA)
4. YouTube Playlist for the Valuation Spring 2016 class
5. Webpage for Valuation Online class (short sessions)
6. iTunes U for the Valuation Online class (short sessions)
7. YouTube for the Valuation Online class (short sessions)