Financial Modeling Cooperative Education Program
A Real-World, Real-Time Financial Modeling Experience
Dealing with uncertainty is one of the most difficult aspects of a career in equity research or asset management. Even if an analyst is able to accurately project a company’s earnings and cash flows, there is no guarantee of how the market will react to the results. Prospective analysts must therefore develop a level of comfort in dealing with uncertain outcomes, in addition to learning the fundamental modeling concepts, in a world of imperfect data.
Our Cooperative Modeling Program incorporates each of these critical components into your financial modeling development. We use a real-world company as the subject of our training, not a theoretical textbook example. Financial reporting can be complex, and companies are selective in what they disclose. A real subject company will help you learn how to deal with shortcomings in data availability, while you apply the techniques commonly used in professional practice.
Our program is taught in real-time, meaning you will build a financial model and project earnings for the subject company before the company reports quarterly results. On the night of the company’s earnings release, we will read the filing, listen to the conference call, and update our model together as a group. This approach will give you the practice of developing a forecast in a scenario where you are not certain of the outcome, in a fun and relaxed setting.
The program is designed to complement your current education, be it traditional college business curriculum, or on-the-job training and professional designations. This makes it a true cooperative learning experience, giving you the opportunity to expand the knowledge you are building, and apply it in a practical format...continue reading in the overview document attached below.
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A Closer Look at the Program...Notes From the Instructor
The clips below are excerpts from the live meetings of a past round of the program. These videos will give you an idea of how our classes are structured, and what our "real-world, real-time" format feels like on our calls.
Example From Meeting #1: Building the Model
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By the time we get to the first live meeting, you will have already watched the pre-recorded demonstration videos and read the first few chapters of the text. At this point most of the students are still getting comfortable with the material, so class participation tends to be low in the first meeting. This is perfectly fine. My goal is to keep the mood relaxed, so I will never cold-call anyone in class. That way you can remain comfortable and focused on the material. In fact, in the last few rounds, the vast majority of students chose to be silent participants on all of the calls, which is always fine with me.
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Example From Meeting #2: Forecasting
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In our second meeting we discuss how to develop and incorporate different opinions into the model to create a unique forecast. Most students enjoy this part of the process, and class participation tends to increase as students are beginning to get more confident in their modeling capabilities.
This clip captures the benefit of the "real-time" aspect of the program. The nature of this approach keeps the subject matter interesting, as we are all trying to figure out how to think about new information as it emerges. |
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Example From Meeting #4: The Live Starbucks Earnings ReleaseOur fourth live meeting is the program’s main event. At this point we have built our models and entered our forecast. We will watch live as the subject company (Starbucks Corp) releases their quarterly earnings. As I discuss the results and update my version of the model, you will be able to follow along and check to see how close your forecast was.
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Example From Meeting#5: Live FOMC Statement ReleaseAs part of our DCF valuation exercise we forecast the primary components of the Equity Risk Premium (ERP) including interest rates and volatility. In Meeting 5, we discuss the Federal Reserve's FOMC statement as it is released, and compare our forecasts to the new data provided by the Fed. This clip is taken as the Fed announced their bond purchase taper in November of 2021.
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As you proceed through the program you should find that it feels much more like on-the-job equity research training, and less like a textbook/classroom example. Overall, my students tend to find the experience to be enriching and fun. I hope you decide to join us in the next round, and if so, I am looking forward to working with you!