12 March 2013

How to make my brain bigger

I took a class in finance via Coursera a few months ago.  Why?  Because I thought that learning something about what my boss knows very well and deals with all the time would help me do my job a little better.  And because learning stuff for free on the internet?  Totes awesome!

My class was taught by Gautam Kaul of the University of Michigan.  Yep, I was an "enrolled" student at the University of Michigan for a semester!  And (ahem) Princeton for my world history class.

Here's the course description:  This course is primarily devoted to the fundamental principles of valuation. We will learn and apply the concepts of time value of money and risk to understand the major determinants of value creation. We will use both theory and real world examples to demonstrate how to value any asset. 

I loved that class.  And worked my butt off.  I found myself repeatedly saying something I do not actually ever remember saying while I going to University of Maryland on my father's dime: I'd really love to, but I can't -- I have homework to do.  I skipped fun stuff to do finance problems sets (and later to write history papers); I chose watching videos of Professor Kaul and his electronic whiteboard over watching sit-coms or reading; and I pounded ideas about present value and future value into my head*.

It was really fun (no, really, it was) and it made my brain a little bigger.  There's still lots of room for brain expansion so I'm going to take some more courses.

Introduction to Finance taught me the following:

1.  The world runs on algebra;****

2.  Finance is algebra with dollar signs;

3.  Finance includes statistics;

4.  Statistics for finance is algebra with dollar signs in Greek.

Oh, and ...

5.  Net present value.

All the rest was commentary.

* To wit:  money now is always better than money later; compounding is the strongest force in the universe after duct tape**; and how to calculate payments versus total cost.***  

**Okay, I actually already knew that one.

***Which means that I will never be at the mercy of a salesman's calculations about what something will cost me.  I can figure it out on my own!!

****As a collateral benefit, I now understand Algebra better than when I was actually taking it in high school.  Sort of the way that taking French greatly improved my knowledge of English grammar.