Double Journey

I went back to my ten year college reunion this weekend.  Princeton has reunions every year.  The big reunions are every five years (the biggest being the 25th reunion) and as such, I decided to go down for the day since I was in New York City.  Quite a crowd turned out.  Despite it being her 25th, Michelle Obama was not one of them.   It was more enjoyable than I would have predicted.  Last time I went to reunions for my fifth, I did not have a particularly good time.  I decided to go for the entire three day event.  By the end of the second day I really was wondering what the heck I was doing there.  This time, I decided only to go for the day (and none of the nighttime activities) and it ended up being the perfect amount of time to see the campus and a few of my friends I wanted to catch up with.

One of the things that sticks out to me though was a fact that was given at the end of the P-rade.   As my classed marched down I heard two facts.  One was that my class, the class of 2000, was setting attendance records for the 1st, 5th, and 10th reunions (all reunions I attended).  But the more interesting fact was that the number one profession of my class was being a lawyer.  To be exact, it was stated that 14% of my class had become lawyers.

Now, I went to an Ivy league school and you would expect a large percentage of my class to be in high paying jobs.   Since law is a high paying job it does not surprise me that it is a profession many in my class pursued  What surprised me was that it was number one.  And as I thought about it I though what a sad commentary that actually is for our society.

Don’t get me wrong.  I think lawyers are necessary in our society.  I also don’t think all lawyers are scumbags like others might.  But for me, law is an ancillary profession.  It is best as a supporting function to the creation of value and wealth to our society.   It is in the same class of profession as accountants and clerical work.  These are jobs that are absolutely necessary but at the end of the day is overhead to the actual creation of wealth.   This is in contrast to things like medicine, manufacturing, or the creation of intellectual property that actually drive the economy and create value in our lives.

So what does it say that the brightest mind in the country if not the world are pursuing careers that are not creating wealth to our society?

I think it says a couple of things.  First, I think it says something about how the cost of obtaining a world-class education has skewed the choices we make.  Most of my class graduated with quite a bit of debt.  This problem is only getting worse has college becomes more and more expensive and having a college degree does not make you stand out anymore.  It used to be, for my parent’s generation, that having a college degree was not the norm.  Now, all my friends have one and that in itself means you have to find other ways to differentiate.  Most people are finding it necessary to get a post-graduate degree to really make themselves stand out and earn the money needed to pay back these college loans. This is a true fact.  I am the ONLY one of my college friends that does not have a post-graduate degree.  Think about that for a second.  I’m the only one.  I have lots of friends from college and they all decided to pursue even more education.

The second problem I see is that we are emphasizing the wrong things. As a country, we have created a society where one of the best paying jobs is being a lawyer.  Now to be fair, this has been the case for quite a while.  But I would argue that before it was more a function about the scarcity of the education required to practice law than it was about the voracious appetite to produce lawyers.  But we are now pumping out lawyers at a very large rate.  There must be an overwhelming demand for lawyers in order to keep salaries as high as they are.    This is because we have created such a complex set of laws and a society that is so litigious that it is required for any large corporation to have an army of lawyers ready to protect and to sue.

So rather than create professionals ready to find the cure for cancer or to create the next great product we create an army of people ready to sue others.  How on earth can we change this dynamic?

Methodology Annual pay for Bachelors graduates without higher degrees. Typical starting graduates have 3 years of experience; mid-career have 15.5 years. See full methodology for more.

While surfing around the internet, I found the above chart which describes which of the Ivy League Schools are the best if you take future potential salary into consideration.  It seems to be that the best school in terms of median salary straight out of college is my alma mater, Princeton.  The median starting salary for a Princeton Graduate is $66,500.  In terms of salary in Mid Career, Princeton is second with a median salary of $131,000.

What I find odd though is this is one of those things that really can’t tell you very much about what it is worth to attend an Ivy League school.  While it may sound great to end up with a salary of $130,000, getting into a school like Princeton or any other Ivy League school definitely cannot guarantee you that.  In fact there may in fact not be a causal effect here at all.  You have to remember, that many of the people who attend Ivy League schools got in there because they are smart and motivated.  It is not the university itself that made these people who they are.  So many of these people would have been successful no matter what.

But even more interesting is the methodology.  One of the pre-requisites to be included in this survey is that the individual not have an advanced degree.  Seriously, how big can this data set even be?  I had a lot of friends at Princeton.  I am seriously, and this is no joke, the only one of my friends that does not have an advanced degree.  Everyone has either an MBA, Law Degree, Medical Degree, or some sort of Masters or PHD.  I am unique in that I neither have an advanced degree nor do I plan to get one.

So do I think having a degree from an Ivy League school means a chance at a better future salary?  Only marginally.  Like I said, there are a lot of factors at play here that determine what someone will eventually make.  While the data is probably valid, Princeton graduates do earn a good living, there is very little that would convince me that attending Princeton was the cause of this.

Most Economic majors at Princeton become bankers or traders.  It is the closest thing to business or finance that you will find there and it serves as an excellent launching pad to a career on Wall Street.  However, after my junior year I decided to pursue a different path and left Wall Street to my classmates.  Despite my love of finance, as evidenced by this blog, I have never really regretted the decision.

However, when I see headlines like this, I have to wonder if I chose the wrong profession.   Ken Lewis, the CEO and Former Chairman of Bank of America, lost his title of Chairman of the Board.  For those that are not totally familiar with the situation, Bank of America is one of the financial institutions most in trouble.  They have made several very questionable acquisitions such as Countrywide Financial and Merril Lynch.  The results for Bank of America is a stock priced that has dropped about 95%.  Since the CEO is chiefly responsible for the financial success and failure of the firm as measured by its stock price, I would say Ken Lewis has not done such a hot job.

His punishment, he loses the title of Chairman but keeps both his CEO position and his seat on the board.  God, how awful.  What’s next?  They dock his pay by $1000?  Yeah, that would really hurt him.  Don’t you just love demotions that aren’t really demotions?  I wish I had such a high paying job with such job security.  Must be nice.

Despite what some people may think given this blog, I do donate to charity every so often.  I believe charity is a very personal choice and not at all an obligation.  I do not find fault with anyone who does not decide to give to charity because I do not pretend to understand everyone’s personal situation.  Some people have the ability to give, some people do not.  But despite anyone’s ability to pay or not to pay, charity should never be an obligation.

I have a perfect giving record to Princeton.  I do this because they gave so much to me when I attended and I want to see that opportunity extended to others.  This year, I also participated in my Company’s plans to sponsor several local families.  I signed up to buy clothes for two children.  Funny thing is that not many people signed up to buy clothes.  Most people were signing up for things like microwaves, blenders, or backpacks.  Not sure why that is.  In fact, every person asked for clothes, and I was the only person as of Friday to sign up to buy any.  Strange.  Before I go on, I have to comment on one thing.  Lots of families asked for blenders.  Why on earth are families asking for blenders?  The only time I ever use my blender is to make margaritas or smoothies.  I highly doubt, or at least I hope, that this is not why they are asking for this, but I cannot understand what else these blenders will be used for.

This year, I was a little bit more cautious in my giving.  Despite being OK financially, I am a little bit worried about the economy and my job.  While I am not in any emminent danger, my company will do poorly in a protracted downturn and we did recently hear some news that will fundamentally change our industry going forward.  So, just to be safe, I decided to take it easy this year.  So if someone like me is pulling back a little bit, I wonder how much other people are pulling back?  If this is as widespread as I think it probably is, then what does that say for charities in the next few months?  Now more than ever, charitable giving is needed, but what happens when there is nobody left to give?

What are you doing this holiday season?  Are you giving as much as you normally do?

For a truly great read on the Wall Street collapse, I strongly recommend you read The End by Michael Lewis.  He is the author of the book “Liar’s Poker”.  In this article, he clearly explains some of the egregious acts Wall Street perpetrated to get us where we are today.  Lewis, like many of my friends, was part of the Wall Street machine.  He ended up leaving after he could not stand the ridiculousness of it all.

In the article, he gives a great description of how we got into this mess.  He tells the story of people who recognized the now seemingly obvious conclusion that there was no way that people who were getting mortgages should get mortgages.  He goes further to explain how the CDO market worked and how the people part of it knowingly exacerbated the situation.  To make matters worse, most of these so called “experts” really no experts at all.  They were like him, fresh out of school with no idea what they were doing, yet tasked with allocating the nations capital.  And these are the people our government wants to bail out now?

Reminds me why I will never hire a consulting company to do work for me.  Straight out of college, I went to work for the world’s largest consulting company.  I did not even know what consulting really was, but it was one of the things everyone coming out of an Ivy League school did.  You either worked on Wall Street or you were a consultant.  Now, I was a technology consultant.  That meant I was supposed to be some sort of expert on technology matters.  Now, lucky for them, I had a computer science background.  I actually was a pretty good programmer.  But some of my colleagues would not be able to tell you the difference between an array and a linked list.  They thought “C” was just another letter and “Java” was just something you drank.

Yet we were all shipped out to work on projects at well over $120 an hour.   That is not a typo.  Now, someone like me, I might be worth it.  I was a good programmer, understood the fundamentals, and had the logical mind to solve most computer problems.  But some of these other guys?  We are talking people who never compiled a single line of code in their life now being asked to build some of the world’s larger computer systems.  How is that at all sane?

The same thing happened to my friends in Wall Street.  All of them were thrown into big money projects.  Many of them had never taken a single economics, accounting, or business class.  It totally changed the way I thought about the professional world and made me scared about some of the things that happen at these large important companies.

I was talking to some coworkers today about college rankings.   They were talking about whose college was better and for what reason.  The topic eventually turned to college rankings which they were using as a gauge of “better”.

Now lucky for me, I hold the trump card.  My alma mater has been ranked #1 for the past several years by US News and World Report.  So I win in any argument that eventually comes to this.  Now, I would agree that Princeton is probably one of the best schools out there, if not the best, but does the ranking really matter? No, in my opinion it doesn’t matter, or at least not very much.

That is not to say that I think all schools are created equal, because I certainly don’t.  And, as someone who hires other people, I’m not going to lie and say I don’t take someone’s college education into account when I’m scanning resumes.  Would I really give more weight to someone who went to Princeton vs. MIT, ranked #1 and #7 respectively? OK, maybe in this example I would, but I certainly wouldn’t do it if it were Yale (#3) up against MIT.

Yet people put a lot of stock in these rankings even though there is very little difference between the top few schools or any of the schools in the middle.  I always have said you can get a great education no matter where you went to school, it is up to you to make the most of it.  Certainly, many doors have been opened up to me because I went to such a great and well known school like Princeton, but does it really matter if it is #1 or #10?  Perhaps to a few people on the outside looking in, but in the grand scheme of things, I think most people should just ignore college rankings.

I got a comment yesterday on my post on How to Get Into an Ivy League School. In it, the reader was stressed about trying to get into an Ivy League school despite the fact that he has started “late” as he is almost done with his Freshman year.

Before I go answer that question specifically, I really want to touch on something. In no way should you feel stressed about getting into an Ivy League School. Let’s just be clear, it is very hard to get in but not getting in does not mean the end of the world. The vast majority of people who apply do not get in and they go on to live perfectly happy lives. I firmly believe that you can get a fantastic eduction no matter where you go, it is up to you to make the most of it. It is true, that most of my friends who have attended Ivy League schools have gone on to have great careers but you should not confuse correlation with causation. Most of these people got into an Ivy League school because they are just the type of person who would succeed in any environment. Just keep that in mind.

So despite my own words which may suggest that I’ve greatly benefited from my Ivy League degree, please keep those words in context. You will do fine in life so long as you are smart and driven. It does not matter what school your diploma comes from.

OK, now that I got that out of the way, let me answer this person’s specific question. You have nothing to worry about. I personally didn’t take any AP courses my Freshman year. I only took one my Sophomore year (that was basically all my school offered to Sophomores). I did however take every honors course that my school offered in the respective grades.

I’m no expert on the subject, but I heard of people who botched up their Freshman year, and recovered their Sophomore and Junior years to still get in. From the sound of it, my reader is doing well in the classes he is taking, so this is not a worry. If you show good progression and you take the hardest courses you can your Sophomore and Junior years, I think you have nothing to worry about. So don’t sweat it. Do well in the classes you are taking now, and make sure you take the hardest courses you can going forward. To balance it out, you should be sure to be involved in as many extra-curriculars this year to show that you were committed to making an impact in other ways this year, not just academically. Best of luck to you.

I am an interviewer for Princeton University.  They use their alumni network to reach out to students and get to understand the person behind the application.  I’ve stated before in my post on how to get into an Ivy League, that an interview won’t make or break you.  It really is just one of those things that the admission council uses to confirm all the other things on your application.  That being said, it certainly wouldn’t hurt you to do well in your interview and there are a few things you can do to have a bad one.  So here are some tips for your interview

1.  Know why you want to go to the school - Yes, everyone wants to go to the best school, but why specifically the school you are interviewing with?  If you just want to be around smart people, you can go to any of the Ivy Leagues.  Know something about the school that is specific to it and would be great for you.  Do some reasearch, use the internet.  It isn’t hard to come prepared.
2. Have goals - You don’t have to know what you want to do for the rest of your life, but you should have some idea about what you want to do and how attending the college of your choice can help you get there.
3. Know why you stand out - Everyone has great grades and test scores.  Be able to articulate why you are different from the crowd.
4. Talk with passion - people love to here othes talk with passion about the things they love.  If you love playing the oboe, show it!
5. Demonstrate a strong desire to go to the school - Alumni who interview for their school feel very passionately about their school and have a lot of pride.  They do it strictly on a volunteer basis and it is often inconvenient for them.  They want to see people who will love their school as much as they do, so show some enthusiasm.
6. Have a conversation - don’t let it be one sided.  Ask lots of questions.  People love to hear themselves talk.  Asking questions shows interest (which helps with the ones above).  When asked a question about something, respond, and think about how you can ask a question right back.  This creates good conversation and a natural flow.

Other than that, relax.  Like I said, the interview really isn’t that important.

I learned from Ben Bernanke. He was the head of the Economics department while I was at Princeton University. I in many ways should come to the same logical economic conclusion that he does. But for the life of me, I can’t understand what the heck he is doing these days.

Today, in case you missed it, the Fed cut the fed funds rate another 50 basis points. This along with the emergency 75 basis point cut they just did, means the rate has plummeted 125 basis points over the last week. Most of this is being done to avert a recession. Of course that implies we are not already in one.

The fed is being reactionary here. Plain and simple. They are seeing the turmoil in the stock market, and they are trying to do something about it. Why, is beyond me. This problem was created by too much easy money. The Fed dropped the fed funds rate to 1.0% several years ago. This caused a flood of cheap money to enter the market. This in turn made it very easy to get loans. This then lead to housing prices going through the roof because money was so easy to come by. Of course, the music stopped playing, and the chairs were pulled out.

To now fix this problem, the Fed proposes to do the same thing all over again? How is that going to help the situation? It isn’t. All it does is delay the inevitable. Debt must be repaid. You can continue to get more and more of it, but some day the bill comes due. It reminds me of people who use credit cards to pay off the other credit cards, compounding the problem, just trying to avoid the day they will eventually declare bankruptcy.

Harvard announced today that it would ease the burden that Middle-class families would have to bear to send their kids to the second-best university on the planet.  I have always stated that Ivy League schools are actually more affordable than many other universities.  They just have a ton of money to help those who genuinely need it.

By the time I got to college, my family was relatively poor.  I came from a single family parent where my mom was making under 30K a year.  When choosing colleges, I did not let cost factor into the equation because I believed that a good education from the right school was worth it at almost any price.  What I discovered was that these schools had fantastic need-based financial aid.

I left Princeton (the best university in the world) with about $17,000 in debt (all of which is already paid off). If I had actually been about two years younger, I would have left with $0 in debt as Princeton has switched all it’s need based financial aids to grants rather than loans.   The last two years I attended the university, my family paid $0 to the university.  I only paid  my fees to my eating club.

I actually talked to several people in my high school who did not apply to some of the better schools because they were not sure how they would afford a private school tuition.  I wish they had known how affordable it really can be.  So for all those of you who find this page and are wondering if you should apply my advice to you is this.  APPLY!  Worry about how you will get the money later.  The worse thing that could happen is that somehow you might not be able to afford and you won’t go, but you will never know unless you try.