Finance is just telling stories with numbers

I recently spoke with one of the founding principals at the financial firm where I work.

“What did you major in?” he asked.

“English,” I replied.

“That’s fantastic,” he said. “That’s a great major.”

I couldn’t help but laugh. His comment was so fundamentally at odds with everything I’ve heard over the last three years as I worked to build up my credibility within the industry. So I asked him why he felt that way — because pretty much everyone else I have ever spoken to about my professional goals has warned me my educational background will always be a huge liability.

He explained that English majors can think critically, put ideas together in a logical way, and most importantly, communicate that information clearly to people who need it. Everything else in finance can be taught on the job, he said.

His comments got me thinking more about my writing, and the path that led me from a writing career to one in finance. And I’ve realized that what I do isn’t so different from writing after all. Finance is all about telling a story (hopefully not fictional — though the way some research is written you would never know it). It’s just that financial stories are written in an entirely different language.

A valuation model, for example, is nothing more than a formal mathematical structure for a particular story, the way one narrative structure may work better for a certain fictional story than another. At the end of the day a valuation model tells the story of a company, or another asset, and why it might be worth X as opposed to say, Y. The characters may be cash flows and discount rates as opposed to adventurers and monsters. Sure, a discounted cash flow valuation of Unilever may not read like Lord of the Rings, but both the valuation and the novel are telling stories, and both should flow logically from beginning to end. I happen to find valuation every bit as compelling as swords and sorcery (a kind of mental illness, if you ask my girlfriend). A decent salary doesn’t hurt, either.

The moral of the story, as far as I’m concerned, is that we need to disabuse ourselves of the notion that there are “math people” and “writing people,” or “creative people” and “business people,” and that these labels are somehow mutually exclusive. It simply isn’t true.

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