The Wisdom of Finance- Mihir Desai in Conversation with Paul Smith, CFA

Speaker: Mihir Desai, Mizuho Financial Group Professor of Finance, Harvard Business School; Professor of Law, Harvard Law School

Paul Smith, CFA, President and CEO, CFA Institute

Written by: Vivek Rathi, CFA

Prof. Desai tried to explain how finance is related to Humanity. His book “The Wisdom of Finance: Discovering Humanity in the World of Risk and Return” tries to connect two worlds which one thinks are not connected. He started by a quote from Wallace Stern “Money is kind of Poetry”  and followed it with a number of Pictures from history, each trying to communicate something important in contemporary world.

Few key takeaways from his session:

• Stories should be used to understand Finance
• The world is random and not structured, there is randomness everywhere. Good part is, this randomness can be managed
• Investors/managers generally face Principal-Agent problem
• It is really hard to become principle
• We do not punish people who fail
• The gap between Finance and Humans is a real loss
• Optimistic about India but expectations have to be rational
• Indian companies should focus on Corporate Governance
• Indian companies spend too much time on analyzing Policy makers/actions, instead corporates should focus on Innovation

• VR