6 Free Financial Modeling Lessons...and More.

Listen up all you newly minted college grads. Now that you’re entering the brave, new, depressing world that is life post college, you are probably eager to jump start your cube life and pay down your debts. And everyone you talk to is gonna offer up their unsolicited sage advice about careers and working and the real world and blah blah

Some of it is common sense, occasionally its useful, but most of the time its useless. So here are my dos centavos, if you will, a list of terrible career advice for you to never follow...

Fred Wilson is a legendary venture capitalist; arguably the best in the game today. He's such a visionary that it wasn't hard to believe when PrivCo announced that Union Square Ventures netted a whopping 5,000% return on their Tumblr investment. What was harder to believe (or maybe I'm just jealous) was what the takeover meant for Tumblr employees in dollars and cents:

Tumblr founder David Karp, 26, walked away with over $250 million after dropping out of high school to work on the project. Fred Wilson reacted to closing the all-cash deal with Yahoo! with his typical class and humility, stating, "You can count on it — when a deal works out spectacularly everyone involved will take credit for it. This behavior is particularly annoying to the entrepreneurs who put the sweat, blood, and tears into the Company."

But did USV actually make a 5,000% return?

Mod note: Best of Bankerella - this was originally posted 10/1/12

I occasionally get PMed by people at colleges I’ve never heard of before, asking if they have a shot at IBD.

Folks, why IBD? The finance world is broad and varied, and there are a million ways to make a buck. Why pick the one that’s going to be hardest for you in your situation? There are mutual fund companies, asset management companies all over the damn place. Hedge funds. Auxiliary businesses. Those folks will look beyond the name of your institution and your GPA in the hunt for quality. Why knock on the door of the one section of the industry that has built a massive recruiting machine designed to keep you out?

If you have been following my blog postings, you are probably aware that I have an obsession with equity risk premiums (ERP), and have done an annual survey paper on the topic  every year since 2008 (with the 2013 update here). I also post a monthly update for the ERP for the S&P 500 at the start of the month on my website. As a consequence, my attention was drawn to a post by Fernando Duarte and Carlo Rosa, economists at the Fed in New York, on the topic.

They argue that equity risk premiums are at historic highs, primarily because the US treasury rates are low, and note that these high equity risk premiums are a precursor to good stock returns in the future. I don’t disagree with their authors that equity risk premiums are high, relative to history and that the low risk free rate is in large part responsible these large premiums, but I am less sanguine about using the ERP as a market timing device, especially at this time in history.

It's been a rough couple of weeks for Stevie Cohen and his crew, and the situation is growing more "fluid" with each passing day. I kinda kept one eye on it all weekend after the somewhat cryptic announcement on Friday that SAC would no longer be "fully" cooperating with the government's investigation into insider trading at the fund.

Then came the announcement that Cohen himself had been subpoenaed, and the previous announcement was interpreted to mean that he planned to take the Fifth rather than testify before a grand jury.

Now the rumor is that Cohen may be cutting a deal with the feds that would close the fund to outside investors altogether. This deal would include an admission of guilt on the part of SAC in exchange for deferred prosecution (meaning no criminal liability unless the firm were to break the law again).