Thursday, July 31, 2008

Easy money

I ran into this fabulous Cole South blog via Andrew's, and frankly I was amazed at some of the discussions and strategies that Cole has. For a novice like me, the blog is an absolute goldmine.

For the uninitiated Cole South aka CTS is one of the most feared high stakes online cash game poker player. He is 24, an undergrad at Cornell (or South Carolina i forget which), and had reported earnings of 1 million USD+ in 06 and 07 (solely from online poker, he doesnt play live much).

Since a picture speaks a million words, here is one of his daily earnings graph (click to enlarge, y-axis is earnings and x-axis is number of hands played):

He has averaged 100k p.m. almost like clockwork over the past few years.

Sigh !!!!

As an aside here is another inspiring story of my favourite student-poker player. Gaucho is a great friend of mine and an absolute beast of a poker player. He is currently on a mini sabbatical from poker having recently joined one of the premier law practices in NYC (not to mention a marriage is on the cards as well) . He financed his NYU law degree (200k+ in student loans) via his poker exploits. He used to play in one of those really big poker games in Long Island with high-flying IBankers, HFund-managers, lawyers and cardiologists and absolutely raped them. It was fascinating to hear his stories about how these super-rich guys used to sit down with bundles of 5k wads and there was dear old gaucho, the poor NYU student all ready to dish out anal rapings !! Incidentally one of these houses where this game took place was (is) owned by his current boss, which is where he got his job offer from, after one of the anal raping he dished out to him obviously. Talk about networking !!!!

Time for more sighs !!!!

In other OMG news: I have taken on 2 new poker students for August. That makes stuff even more hectic as both of them have booked up three 4 hour slots each for the upcoming week. But both of them seem very very sincere and keen on learning and picking up some of the stuff as well as plugging some obvious (and not so obvious) leaks in their game (I spent a couple of hours today watching them play), so in a way it should be fun working with them.

Friday, July 25, 2008

Stop that---be serious

Ok after jerking around in some of the earlier posts lets move on to some serious topics for a change.

(1) Many many thanks to those readers who emailed me with resume/essay swapping and peer-reviewing suggestions , but unfortunately for you I am not a 09 applicant, I am a 2010 applicant. So you would have to make-do with somebody far less briliiant than me. And for the 5 of you who sent in your million word long essays, I will try and go through them over the weekend and get back to you, but remember the operative word here is TRY. I am already doing sessions with 2 of my closest buddies (09 applicants), and dont really have much time.

(2) The majority of the coming one year will be spent, from an MBA point of view, on building a community service track record, something which I feel is an utter laggard on my resume. I have started as a volunteer computer instructor for underprivileged kids with Salvation Army, and already the shit has bored me out of my mind (4-6 fucking hours every weekend and when my weekends are tied up I do after hour weeks, talk about the fucking pain, but apparently com-service is a big deal with the stupid fucking adcoms, so screw me) . On a brighter side, the only available alternative to comp-literacy-nights right now, with Salvation Army atleast, is Bingo-nights with elderlies, so in a weird way I should be thankful.

(3) My interest is in Sales and Trading/buy side of finance (sell side is for dummies if you want to know the truth), but I am sure that each and every adcom in this big bad world will scamper for the nearest trash-bin if I dare mention a word of that in my apps. So, instead, I'll weave mind-blowing consultant stories (with the obvious energy focus (core competency), b-schools love the energy buzz words these days) in my apps. But then assuming I get into an MBA (I'm pretty sure I would), come interview time those buy-side hedge funds will again make a beeline for the trash-bin with my resume. Hence I decided to get a CFA level 1 (date is June 09) before starting an MBA. An year is time enough for that I hope.

(4) Euro schools seem to be out for now, as my girlfriend is doing her phd in finance in the US and shes going to have my ass for lunch if I mention that I am apping into euro schools, London though looks very very promising (maybe I should go beind her back and apply to Euro schools anyway, one of her friends did get into E&Y, london after her phd, something to think about, but for now "sweetheart only US schools" is my official girlfriend-pleasing tagline).

(5) The GMAT is set for Dec, it shouldnt be a big deal, as far as I can tell.

(6) I dont wanna be in serious debt when I go for the MBA, hence poker must account for 80-90k in the next 20 months to help pay for my BS-elevating vocation. Looks very doable at just about 5k pm (time permitting).

In today's OMG news: I crushed wed's live poker tourney for about 1k and chump-change.

/end of serious post, back to work

As an afterthought: Most b-schools keep on recycling and spitting out the same essays year over year, how come serious applicants then find these so nerve-rackingly tough??? I mean if you know 90% of what you are going to asked in an exam, atleast an year in advance, shouldnt you be ace-ing it?? Seems logical.

Thursday, July 24, 2008

Why an MBA, goddamit WHY NOW????

Always asked and probably the most common Q for an MBA, and along with that something that people/blogs/adm-consultants/your-next-door-neighbor-and-his-maternal-uncle-from timbuktoo spend the most bytes (sonic and binary) discussing about.

And thereby, progressively, adding more and more rationale/theories into the already 1 billion (could be 1 trillion) strong "why mba, and even the more foreboding why now" case-book.

Apparently plentiful of soul searching is required in order to answer this question, which creates a major hurdle for people like me. People who either lack a soul or do not have the means to search for it.

So this post is meant for us, that particular group of "me, myself and us- who would rather leave the soul-searching business to the afterlife".

So without further adiue, here are the much anticipated answers:
Insert drumrolls, fireworks and make for a dramatic entrance

Part 1--> Question:Why an MBA?
You are not bill gates neither are you steve jobs, meaning you can never on your own, in your backyard garage, come up with a product design/idea(s) that would change the face of the world and in the process make you a shitload of money (which you can then dump off to charitable foundations, to the utter and complete disgust of your children). Hell you arent even Steve Cohen, you are sure you dont have the skills, confidence, know-how to learn managing and making tons of profit on big money. But you know that you like big-money and even bigger and fatter paychecks. And thus, lacking the brain-power/intellect that most successful greats (as a simple statistical enquiry try and look up the % of MBA who have actually made a path breaking product/company) have, you realize that there is just one way you can atleast get a chance to pretend to be a great-one. It is by increasing your bullshit quotient and having an official tag for that aka MBA FROM AN ELITE SCHOOL.

I kid you not, when I tell you, that this is your one and only meal-ticket to be a Bill Gates/Warren Buffet impersonator of the future.
And anyone who tells you otherwise, in the form of sentences that go "I want to see myself in an advisory/consultant role for bigger and bigger companies and thereby change the way the corporate world operates" or "OMG it turns me so damn on when I dream about helping clients seal M&A deals", are plain and simple lying. The MBA is their one-and-only ticket to green-villa.

So stop searching for your soul, realize you like the color green, cut the bull and start spinning your tales, and dont forget that you are mother teresa (community service), isaac newton (acads, not einstein, einstein you see didnt have a college degree, thereby debarring him from the mba admission process) and jack welsh (industry leadership) rolled into one. I know I am.


Wednesday, July 23, 2008

Blaaaahh !!!

I had a horrible monkey tilt session in poker yesterday. On the weekdays, I usually play in the nights mainly on Full-Tilt , and yesterday I proceeded to drop ~5kish+ in less than 90 mins to an absolute donkey in Heads-up (one-on-one, for the poker uninitiated) cash at the $5/$10 No-Limit level.

Needless to say I am mega pissed. I am still up about 10kish for the month on the back of very little paying time, but the bottomline is I AM PISSED and ON SUPER MONKEY TILT.

Anyway, I'll be playing (well atleast planning to play) three live tourneys this week (live tourneys are by definition 1000-X-easier than online ones, as live players are god-awful horrid BAD, and have no idea of even the extreme basics of tournament poker strategy):
(1) Today: a rebuy tourney, rebuys are mega fun and complete donkfests.
(2) Saturday: $250 buy-in tourney, 1st place is about 4-5kish, I should win this if for once my AA>J8o
(3) Sunday: $100 buy-in tourney, 1st place is about 2-3kish, I have won this thing about 4-5 times this year and depending on my tilt-factor I should win this one too.

But for today its BLAAAAAAAAAAH.
F Poker. Bring on the MBA apps.

In other OMG TILT news: the bullshit rally in stocks continue, for the second week now. Stupid Wachovia Bank (WB) has rallied from a low of 8s to the 18 in less than a week (brace yourself for this) on the back of a mere "5 billion USD loss". The whole fucking nine-yards of those shitty banks and the fin sector (ETF XLF), with the help of those dastardly stupid Feds , have rallied upwards of 35% in one week (apart from GoldmanS which is dropping faster than a hedge fund on cocaine), while 5 of them who've reported earnings this Quarter have declared collective losses to the tune of "just 12 billion USD+". Not to mention even the stupid retailers are rallying.
It is official : Reason has no place in today's market anymore. I still like shorting here, even though we seem to be in a weird bull market anchored by bullshit sectors. I like SKF, FXP here.

Disclaimer: On life tilt, 30% cash position

Saturday, July 19, 2008


strength: top ug school (7.2/10), top grad school in discipline (3.8), widely published in leading journals lending credibility to acads (UG gpa maybe low, but i can manage that, especially with my publications, anybody have any comment on the relevance of publications in leading journals to academic strength)
weakness: dropped out of THE top phd program (have story)

Serious XC: sport: poker.. stellar 3 year performance track record, winner of numerous big field-large prizepool tournaments all over the place including important world poker tour circuit events, stories aplenty
community service: computer teacher for underprivileged kids (4 hours/week) with salvation army
weakness: no leadership exp in XC (impossible really with an individual sport like poker and a teaching volunteering activity)

Career: strength: good progress, developed several leading cutting edge technology with direct and very visible impact on company's bottom line , related to this worked on atleast 2 of the company's most important projects in the past 1 year, atleast one HUGE project obtained by company on the merit of technology developed
weakness: no traditional leadership exp, could be typecasted as tech (and no not software/IT)

MBA essay underlying theme: Career changer.

And that is that... in a nutshell, comments, critiques, observations welcome.

Thursday, July 17, 2008

A hedge fund in action

Hedge funds are usually passive position holders, meaning that even though they might have a pretty decent stake in a company, it will not usually use that stake to try and take over boards (unlike say the Jerry Yang/Yahoo board versus Carl Icahn ongoing saga), though it will of course keep a big bad eye on the operations of its bigger holdings. What this essentially means is that a hedge fund is a "passive investor" and not an "active" one. However, hedge funds, are trading entities and seldom will they let a good trading opportunity pass.

A recent development occurred in a commodity play in the US equity market this week that shows how hedge funds can suddenly turn active investors in search of a very profitable trade and thereby hurt the retail/individual investor heavily.

The background: Yesterday Cleveland Cliffs (CLF), USA's biggest iron-ore producer announced that it would acquire Alpha Natural Resources (ANR), USA's biggest coal exporter, for 8 billion USD+, the offering included a 35% premium on ANR's current share price.

Now those who follow the market will know that commodities are in a bull market and both these companies have been flying fast and high over the last 1 year. So obviously when these two top dogs decided to merge, shareholders expected a huge surge in the price pf both.

Hedge fund comes in: But curiously after a small rally, ANR's shares started to plunge in an alarming rate and as of today ended up trading lower that CLF's, completely confusing me and all other individual/retail investor, as this completely defies all logic. A company offered a premium over its current share price, cannot by any logic trade below that price.

Well on further digging we found that
Harbinger Capital, an Irish based hedge fund, which owns 18%+ of Cleveland Cliffs - informed the co. they were going to be fighting it. That is they believed this deal to be against CLF's interest and suddenly turned an "active investor" from a "passive one", creating a huge short opportunity for the big money (hedge funds) causing the price to plunge.

The follow up play after Harbinger's decision for hedge funds would be --->Short ANR--> ANR plunges-->make profits on the drop in ANR due to this decision--> get out of the short position with a killing--->explains the complete weird stock price behavior of ANR

Hedge fund's fundamental trait: Remember, that unlike a value investor like Wbuffet, HFs have no interest in improving a company's operations and such things, they are in there to make profitable trades. And this sudden filing made for a perfect trade. Moreso if you understand that this deal would ,infact, have been a booming winner for CLF !!

Moral: Follow the big money, follow where HFs are going in and out of. But right now the HFs are really working in a weird and unpredictable manner, mainly because the downright wretched US market has completely spooked them and most of them are losing a LOT in this market, something which their investors are definitely not going to like. Remember HF investors are wealthy affluent folks (high net worth individuals) who put in obscene amounts into these HFs and therefore the HFs have to work under tremendous pressure to generate big returns for them or else have those funds pulled out , even in shabby bear markets like we have now. It is pretty funny to track these HF panic buys and sells in the current bear market. The trades are downright whacky !!

Now for the million $ Question:

OMG HowTF is this relevant to my MBA: For somebody interested in the buy side of finance, understanding of the market is almost a necessity. You cant just land up in B-school, and suddenly become a star trader overnight. Like any sport, learning trading and way trades are being done is a long drawn learning process with a fairly steep learning curve, not an overnight "stock -pitch" cram.

Disclosure: Long ANR in personal account

Monday, July 14, 2008 and poker

I got into an interesting discussion last week as to whether the market is actually beatable by retail investors (or hedge funds and mutual funds for that matter) in the long term. The basic idea that my friend was trying to push through was that it is NOT BEATABLE. Majority of funds and even a bigger majority of the retail investors are either market trailing or will probably return at best the index's performance. He describes it as being a game of chance and those that are making money just happen to be on the positive side of variance.

In some ways I agree and disagree with him (more disagree ob). The market by nature and like poker is a game of incomplete information. Unlike, say chess, the information set needed in either poker or the stock market is not complete. Thus it is almost impossible to design a sophisticated algorithm running on a supercomputer with a teraflop performance that can play profitable poker, while Deep Blue and its cousin Blue Gene can always give Kasparov a run for his money.

I will try and highlight what I see as the biggest problems and of course potential remedies while trying to beat the market. I will talk primarily about hedge funds and retail investing, not about Mutual funds, as they have a bit of a disadvantage, being primarily LONG (but there are some top notch ones out there, Ken Heebner's CGM group of funds).

Now money is there to be made both in poker and the market. But key for both are the following:

(1) Bankroll management: This is absolutely critical. Bankroll management essentially refers to managing you roll/money/AUM. People get greedy and start placing bets way over their heads or way over their AUM limits via crazy leverages. The hedge funds that go down the drain and return 0$ to its investors for every $ invested are primarily guilty of this (and right now hedge funds are going down like pinballs) . It is hard to believe that funds supposedly run by such smart folks can make such horrible calls and place such atrocious bets. A recent case of a hedge fund's misfortune is this. The reason for the collpase of this family of hedge funds, Horizon funds, is the insanely crazy leveraged risks that the fund took. In some cases they were leveraged at 12:1 or more. While such huge leverage will print money in the first few years (Horizon returned 40% for the first 2-3 years) but it is a sure shot recipe of disaster (net assets turn to ZERO).

Another more bigger fall that highlights the poor bankroll management that hedge funds tend to practise is that of JWM Partners launched by Meriwether of Long Term Capital Management fame (i mean absolute infame). LTCM if people remember is that crazy hedge fund that was a yester-year bears sterns meaning that it was so big that it could not fail and had to be bailed out !! Details here. Now after the LTCM debacle Meriwether and his cronies having not learnt an iota of a lesson from thier past debacle, this time went about placing leveraged bets on mortage-related securities. And well once again they are close to being history, having pumped into the gutter more of investors' wealth (approx 1.4 billion). The story here.

(2) Atrocious bets: By definition a hedge fund is supposed to hedge risks, a market neutral hedge fund for example must always be that---> market neutral. But the reality is of course a bit more distant from that. Hedge funds are known to place some heavy and I mean really heavy bets on SINGLE POSITIONS, and in most cases via their star traders. So whatever the prospectus say, these HFs make some sorry ass bets that can turn against them faster than you can say bob's my uncle. Amaranth Advisors for example (I am choosing the famous/infamous ones here) had 50% of its portfolio (starting AUM of about 5-6 billion USD) bet on natural gas via their star commodity trader Brian Hunter. Such brash bets made huge returns in the first couple of years but then in one week of trading that 50% position dragged Amaranth's AUM down to 4.5 bill from 9 bill causing the fund to collapse.

I have heard and read that discpline is one of the first thing that a trader in a fund is instilled with --> Hedge your risks, dont fall in love with your positions, dont take leveraged risks, exit losing positions fast etc etc. But reality shows that discpline is something that the majority of the funds lack. Black Swans are supposedly once in a lifetime happening, but these days it happens once a few months !!! So for an outsider or an investor who sees these collapses, it is quite natural for him to turn extremely sceptic. But of course there are some good ones out there (though it is getting increasingly difficult to find the good ones) , SAC Capitals for example. But hedge funds can get bad to worse really fast when they forget the basic underlying principles of maintaining strict trading discipline and not making crazy bets (though it is very common, and driven almost exclusively by gut wrenching greed).

As for me Sales and Trading still remains a potential career option and poker continues to remain profitable. I am up over 20k YTD on the back of very very limited playing time. Touch wood.

Ooops this has turned into a huge post, part 2 later, part 2 will be for the retail investors..... one last parting word ---> there is nothing like self-learned knowledge, Wbuffet spends 99.9% of his time doing nothing but reading 10ks and 10Qs and prospectus.

Friday, July 11, 2008

CFA Level 1

I have decided to take the CFA level 1 exam. This could be a spur of the moment decision, but it would be very helpful to pass level 1 before I start apping for B-schools. I am targetting the June exam date. At this point I have little idea about the content, but it surely is not rocket science. I am expecting a 6 month prep time for the level 1 exam maybe more for someone with no-finance background.


Sunday, July 6, 2008

Are star fund managers and traders MBAs?

Are they MBAs or do they have a much more solid background in finance or econ or maths (PhDs). My belief is that star managers (and star traders) working with small teams (eg Ken Hebner of the CGM fund group and the infamous Bryan Hunter, probably the greatest trader the Wall Street has ever seen, who was the energy desk chief of the now bankrupt Amaranth Advisors Hedge Fund) have to have a much more stronger foundation in finance/econ/maths than what the MBA courses usually offer.

I am not at all convinced as to whether MBA fin courses gives the correct/desired training for such careers. For starters they tend to be the over-simplified or the broad-overview kind. When I was at Stanford a bunch of my friends were in a Masters in management program and they had these required cross core-courses from the MBA program like corporate finance, DA, accounting and so on. And frankly, having a math heavy background I found those courses naive at best, due to the simplicity in the actual maths involved. Accounting is of course jargon heavy and once you get that straight, the rest is a walk in the park. DA which was probably the most feared course is also in reality a pretty simple one. One peculiar thing about DA though, is sometimes it doesn't exactly follow the probability laws (especially Bayes' Theorem) !!

And now I see my girlfriend doing her PhD in finance and the mathematics is extremely involved. A pretty decent grasp of real and complex analysis is almost mandatory. Theories developed on Mutual funds, ETFs and the varied kind of investing methodologies (value, growth, momentum) are very very math intensive. For example the starting point in the Stock market for fin/econ grads, the Black-Scholes model for option pricing, is stochastic to start with. It needs random walk kind of solutions (something like a Monte Carlo simulation for example) as it cannot be solved in a closed form deterministic manner. That makes me wonder whether MBAs going for their fin specialization actually have the expertise to deal with such sophisticated maths or do they stay more in the overview plane. If they do stay in the overview ball park, then how the heck do they perform their corporate jobs ?? Wouldn't an econ/fin PhD be a much superior analyst/trader simply because they have a much more thorough grasp of the subject matter.

And then I also hear of the numerous models that I-bank newbies/interns need to run on a daily basis. And curiously most of these models that they run are done with Excel. Now I have always believed (instilled by my co-advisor at Pennstate) that Excel is the stupidest black box that Bill Gates has ever designed (it is dumber that Windows, if you know what I mean). So what models do these I-bank whizzes run??? No sophisticated heavy duty modelling (especially stock price modeling which is a highly non-linear problem and notoriously unstable to solve) can be run on a single node PC on excel. All known computational and computing laws would be severely violated. I have exactly one friend in I-banking so I dont know the answer to these modeling thingy that they keep talking about. But I have some friends over at motley fool who are analysts for motley fool in their stock picking business, and they shared a model-running exercise of theirs.

I'll walk you through it since I presume that these are the typical Excel models that I keep on hearing about. The thing here is that one of their top equity holdings X has taken a severe beating, and they want to analyse whether buying more of this X at today's prices would yield a S&P 500 beating profitable return in the next 3-5 year time frame. So heres what they model in essence ( I highlight in red my comments from some feedback):

1. Trailing 12 Month (TTM) Revenue = $217.9M (from balance sheet)
2. Estimate 3 yr. Revenue Growth = 11% (Different bunch of numbers are plugged in for this based on their estimate/forecast depending on a myriad of macro-economic conditions, this is their estimate and not a hard data point)
3. TTM Revenue in 3 yrs. = $217.9M * (1.11^3) = $298.0M
4. Estimate Net Profit Margin =9.5% (Again Different bunch of numbers are plugged in for this based on their estimate/forecast depending on a myriad of macro-economic conditions, this is their estimate and not a hard data point )
5. Net Income in 3 yrs = $298.0M * 0.095 = $28.31M
6. Current Shares Outstanding = 6.4M
7. Estimate Share Dilution Rate = 2% (per historic levels)
8. Shares Outstanding in 3 yrs. = 6.4M * (1.02^3) = 6.8M
9. Estimate EPS (earning per share) in 3 Yrs. = $28.31M / 6.8M = $4.16
10. Estimate P/E ratio = 12 (This is reasonable for current growth level of 11% and 25% in favorable times. The P/E ratio might be higher, but let’s stay on the reasonable side, more different values to test here.)
11. Estimated Price in 3 Yrs. = $4.16 *12 = $49.92

Once they have a price target calculated they then go for potential return calculations based on current prices, essentially to identify favorable buying points:

Let’s look at buy target prices:

Expected Return Buy Target
--------------- ----------
15% $32.82
20% $28.89
25% $25.56
30% $22.72

And that in essence is a typical stock analysis. Not rocket-science level by any means is it, but almost wholly common-sense and logic driven. And then they add layers of complexity to this to come up with a ton of scenarios and potential outcomes/risk/profit analysis etc. I am beginning to think that this is what Excel modeling is all about. Correct me if somebody has more know-how on this.

Now hedge-fund traders though are a very different breed and I know for certain that they crank up huge computational power/time (statistically the biggest user of computational power in the US are : (1) defense (2) oil and gas industry (3) finance ) crunching sophisticated algorithms to come up with buy/sell triggers for equities/options etc. And again it is my feeling that the MBA wouldn't be a good fit here because of his over-view based background. But he might be a good interpretor of the numbers that hedge fund computers crunch out, but such interpretation skills can come from pure experience, why do an MBA for that?

While I was pretty excited about I-banking (particularly portfolio mgmt/Pvt Equity/Trading) some time ago, but I strongly feel that an MBA is not an adequate training enough to make someone a star fund manager, which is where I would have wanted to go to if I had opted for the fin route. As of now I am sticking to consulting where arm-waving has been made into an refined art.

Saturday, July 5, 2008

OMG -The economics of an MBA

One important question that well settled professionals have to be think about before their MBA apps is the economics of the whole thing. Cos, barring those ludicrous few who would want to join the peace corps in Africa at minimum wage, most MBA applicants are looking for a substantial pay-hike, post MBA. So lets get some numbers going.

I will stick to the oil and gas space cos thats what I have been doing in grad school and then at work (for a combined total of 6 grand years). For this simple exercise I'll use MK as an example. MK is one of my closest buddies, we went to undergrad together, we were room-mates in the first year at undergrad, we applied to US grad schools together, and to top it all like me MK works in Houston in the oil and gas space for the past 3 years, with one of the 5 biggies. MK was contemplating an MBA last year after 2 of his office-mates got their Havard tickets. But after some fairly large amount of thinking he decided against it, from a simple economics stand point. Heres his arguement against the MBA:

(1) Cost of MBA in a top school : 120k
(2) Loss in salary for 2 years : 250k
Loss : 370k

Expected mean/median/mode salary package post MBA: 120k
Salary package at current job in 2 years if no MBA: 135k
Salary loss at end of 2 years: 15k

Loss in 2 years: 385k
Loss in Matching 401K @7% of salary/annum: 17k
Loss in 2 years: 400k
Actual Loss (amount he would have saved in those 2 years): 190k
(20% savings+120k mba cost+401k contributions)

Assuming he continues to save post MBA, and he can save on avg 30k/annum, he will break even only after 6 years. This is a bit of an unknown part of the equation as salary projections post MBA in terms of growth rate is not something I am too familiar with, so I have just assigned 150k as an avg for the first 7 years post MBA. But for those 7 years that ~200k which he lost in his MBA would have grow to about 400k on a 10% compunded basis. If you tweak the numbers even further and put in the fact that for each of those 7 years he would be contributing an additional 25k per annum, the number stands at 660k.

Yes you read it right thats -660k USD.

No wonder he isnt planning on doing an MBA.

PS: If you are wondering about the accuracy of the math, assign 40k in savings per annum post MBA for the first 7 years, and use a compounding rate of 10%.

Next post: Do MBAs make good analysts in the stock market in other words do they have the expertise to be a good analyst or is it more jargon bombarding and fancy verbosity of the obvious is what they do??

Friday, July 4, 2008

Consulting for the non-consultants in the goals essay--Primer

I dont know if I would ultimately want to do consulting, but being one of the most sought after post-mba professions it would be good to spend some time analyzing the whole nine-yards of the consulting buzz from an applicant's point of view, applicant being some-one (like me ) who wasnt working for even an unknown consulting firm, let alone the biggies, when the mba bug bit him square on his/her's ass-cheeks.

Premise: Say you do want to project consulting as at-least a short term career goal in the "goals/career path" essays.

With this premise we will try and build up the bullets/pointers/core to the goals essay.

There are really two issues that you have to address, once you have actually decided to put on the I-want-to-be-in-consulting arm-badge:
(1) Past work-ex and its relevance to consulting
(2) Long term career goal statement with consulting as your near/short term goal.

To answer (1), what you basically need to do is somehow relate your current work to some critical functioning of a major sector (a sector that consultants work on/with in a pretty regular manner). Now this so called "relating" is obviously key and not very trivial. Say you are an IT professional (and no I am not that), then the obvious way to tackle this problem would be to say that you want to do consulting in the high-tech sector. You can then bring in you current work expertise and things such as you have worked on such and such high-tech projects before for so-and-so client ( but you must remember here that providing IT consultancy is not very high-tech, most IT projects tend to be back-end "needed" support at best, the adcoms by now know this, so you need to be careful about your frame-work and your verbosity here, you do not want to come up against that Google engineer who actually has been working in cutting-edge tech, but now wants a mba, with a consulting focus).

You therefore need to do a bit of digging. You know what your current job is (IT-consulting), but you would want to get involved in more/all of the consulting opportunities in the high-tech sector, not just limit yourself to providing IT solutions (why now mba part comes in, standard I guess). And in comes your research/material digging up skills. You need to find out what high-tech consulting is all about, find close to everything they do which would be a comprehensive list and then choose/select functions to highlight in the essay that ties in a direct/obtuse way to your current work. Some pointers for this year's IT-to-consulting applicants as to things you might want to highlight/think about depending on your background:
(1) Changing macro-economy under which hi-tech companies must learn to operate-- shrinking margins, emergence of newer and newer competitors.
(2) Need to say technologically competitive to stay ahead of the competition. This is probably something that all in IT-to-consultant-applicant should highlight as they have direct experience in developing competitive solutions in short times for their clients. (translation: you have been in the shoes of your future customers, you know the environment, culture, work ethics and would be ideally suited for lending consultancy advise).
(3) Retainment, hiring, responsibility allocation to top employees.
(4) Consulting on new products/technology/innovation and everything involved with it.

The list could be huge and some research would help you find things that consultants do that it almost a perfect fit for your background, and that is what you need to highlight. Everything is available on the net and would take less than a day's research to pick things up.

About the long term goal, well there are two ways to go about it and thats about it:
(a) Stay in consulting and rise to partner, MD level and so known. Again research on what these big dogs do and you can pretty much copy-paste that stuff onto your essays.
(b) Move into an executive/top dog kind of position in the high-tech industries, preferably one amongst the many you have been consulting for. But remember here, that you have to then explicitly state why the heck you dont to join a general management position in the first place.
(c) Some even try and bring out an entrepreneur spin, but remember for that you have to have some semblance of relevancy with your background to make it sound convincing enough.

If anyone trolls into this blog, would like to know whether this approcah is all encompassing and or self sufficient or not, if not would love to hear your feedback o-dear-troll.

Disclaimer: I am debating between consultancy and general management in the essays

Tuesday, July 1, 2008

OMG I want a mba

Top reasons why people say that want a mba:

(1) I will be taking classes with some of the best minds in the world at " insert name like H, K, W, S, C, M, I, R " and will be taught some of the best courses in the world by some of the best professors in the world. OMG!! I cant wait to get immersed in this culture of valued learning.

(2) Two years of networking opportunity with the sharpest minds in the world, past (alumni), present (class) and future (incoming class). OMG!! What more do I want.

(3) I want to move into the decision-makers echelons of corporations, I want to bring in my newly acquired vision of greatness (learnt in my 2 month corporate ethics class) and change the way corporations work forever. From now on, corporate board meetings, will not open with the CEO's perspective on how much value has been added to the stock, but will instead open (and end) with the social work and budgeting details about that project in Congo, Africa, to feed the poor Silverback mountain gorillas. OMG!! Socially responsible corporations.

(4) I will be such a perfect "fit" for again insert name like H, K, W, S, C, M, I, R, their culture, their values, their principles, their ethics is exactly what I have been waiting to be a part of, since the day I sucked on my thumb. OMG!! I can fit in---> atlast.

(5) This is the most beautiful campus in the best city in the world. (Note name insertions should again be done for city and campus). Its almost as if the campus and the city has a life of its own. OMG!! I can now be a part of this great campus and this lively city.

(6) I will now be able to write cryptic blogs for future applicants/candidates/whatever those bulls-ready-for-slaughter are known as these days, about a MBA's life, without mentioning anything in specific, but instead concentrating on jargon bombardment. Key words to focus on : fin, strat, ethics, 1&2, mck, DA, modeling. Never mention companies you work for, or are interning for, or would give your right arm and right leg to work for. I need to be cryptic, I dont know why, but I have to be. OMG!! All this cryptic stuff makes me feel like halle berry in a James bond movie.

(7) Atlast I will be able to realize the true greatness of Bill Gates in general and MS-Excel in particular. I can stun people with my Excel modeling schemes. OMG!! I can actually be part of that group that considers adding rows and columns in Excel as sophisticated modeling.

Top reasons on why they actually want a MBA:

(1) My starting salary could be 150k+. OMG!!

(2) My sign-on bonus could be 50k tax free. OMG !!

(3) Finally I have a brand name to leverage to the hilt. OMG!!! HA-HA-HA (devilish laughter follows)

(3) I have heard most consultants are Platinum level frequent flyers. Now an annual trip to India costs me about 2k in tickets. I think I can get that through my Platinum miles, should throw in the wife and baby's tickets too. OMG!! Sweeeeet.

(4) Dont they have a quarterly-all-expense-paid- company bash at Acapulco? OMG!!

(5) I am no longer an IT-consultant from insert name like Infosys, Cognizant, TCS, Wipro with Goldman-Sachs as my client. I am GS now. I can now be that dick who calls up those stupid IT consultants, every five minutes, and asks for his passwords to be changed.

(6) My ex-boss was that stupid tech jerk. I am his boss now. Payback time.

(7) I hate my current job, I am fucking underpaid and overworked.

(8) I hate my current job, I am fucking underpaid and overworked.

(9) I hate my current job, I am fucking underpaid and overworked.

(10) I hate my current job, I am fucking underpaid and overworked.

Disclaimer: I am not an IT-consultant neither do I work for GS, but I do visit India once a year minus the wife and the baby. Oh and I do develop new modeling techniques, mostly from scratch in C/Java and publish them in journals