Yale SOM is not a traditional "finance school," and that's exactly what makes it such a great place to study investment management. SOM's integrated core and contrarian culture are uniquely suited for cultivating long-term oriented, independent-minded investors; few other fields require their practioners to possess such a broad, holistic understanding of both business and society, and few other business schools approach MBA education with a philosophy like SOM's. The following four aspects of Yale's investing community comprise a large part of what makes it special, and are resources that members of the IMC seek to both utilize and reinforce with each new class.
1) A Holistic Investing Education: Robert Hagstrom, author and portfolio manager at Legg Mason Capital Management, famously called investing "the last liberal art." At Yale, we adhere to a similar philosophy, and believe that successful investment decision-making requires more than a narrow education in financial theory alone. SOM's first-year integrated core curriculum ensures that its student investors learn to think broadly and deeply about what makes a good business and what drives irrational market actors; as second-years, Yale MBAs frequently go outside of SOM to take courses in literature, history, law, political science, and psychology, building on the "latticework of mental models" long espoused by Berkshire Hathaway's Charlie Munger. At SOM, students learn all of the relevant technical skills needed to succeed in investment management—but are also exposed to a diverse, interdisciplinary array of disciplines that will ultimately make them better investors.
Collection of historical bonds displayed at Yale SOM. Yale is also home to one of the world's oldest bonds (issued in 1648) that is still paying interest today!
2) The Epicenter of Behavioral Finance & Practical Investing: Yale is the birthplace of behavioral finance and academic research championing the theory of inefficient markets. Our behavioral economics faculty include Nobel Prize winner Professor Robert Shiller, who created the Shiller P/E ratio and correctly predicted the financial crisis, and Professor Nicholas Barberis, who teaches SOM's flagship behavioral finance class. The International Center for Finance, a leading research center run by Professor Will Goetzmann and supported by an elite cadre of finance faculty and fellows, provides outlets for students to work on independent projects with practioners and academics alike; other notable SOM faculty members and lecturers include Jim Chanos of Kynikos Associates, Roger Ibbotson of Zebra Capital and distressed investing professor and former SOM dean Stanley Gartska. In recent years, SOM has also expanded its finance faculty by hiring four full professors.
3) Intimate Access to Yale's Resources: With only 350 students per class, a six-to-one student/faculty ratio, and no undergraduate, part-time, or evening business programs, SOM offers unique, individualized attention to aspiring MBA investors. SOM students face little to no competition for enrollment in popular finance classes, access to our ten Bloomberg terminals, faculty mentorship, recruiting events/trips, or participation in top stock pitch competitions; the student-run investment fund is similarly open to all interested members, and prioritizes creating a supportive, collaborative community. As the business school most integrated with its parent university, SOM also retains unique access and support from Yale's world-class academic community and alumni base. In addition to SOM MBA graduates and asset management EMBAs, alumni from Yale College, Yale Law School, and Yale's other constituent schools concentrate heavily in nearby investing hubs such as Boston, New York, and Greenwich, all of which are located less than two hours of campus. The density of financial talent within the broader university community is instrumental to attracting recruiters, speakers, and other events to campus, and serves as a valuable tool to SOM students.
Our weekly club meetings
4) The Yale Model of Portfolio Management: Yale is also home to the Yale Investments Office, which manages the university's $30.3 billion dollar endowment and is led by David Swensen and Dean Takahashi SOM '83, who together pioneered the "Yale Model" of actively investing in alternative and illiquid asset classes. Swensen and Takahashi have generated an exceptional 13.9% annualized return over the past thirty years. SOM alumni employed by YIO remain actively involved in supporting SOM's investing curriculum and pedagogy; Takahashi teaches a popular endowment management elective at SOM each year, and in 2016 endowed a new professorship that brought Tobias Moskowitz, one of the leading finance scholars in the world, to SOM's full-time faculty. In 2005, YIO invested $20 million with 2002 SOM graduate Lei Zhang to seed Beijing-based Hillhouse Capital, which has since grown to over $20 billion AUM and ranks among the best-performing hedge funds in the world.
In addition to leading YIO, SOM alumni have recently or currently run many other top performing university endowments, including Harvard (Jane Mendillo '84), Princeton (Andy Golden '89), Bowdoin (Paula Volent '97), and UPenn (Peter Ammon '05)—in addition to the Yale College and YIO alumni at the helm of MIT (Seth Alexander) and Stanford (Robert Wallace).