Tag: john cochrane

Asset Pricing is back

I haven’t had too much luck with MOOCs. Usually I end up signing up for a lot of them and then subsequent NED happens with the effect that I end up doing nothing about the course and I “drop out”. The number of courses I’ve dropped out of is not even funny.

There has been only one MOOC that sustained my interest for a reasonable length of time, though, the course of Asset Pricing taken by The Grumpy Economist. For five weeks in September-October 2013, I diligently did all the readings and assignments and quizzes. I remember returning from a day trip one Sunday, and late that night, sitting down to do my assignments for they were due the next morning. But then the complexity of the course increased precisely at the same time when my work pressures went up, and I missed an assignment. Soon, that led to NED and I dropped out of the course.

I had enjoyed the course so much that I decided that I would take it the next time it was offered and actually complete it. To my disappointment it wasn’t offered in October 2014. I assumed that the economist had gotten too Grumpy and decided to stop offering the MOOC. I was disappointed.

But then this morning I see a mail from Coursera indicating that the course is back, in two parts this time. I’m in the process of signing up for the first part of Asset Pricing. You should do so, too, if you are so inclined. The breadth covered in the course is phenomenal, and what really excited me is how concepts that I had learnt in three or four different courses when I was a student at IIMB all got integrated into one course here. As I had written back then,

The beauty of the Chicago course is that it is holistic, and so well connected. The same professor, in the same course, teaches us diffusions while in another lecture uses the marginal utility theory from economics to explain the concept of interest rates. In an assignment he has got us to do regressions and in some others we do stochastic calculus. Having seen each of these concepts separately, I’m absolutely enjoying all the connections, and that is perhaps helping me keep my interest in the course.

Studying on coursera

In the last one year or more I’ve signed up for and dropped out from at least a dozen coursera courses. The problem has been that the video lectures have not kept me engaged. I seem to multitask while watching these videos, and the sheer volume of videos in some of these lectures has been such that I’ve quickly fallen behind, and then lost interest. I must, however, admit that many of these courses haven’t been particularly challenging. In courses such as “model thinking” or “social network analysis” I’ve already known a lot of the stuff, and thus lost interest. Modern World History (by Philip Zelikow ) was more like an information-only course which I could have consumed better in the form of a book.

Given that I’ve had bursts of signing up for courses and then not following up on them, for the last six months I’ve avoided signing up for any new courses. Until two weeks back when, on a reasonably jobless evening during a visit to my client’s Mumbai office, I decided to sign up for this course on Asset Pricing. And what a course it has been so far!

I went to bed close to midnight last night. I watched neither the Champions League final nor Arsenal’s draw at West Brom. I was doing my assignments. I spent three hours on a Sunday evening doing my assignments of the coursera Asset Pricing course, offered by Prof John Cochrane of the University of Chicago.

I’ve only completed the assignments of “Week 0” of the eight-week long course, and have watched the lectures of “Week 1” and I’m hooked already. I must admit that nobody has taught me finance like this so far. In IIM Bangalore, where I got my MBA seven years ago, we had a course on microeconomics, a course on corporate finance and a course on financial derivatives (elective). The problem, however, was that nobody made the links between any of these.

We studied the concept of marginal utility in Economics, but none of the finance professors touched it. In corporate finance, we touched upon CAPM and Modigliani-Miller but none of the later finance courses referred to them. There was a derivation of the Black-Scholes pricing model in the course on derivatives, but that didn’t touch upon any other finance we had learnt. In short, we had just been provided with the components, and nobody had helped us connect it.

The beauty of the Chicago course is that it is holistic, and so well connected. The same professor, in the same course, teaches us diffusions while in another lecture uses the marginal utility theory from economics to explain the concept of interest rates. In an assignment he has got us to do regressions and in some others we do stochastic calculus. Having seen each of these concepts separately, I’m absolutely enjoying all the connections, and that is perhaps helping me keep my interest in the course.

And it is a challenging course. It is a PhD level course at Chicago (current students at the university are taking the course in parallel with us online students) and my complacency was shattered when I got 3.5 out of 11 in my first quiz. It assumes a certain proficiency in both finance and math, and then builds on it, in a way no finance course I’ve ever taken did.

Also what sets the course apart is the quality of the assignments. Each assignment makes you think, and make you do. For example, in one assignment I did last night I had to do a set of regressions and then report t values and R^2s. In another, I had to plot a graph (which I did using excel) and then report certain points from the graph. Some other assignments make sure you have internalized what was taught in the lectures. It has been extremely exciting so far.

Based on my experience with the course so far, I hope my enthusiasm will last. I don’t know if this course will help me directly professionally. However, there is no doubt that it keeps me intellectually honest and keeps me sharp. I might not have had the option to take too many such courses during my formal education. I hope i can set this right on Coursera.