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Retrospective: some thoughts on choosing CBS for investing

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Retrospective: some thoughts on choosing CBS for investing [#permalink] New post 18 Jan 2014, 05:37
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I thought I'd write a retrospective post - in the spring, I was lucky enough to be deciding between three great school -- Columbia, Booth, and Wharton -- and ended up choosing Columbia. I wanted to follow up and give people some thoughts on my choice now that I'm about to start my second semester.

Some details: I'm interested in the investment management space - so HFs / Mutual Funds. For other career options, your decision making process and considerations may look very different.

Quick reaction - I am certain I made the right decision.

I'm having a great time and, frankly, learning more than I expected. Big surprise on the upside with some of the courses available in investment management. I took a stats class specially tailored to investors, a focused class on investing in a particular sector, which was taught by a PM and featured CEOs from companies we were evaluating as guest speakers -- all in my first semester. Unbelievable exposure. Next semester, four out of five of my classes will be investing-focused (my choice). Keep in mind, the value investing program doesn't start till the second year, so these are classes available to first years. There's almost no efficient markets nonsense taught here.

Recruiting: lots of job postings for summer and spring internships, with most of the big HFs and long-only shops represented. I am shortly starting a paid spring internship with a good fund I found through the CBS job boards.

New York: the benefits of being in the city underpin all of the other dimensions - access to great professors, good recruiting opportunities, etc. I have found it to be particularly useful for networking - I've been meeting with people once or twice a week and that many of these introductions would never have materialized if I wasn't in the city. It's hard to say how being here will help for any given person, but for me it has led to several serendipitous interactions that opened a number of doors. Because full-time HF recruiting is much less structured than internship recruiting, I think this will provide an even greater advantage in my second year.

Network: CBS network in investment management is unbelievably strong. I've met lots of people in great positions at great funds that genuinely want to help.

CSIMA (the investment management club): great community full of good people. Decent number of events and support - pitch workshops, modeling training, mentorship, speakers, social events, etc.

The core curriculum: hit or miss. Many of the classes are a waste of time if you have a decent business background. Luckily you can exempt most core classes without much difficulty.

Facilities: bad. Classrooms are fine, but finding meeting space for group work is a pain. On the other hand, the library is a great social scene and you can eat and drink in it. Otherwise Uris is showing its age and the new building isn't going to be ready for a number of years.

People: very nice, down-to-earth, smart students. I don't think this is a differentiator vs. other schools, but I've been very happy with the community. The vast majority of people live very close to school and there are lots of social events to keep you busy and connected. You could spend your entire time living in the CBS bubble, and many do, but I choose to split it across bschool-life and my other groups of friends in NYC.

I can't comment on Booth or Wharton in this space since I obviously didn't go to those schools. I will say that when I was deciding, I spoke to many people in the industry about my choices (PMs, senior analysts, etc.). I would say the responses were split pretty closely between CBS and Wharton, with CBS probably getting a little more than half the votes, but that may have just been due to the sample. On these forums, you tend to think the name and ranking matters a lot. Once you start, you realize that at this level, you're splitting hairs choosing among top schools. At least in my world, no one cares if you have an MBA, they care about what you make of it through classes, activities, stock research, etc. So while I won't say name doesn't matter, I can tell you to not be afraid to choose the school you are most comfortable with.

Happy to answer questions about investment management or Columbia in general.

Last edited by Mbainvestor on 18 Jan 2014, 17:24, edited 2 times in total.
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Re: Retrospective: some thoughts on choosing CBS for investing [#permalink] New post 18 Jan 2014, 06:32
One additional postscript: bschool is fun. You'll enjoy it wherever you go. I don't think I have ever met someone who thought they made a wrong choice. So while I'm sure you are all stressed now having just submitted applications, just know that you have two great years to look forward to. I know it's a cliche, but it's true.

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Re: Retrospective: some thoughts on choosing CBS for investing [#permalink] New post 05 Feb 2014, 10:39
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Hey mbainvestor,

Great post. I was wondering whether you could elaborate on the types of people who do well @ Columbia and especially its value investing focus. I also have some personal questions I was wondering if you could opine on.

I'm going to be frank here and say that I come from the financial services industry and was admitted to Columbia class of 2016. I worked in p/e beforehand. Honestly I'm not in love with finance. the people I know who are the best at hedge funds/investment management are those who live and breathe the markets. they are excited by the econometric indicators, the unemployment reports, research commodities, and follow stocks on their own. They research their own investments in their spare time and love doing analysis on finding undervalued stock. one friend took a trip to Asia in order to visit a factory that produced goods in order to research a stock for his own portfolio. In short, these are the people who have a passion for investing, have the smarts, and end up succeeding @ either big name funds or starting up their own small shop and becoming a PM.

Now my question is, what % of people at Columbia are like that, and do you think this passion is necessary for someone going into the industry? From a p/e background I have become sort of disgruntled for finance, but I realize that it certainly pays well and to take on $200k worth of debt, forgoing salary for 2 years, attending bschool is going to be a crap ton of money especially when I could do well without it. Now I will attend bschool but I will either go into the startup route and try to create something (which I am leaning towards) but a part of me wants to just attend a top bschool, studying investments, and just try to work at some hedge fund after school and make $$. Sorry for the frankness but yes, I will be in a job I don't love but at least i'll have the $$ to be happy.

Finally, I am skeptical of value investing, and probably strongly differ in your view. I believe in efficient markets and think that stocks reflect all publicly traded information. All the alpha that hedge funds generate are either through 1) "prestige/herding effect" of big name investors disclosing their holdings - i.e. Einhorn discloses 10% stake in XYZ and shares go up, Ackman says he sold his stake in XYZ and shares plummet, or 2) insider trading (you hear of all those tiger funds/ GLG inside-circle networks), or 3) pure luck. I really don't believe that getting 30% returns YoY is that impressive because 1) you got lucky with a bull market, 2) you took a considerable amount of risk.

So... yeah, any thoughts on the above? (maybe it's easier to chat in private and I can pm you). And finally, I'm happy to hear that you're enjoying your experience @ Columbia. I'll be attending the Columbia Connect weekend and hopefully get a sense of the finance classes there.
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Re: Retrospective: some thoughts on choosing CBS for investing [#permalink] New post 05 Feb 2014, 16:53
Great post to both of you. Would love to hear the reply from mbainvestor as well.
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Re: Retrospective: some thoughts on choosing CBS for investing [#permalink] New post 26 Feb 2014, 06:24
I'm not MBAInvestor but I agree with what he said. I'll give my thoughts on your various questions.

stressedanalyst wrote:
Hey mbainvestor,

Great post. I was wondering whether you could elaborate on the types of people who do well @ Columbia and especially its value investing focus. I also have some personal questions I was wondering if you could opine on.

I'm going to be frank here and say that I come from the financial services industry and was admitted to Columbia class of 2016. I worked in p/e beforehand. Honestly I'm not in love with finance. the people I know who are the best at hedge funds/investment management are those who live and breathe the markets. they are excited by the econometric indicators, the unemployment reports, research commodities, and follow stocks on their own. They research their own investments in their spare time and love doing analysis on finding undervalued stock. one friend took a trip to Asia in order to visit a factory that produced goods in order to research a stock for his own portfolio. In short, these are the people who have a passion for investing, have the smarts, and end up succeeding @ either big name funds or starting up their own small shop and becoming a PM.

Now my question is, what % of people at Columbia are like that, and do you think this passion is necessary for someone going into the industry? From a p/e background I have become sort of disgruntled for finance, but I realize that it certainly pays well and to take on $200k worth of debt, forgoing salary for 2 years, attending bschool is going to be a crap ton of money especially when I could do well without it. Now I will attend bschool but I will either go into the startup route and try to create something (which I am leaning towards) but a part of me wants to just attend a top bschool, studying investments, and just try to work at some hedge fund after school and make $$. Sorry for the frankness but yes, I will be in a job I don't love but at least i'll have the $$ to be happy.

You are asking 2 different questions really. The % of Columbia students like that is relatively small. There are a lot of people here who know nothing about investing and could really care less about the stock market. However for those recruiting for Investment Management positions and those applying to the Value Investing program it is pretty much a requirement. I don't know anybody planning international trips on their own dime for the PA but everybody invests their own money, spends a huge amount of doing research and following stocks. The recruiting process is painful, the value investing program is far more work than other classes and the job involves doing this research all day every day. If you don't have a passion for it I don't know why you would put yourself through that and I honestly do not believe you would be successful at it.

stressedanalyst wrote:
Finally, I am skeptical of value investing, and probably strongly differ in your view. I believe in efficient markets and think that stocks reflect all publicly traded information. All the alpha that hedge funds generate are either through 1) "prestige/herding effect" of big name investors disclosing their holdings - i.e. Einhorn discloses 10% stake in XYZ and shares go up, Ackman says he sold his stake in XYZ and shares plummet, or 2) insider trading (you hear of all those tiger funds/ GLG inside-circle networks), or 3) pure luck. I really don't believe that getting 30% returns YoY is that impressive because 1) you got lucky with a bull market, 2) you took a considerable amount of risk.

This paragraph basically says to me that CBS, and in particular the Value Investing Program, is not the right fir for you. I'm not going to waste time here arguing the fallacy of efficient markets but maybe a Masters in Financial Engineering and going to work at a quant fund would be more up your alley. How are you going to give convincing stock pitches during interviews if you don't believe anybody can pick stocks and beat the market? How will you work at a value fund after graduation if you don't believe it actually works?
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Re: Retrospective: some thoughts on choosing CBS for investing [#permalink] New post 13 Mar 2014, 07:52
I'm guessing this reply may be a bit late, but I'm somewhat confused by your comment. I agree with mappleby - if you don't want to do investing, you'll can still find a home at CBS. The vast majority of students here are not going into that field, though there's a large finance community in general.

If you don't believe in being able to generate alpha, that's fine - but then don't go into value investing. I would hate to spend my life doing something I didn't believe in just because it provided a comfortable paycheck. Plus there's no way you'd be successful in it. The great investors and even the successful analysts live it 24 hours a day. It's not a field where you can "clock out."

That said, I happen to believe that markets are very close to efficient (with the US stock market likely being the most efficient), but also believe there are lots of less developed markets with greater opportunities to generate alpha. E.g., I'd be hard pressed to believe that a frontier market like Vietnam is perfectly efficient. If you want to be an investor, you may want to focus on these opportunities (if you believe in them) or avoid alpha-generating careers entirely and focus on asset allocation / efficient risk premium gathering (smart beta).

Whatever you do, don't justify it for the paycheck: you won't be happy. And if you really care about the $, then keep in mind that most careers can lead to seven-figure paychecks (some more likely than others, sure), but in no industry will you make that kind of money unless you're 100% committed to what you're doing, investing included.
Re: Retrospective: some thoughts on choosing CBS for investing   [#permalink] 13 Mar 2014, 07:52
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