Day 5 — Fake it until you make it

I know it works — I’ve done it before.

When I was studying finance, I took several courses covering accounting, corporate finance, valuation. They all included foundations of or elements of financial analysis. Still, to me, these were just numbers in tables for a long period of time.

I like numbers and liked the challenge, so I was building my own financial models, simulations. I worked in a bank for two months after my second year. I remember that I got a task to copy numbers from a paper version of an annual report to excel model. After I did that (which is not necessarily that straight forward, because you might need to aggregate or expand some numbers to fit the structure of your model) credit analysis team leader asked me what I thought about the company. I had no idea. She walked me through some of the key points.

Maybe two years later I was taking another finance class and I started reading a book about financial modeling, which was not part of the course readings. The model I built following the book guidelines turned out to be pretty useful. It started to make sense.

During the same class, I started getting some useful insights from the numbers when doing the assignments and preparing for case studies. Later I got a credit analyst job and had a chance to read at least 100 annual reports a year. I’d need to analyze the companies as well.

All of a sudden I became “expert” in the topic and had to teach other people. I was also “seeing” things in numbers that others couldn’t.

Is it osmosis? Or maybe just determination, iterations and feedback? Whatever is the underlying mechanism, it seems to work, at least in some cases.

I’ll stick to that approach, when it comes to theory building. I’ll fake it until I make it. Let’s see if it works out this time as well.