MBA Finance (Specialization Dilemma)

During my MBA programme there was this ubiquitous discussion “Which specialization I should pursue”.

Candidly speaking I was in the same boat as everyone else, and there were few who clearly stated "don’t even think of Finance till the time you are sure about it". But this general ideology is far from solving the “Specialization dilemma” infact, it just reframes the problem. I think the only way to figure out, is to read as much as possible about Finance. By that I don’t mean you pick up every book on Finance & Investments you come across and start perusing it. But rather reading should be done in a structured manner and should be done taking in consideration your level of understanding. First focus on the basics then you can go on to the domain knowledge, that you are thinking of .You can also try books in consultation with your college profs.(I have given a list of few books for finance at the end of the article, which could be read irrespective of your background).

First you need to understand that Finance is a vast field and there is no strict compartmentalization of anything in Finance whether it’s Industry, Profile or Functional area. You’ll see a lot of overlapping among all this, when you’ll start working. Frankly speaking Finance being such a huge entity it is not possible to have an in-depth understanding of all the constituents and especially when almost half of your programme is spent on studying subjects other than Finance. So just let me run through a brief introduction of avenues that are available in Finance. Before I start, let me share a word of inspiration, “if you’ll start reading about finance you’ll automatically start liking it” and I have seen this happening with many people. Because you’ll see, eventually it’s all logical in Finance, starting from your basic accounting concepts till those complex exotic options (and of course the opinion is biased).I have segregated Finance into areas which you can think of pursuing as your intended domain knowledge.

• Treasury Management
• Corporate Finance
• Investment Banking
• Analytics
• Risk Management
• Insurance

But these areas are not very strictly compartmentalized and at the cost of repeating myself I would say, you can certainly see lot of areas, overlapping with each other. As far as skill sets required goes, the only thing I can profess is an analytical bend of mind and inclination towards number crunching, albeit I think skill sets required cannot be justifiably described. But if you are asking for the attitude, the golden rule is keep your mind open, cause everybody will have a different idea and explanation about any given concept in Finance and the more you’ll listen(or read) the stronger your concept will become. For ex – A simple P/E ratio can be interpreted as

1. The growth rate that one is expecting.
2. How many years it’ll take to get one’s whole investment back.
3. Some people think it’s not even an appropriate measure as one data-field (i.e. Price) is futuristic in approach, while Earnings are historical.

So I think the more you’ll listen (and read) the better it’ll be for you and then you could possibly have a holistic picture of the concept.

I remember a very nice observation made by Thomas Friedman in his book “World is Flat”. He was having a word with Mr. Glocer, CEO of Reuters who was then setting up a centre in Bangalore. The statement made by the CEO was that “Not many people know, India not only possess good technical skills but also people with good financial knowledge”. I think this will clear all the doubts, people have over job prospects in financial industry and as KPO is the new buzzword, we have just seen the tip of the ice-berg.

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• Tomorrow’s Gold - Marc Faber *
• Basics of Finance - Prasanna Chandra
• Finance Sense (For Non-Finance people) - Prasanna Chandra
• Fooled by Randomness : (The hidden role of - Nassim Nicholas

Chance in Markets and Life)

• One up on Wall Street - Peter Lynch *
• Against the Gods - Peter Bernstein
• Stock Market Wizards - Jack Schwager *

* Highly Recommended.

Mohit Shrivastav

PUMBA Class 2006