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It feels like it was yesterday that I went online to do some research on Master of Finance programs in Germany. My “highly comprehensive” research consisted of googling “best Master of Finance program in Germany”. Convinced of my decision, and being well-aware of my own cognitive bias towards satisficing – not all of us are Econs after all – I applied for only one school (not recommended – but hedging wasn’t part of my vocabulary back then).
Just over two years have passed since then and I feel I could be of help to those of you who are 1) thinking about doing a Master of Finance degree, or 2) are already enrolled, but still don’t have a clear idea of what is likely to come. So let’s get to it!
By the time I turned in my thesis, I had a full-time job, I was working on a start-up, and my wife had just given birth to our daughter. Again, I don’t recommend this setup, but there are some things in life you just can’t control! As it turns out, the thesis was delivered safely (read: in one piece) – although I did have to ask my 4-week old daughter to help me write my conclusion – my thesis supervisor must be thinking: “Ah, that explains it”.
On a serious note, you have probably already been told about the importance of starting your thesis early about a hundred times. I want to go off on a tangent here and give you a different piece of advice: Start early!
I mean it, if you care about your grade, and if you plan on using your thesis as a springboard to the job market after you graduate, “winging it” is just not an option. Trust me, you will thank me for this!
It’s a tough world out there! If you want to make sure you are employed after graduation, make sure you do your homework. What exactly do I mean?
The world would be a much better place if only we could follow the advice we freely give out to other people. In this case I have to say I did and I think it really made a difference. I am now working full time in private equity, and I like to think that my preparation had at least some say in it.
If you are enrolled in a pre-experience Master of Finance, it is perfectly normal for you not to know exactly what you want to do after you graduate. That is totally fine, as long as you try to figure that out during your program. You don’t have to have a definite answer, as most of us go through life wondering if there might have been a better choice, but you should at least have a general idea. The best way to find out is by trying to talk to as many people as you can that are currently working in the industry (surprise, surprise!). They can usually tell you details about a certain area of finance that you won’t find in your textbooks. So, before you go to an interview and stutter your way into a rejection because you were not able to answer a simple question, make sure you know what your areas of interest are!
It is true that, when it comes to putting financial theory into practice, Frankfurt School might be just as good as it gets. I am not advocating that you don’t learn what your professors teach you in class. On the contrary, what you learn in a Master’s program serves as a very good foundation, allowing you to quickly grasp what needs to be done once you enter the job market. What I am saying is: do not try to impress your peers by showing how much you understand DCF. Be flexible and be prepared to change your mind.
Need proof?
Here is a great Financial Times article about the flaws of DCF valuations when used for infrastructure investments. The author argues that DCF assumes that cash flows over 20 years are deemed irrelevant for DCF purposes. In fact, in school we tend to just calculate the terminal value of projects after anything over 10 years. Yet, the value of infrastructure projects, which can last for much longer than 20 years, are still being calculated using DCF models. The author also argues about the difficulty in capturing both the time value of money and the risk of a project in just one number (the discount factor).
So, if you have a job that requires you to calculate the value of infrastructure projects, make sure you don’t only have eyes for the DCF model!
Let’s face it, if you are a student, time might just be your only asset! So make sure you use it wisely! Get involved with student initiatives; learn something on your own, such as a programming language; sign up for an Ironman race; try building a startup. Anything! Just don’t waste your time!
After becoming a parent, I realized just how important your time is. For me now, any hour spent doing something, is time that I am not spending with my family. So I try to use my time as efficiently as possible. Don’t wait until you have to change another human being’s diapers! To make sure I practice what I preach, I started a podcasting company a few months ago called The Wall Street Lab. We don’t yet know where it will take us, but what have we got to lose?
I wanted to end on a positive note after telling you so many things you shouldn’t do! Enjoy your time as a Frankfurt School student. Cherish those great moments of solitude
in the wee hours of the night while studying for a Vilkov exam. Learn how to love Aldi’s food next door and memorize what the bread machine says when they run out of pretzels – ihr gewünschtes Produkt ist heute leider nicht mehr verfügbar! Consider it a compliment when the cleaning people start wondering if you actually live in the library.
I could go on and on!
Life outside of school is great, don’t get me wrong! But I graduated just a few months ago and I already miss every minute of it.
This might be my last post for Frankfurt School. I want to thank Frankfurt School for allowing me to give back. I hope I have been helpful to some of you. If I was, make sure to leave a comment below or give it a “thumbs up”. You can also contact me directly at severinol@outlook.com if you have any questions.
Happy Studying!
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