Finance: Where Did We Go Wrong?
As I read through the multitude of finance journals, blogs, textbooks, and trade media, I am deeply discouraged. I find a profession defined by formulaic expressions, data manipulation, trite principles and shallow theories.
The academic community is hell bent on perpetually regressing historical data, while the professional practice is determined to move the finance vehicle forward by lashing its rear bumper with buggy whips of trite tools and over-extended programs.
The new school of finance is all about quick fixes and arbitrage of market asymmetries and imperfections. The concept of building a conduit through which those with capital resources can effectively invest in those entities which have legitimate capital resource needs…is so yesterday.
Our students have several financial engineering courses within their transcripts, but they appear as a “deer in the headlights” when the concept of supply and demand is mentioned. It would be irresponsible to put a new driver behind the wheel of a Ferrari, yet we don’t think twice about letting an untrained, undereducated finance professional steer our largest financial institutions, corporations, and organizations. Is it any wonder our markets and economy have crashed?
Since when did we replace value creation with currency manipulation? Since when did we engineer our curricula to exclude economics, literature, history, chemistry, religion and psychology — since these educational elements have somehow through time become irrelevant to value creation?
We have let the finance profession become defined by formulas, market manipulation and easy “fixes” rather than creative problem solving through economics and”knowledge”principles — finance is now an exercise in math, not meaning.
I think it is time to call the finance profession out — both professionally and academically.
We deserve better.
Posted on Thu, May 13, 2010
by Timothy E. Moffit