Saturday, June 23, 2007

MBA in London and career change to investment: best decision ever

As you can see from the title of this post, my first week of the summer programme in Global Markets has been fantastic. I cannot believe how lucky I am. It is such a nice feeling to do a job that you enjoy with people you like. Where should I start?

Preparing for the trading floor
The first three days, we had training in markets, mainly about trading, trading strategies, derivatives, equities and so on. Our instructor was a futures and FX trader for 11 years in the old days, so he had a lot of anecdotes to tell and emphasized the practical side of finance, which was quite helpful after one year of theory. I only got to know a few other Summer Associates because the US school Associates started a week earlier, but I will meet everyone next Monday when we have another training.

Finance meets reality
On Thursday, I started my first rotation on the principal investment desk. They take the bank's money and do leveraged buyouts of "illiquid assets", such as ports, pipelines, airports and so on, though now they are diversifying into the private equity space and starting to buy up running businesses as well. I'm helping out on three different deals to differing degrees, partly to learn, partly employing my language skills (some of the deals are in Germany), partly just doing excel modelling and things like that. It is very diverse in terms of the things they do. So in terms of the content, I couldn't be happier. I also enjoyed seeing the practical side of valuation, it is very different from what we learn at school! We learn that you project the cash flows to value a business. Here, what they seem to do is to use a simple EBITDA multiple based on comparable deals to determine the bid price, and then they go into complicated cash flow modelling and revenue forecasting to see how much debt they can use for the buyout. So rather than the output, the value - i.e. the bid price - is the key input, and all else follows. Of course, coming straight from school I did not approve of such short cuts, and I took one of the LBO models and decided to do a nice DCF model with it to get the value. And funnily enough, the value I got with my discounted cash flows was exactly the same they had gotten from the multiple, to the first digit behind the comma (at least if you call the five in 2.5 billion the first digit behind the comma ;-) ).

Lifestyle: pub at 6pm anyone?
But what I like just as much is the people on my team and the atmosphere of the trading floor, not to mention the lifestyle. The people on my team are extremely friendly and forthcoming and treat me very well, they joke a lot and are having a good time. The directors are also very approachable and friendly and sit with us and invite us for lunch and stuff like that. One day people were busy and only got sandwiches, but we have a really cool shop in the middle of the trading floor which sells fresh fruits, organic smoothies, sushi, fresh loose leaf peppermint tea and things like that. So that day I bought a sandwich of brown bread with ruccola, tomato, horseradish and roast beef, a lentil salad and a coconut banana smoothie. I think the old days when traders ordered pizza or burgers are over, luckily :-). The first day on the desk, I was enjoying it a lot and wanted to learn more, so I stayed quite long, I was there till 9:30 with two other associates but we were literally the last people left on the trading floor.

Yesterday, I was going to work till around 7 because my husband works till that time as well and we wanted to go for dinner, but then at 6 all the senior people and all the traders had already left, and one guy from my team just came around asking everyone "pub? pub?", so we went for a drink nearby at 6, wished each other a good weekend and each went our ways. We start at 9am and work till maximum 9 or 10 and often even shorter. This certainly beats working till midnight and sleeping in a hotel!

And the best is having the weekends completely off, without worrying about anything or doing assignments. I went shopping this morning, tonight I'll go to the cinema and dinner with friends, tomorrow probably hang out with my sister whom I haven't seen in a long time or go rollerblading in Hyde Park, and on Monday I have a training from 10-5 pm and will finally meet the rest of the other interns. I could not be happier. I wonder how my friends interning in M&A and consulting are doing?

Sunday, June 17, 2007

The first year ends as it should - with the Italian Festa d'Estate

If there is one common theme that makes London and London Business School special, it is the diversity and the opportunity to explore new things every weekend. One particularly popular activity for LBS students is to organize all kinds of national parties - readers of this blog will have heard about Diwali, Mexican Independence Day, the Salsa Party, Tatoo... Lots of great parties that have made this year a very special one.

Yesterday, we had our final exams - Cost Accounting and Finance 2 - and after that, it was time for a final party of the first year. And since it was the final one, it had to be a particularly festive one. What better way than to celebrate an Italian Festa d'Estate in Soho, in a club called Cafe de Paris.

I was happy to bump into some friends that I hadn't seen for a while and probably won't see for an even longer while - this is me with a Russian friend whose Italian husband just finished the Executive MBA - they are moving to Abu Dhabi next month. And me? I'm just a German girl who has been dreaming of living in London since she was 13, and now I'm here and am about to start my first job tomorrow morning.

Tuesday, June 12, 2007

Electives for next year - Finance, Finance and more Finance

It's time to choose electives for next year, there are many great ones so the choice is not easy. In the end, it turns out my elective portfolio will be very finance focused, which I didn't necessarily plan, but most of the top teachers here happen to be the finance or economics guys, and I cannot risk taking a class in which I don't learn anything. Based on my background in psychology, there is not much I can learn from Organisational Behaviour or Marketing classes, or even Decision Sciences, so I feel like Finance & Economics is the way to go. These are my preferences as I have submitted them:

Autumn 2007:
- Global Capital Markets and Currencies (Economics)
- Options & Futures (Finance)
- Mergers, LBOs and other Corporate Reorganisations (Finance)
- Managing Corporate Turnarounds (Strategy)

Spring 2008 - University of Chicago GSB
- Entrepreneurial Finance and Private Equity (Entrepreneurship)
- Cases in Financial Management (Finance)
- Cases in Financial Risk Management (Finance)
- Time Series Analysis for Forecasting and Modelling (Statistics)

Summer 2008:
- Credit Risk (Finance)
- Financial Engineering & Risk Management*
- Equity Investment*

I will probably replace the latter two with the Creativity and Personal Mastery (CPM) course, but I'm unsure about it. I'm not sure if I should work on my personality or on my technical skills. If I look at the times I am unhappy (which are the times one might choose to take philosophical courses), it is usually because sometimes I feel like I haven't lived up to my aspirations or worse, that I will not live up to my aspirations. But somehow I feel that if I spend my time working on achieving my aspirations, rather than questioning them or agonizing about them, I will be happier in the end. It is a very weird decision to make, and I wish I could postpone it till next year, which I can't. I should probably go for CPM, because the other two courses won't add that much to what I will learn in other electives, particularly after doing some hardcore finance at Chicago GSB. Let's see.

Yesterday I handed back my laptop and blackberry to McKinsey so I am officially part of the alumni now. It is weird not to have a blackberry after 3 years!!! I did not write a good bye email in the end. I guess I would have done it if I had resigned in a normal fashion, but because I mainly resigned because they wouldn't let me do anything else but work for them over the summer of the MBA, and because that they said if I want to come back after the summer to just call them, I would have found it weird to send an official "I'm leaving"-Email. So I left in silence, though I called some people who were closest. Luckily, the person I got on best and worked with the most during my time with McKinsey was elected partner last week, so I still heard about it before leaving. I really wanted him to become partner of the Firm, so I was happy it happened before I left.

Funnily enough, whenever I thought of writing a good bye email, or whenever I thought of how I feel while working there, all I could think of was this Charles Dickens quote from "A Tale of Two Cities". It would have been wholly inappropriate to write such negative thoughts in my farewell, but in actual fact it sums up quite well the contradictory feelings I had. So if I had written an honest goodbye, it would have been this:

"It was the best of times, it was the worst of times;
it was the age of wisdom, it was the age of foolishness;
it was the epoch of belief, it was the epoch of incredulity;
it was the season of Light, it was the season of Darkness;
it was the spring of hope, it was the winter of despair;
we had everything before us, we had nothing before us;
we were all going directly to Heaven, we were all going the other way."

Monday, June 04, 2007

admits weekend, assignments, battle of the quants...

Well, these days I can't complain that I don't know what to do with my time! 2 weeks to go till the summer internship and there is a LOT left to do: an economics group paper, two individual economics assignments, three final exams, one finance assignment due tomorrow morning, also another accounting assignment due next Monday, and in between I'm going to Germany for 5 days, and my bank for the summer has sent me some online trainings on FX, derivatives etc. to do over the next days.

There is a lot more going on. Tomorrow, the investment management club has invited the CEO of Frontier Capital to speak on Asset Allocation, and this is followed by a end of year party of the Women's Football Club. On Wednesday, my study group is going out for dinner with partners to celebrate the end of the year and also because we still need to drink that Veuve Cliquot we won in the economics debate a few weeks back! On Thursday morning, I might go into the City to meet my former EM (project manager) who has also since left McKinsey but is coming
to London for a business meeting. Then I need to head to the airport. I got a very cheap flight to my home town, 50 GBP return!! The bad thing about such a price is that it influences my decision-making in other areas. We have a London Business Summer Ball in July, and one ticket costs 80 GBP!!!! I simply refuse to buy a ticket for one evening with a bit of food and drink that costs more than a return ticket to Berlin or Rome! In the end, we are all students, unfortunately some people forget that not all of their classmates are swimming in dollars (and much less in pounds ;-) ).

But of course, you all want to know about admits weekend. Well, probably the admits should be a better source of information, too bad Rusgirl wasn't there to tell the story! The only picture I have from the weekend is from the Women in Business brunch, and there is not a single admit on the picture :-). It's me with two of the more active Women in Business club leaders :-). Maybe the picture sums up my mood: I had a bit of a deja vu, it was very similar to last year's admits weekend, but I was in a different role this time, and that was very weird for me. I somehow thought "what are you guys doing here? My first year isn't over yet! It's too early! I'm not a 2nd year student yet!". I wouldn't say I was envious though, because though it's very exciting, I also like to have close friends already, rather than hectically roaming around looking for like-minded people.

From what I heard from talking to admits, they really liked it and I think all of them were sure they were going to come to London. There were lots of waitlisted people as well and I wish them luck! I guess it helps to come to admits weekend, but then not many waitlisted people make it into the class, so it's not an easy situation. But there were also many happy people who are just about to leave their jobs and move to London, and that is indeed an exciting situation to be in!

Another great event I attended today was the briefing for the Creativity and Personal Mastery Class with Srikumar Rao, it was great, and I'm now more sure than ever that I want to take this class. He talked about the course, then some of his current students talked, and afterwards we went to the Windsor pub (which the admits will know very well by now!) and talked some more, it was fantastic. I hope to take it next term. I'm not too worried about the pre-reading one has to do, because I was so enthusiastic when I heard about the course last year that I already read the course outline, Rao's book "Are you Ready to Succeed?" and another brilliant book on the syllabus, "FLOW", which is by the way one of the best and most helpful non-fiction books I have ever read, so at least I don't start from zero :-).

And it doesn't stop there, another great thing happened today! The investment management club was approached by the Battle of the Quants Conference, asking for 5 students to help them out with registration and in return they could stay the whole day at this conference which usually costs over $1,000 to attend. The email came early this morning and luckily I checked my email shortly before class, so I was one of the first to reply and will get to attend the conference next week! The keynote speaker is Nassim Taleb, who I hear is very entertaining and knowledgeable. The main topic is the whole "human vs. machine" debate in trading - can quant models replace or outperform people? Looking at Renaissance Capital's and DE Shaw's returns, it definitely looks like it, though obviously you will always need people to program the systems. Next week I will write about all my impressions from the conference for sure. I just need to find the time!

Friday, June 01, 2007

Oh come all ye admits...

Welcome to London, class of 2009! This is the admits weekend, and I know my friends the student ambassadors are working hard to make this a memorable weekend for you, making sure you choose the right school for your MBA!

I will be there for the networking session at the pub, as well as the barbecue and the party on Saturday night, and I will also be present at the Women in Business brunch on Sunday morning! So it should not be too hard to find me!

Enjoy the weekend!