So, how shall I begin?

 
This is the blurb for the course, 
the blurb that's been in the Yale catalog for a long time. 
This is a course on finance. 
It has the word, "markets," in the name, 
which suggest that it's about trading, 
but I think it's a broad course in finance. 
So the blurb says, 
"Financial institutions are a pillar of civilized society, 
directing resources across space and time to their best uses." 
So this sounds broader. 
I guess the course is broader. 
I wrote the title of the course many years ago when I created this course, 
and it's been a title for about... 
To me, this course is about is how we get things done in our society. 
That's how we incentivize people to do things. 
Now, most of us are in our lives, 
thinking about ourselves – that's human nature – and about 
our particular place in the life cycle. 
So, you may be a young person who's thinking about getting started in life. 
But when you join a enterprise or an organization, 
you have to do things for the organization and you have to take a different perspective. 
You have to help manage a productive venture that involves many people. 
So there aren't that many things that you can do as an individual that are useful, 
you have to join an organization. 
This is a fundamental principle of human life. 
So this is a course about understanding how the institutions 
work and how we can predict what will happen. 
And things are rapidly changing in the Information Age that we live in now, 
so that's what this course is about. 
I don't consider this a vocational course because I 
think it should be of interest to anybody who is interested in how things work. 
On the other hand, this course comes across as more vocational than most Yale courses. 
And in some sense, I pride myself on that, 
although I consider myself an intellectual. 
But, this is a relevant course, all right? 
It's not about how to make money. 
You might say it is, I suppose. 
But, it's about making things work. 
These are the topics in this course. 
So, risk Insurance, diversification, 
history of finance, innovation, 
efficient markets, behavioral finance. 
Actually, behavioral finance is a little bit more prominent than you 
might think from its appearance as number seven on this list. 
Behavioral finance is the application of psychology, 
sociology, other social sciences to understanding financial events. 
It's a revolution in finance that I have watched over the whole course of it because 
I have organized conferences on behavioral finance starting in 1991, 
working with Richard Thaler at University of Chicago. 
We've been doing that for 25 years, 
but we just bequeathed that there are regular seminars of professors too, 
Nick Barberis here at the Yale School of Management. 
But we'll talk about it because I kind of believe in a unity of knowledge. 
So this course will differ from 
many other finance courses in that I want to 
talk about real people and how things really work. 
Then we'll talk about debt, the stock market, 
the real estate market, regulation. 
Oh by the way, regulation is an interest of mine too, 
more so than most people who teach 
finance because I think that the markets need to be regulated. 
Human beings have a tendency to be manipulative and tricky, 
and finance is used to trick people. 
That's why we need regulators. 
So you shouldn't assume that I want to send you off to Wall Street. 
I think that you might go to be a member of the right like 
the Securities and Exchange Commission or something else as a job and be proud of it. 
OK? It's important. 
And then banking, futures – futures market has a special meaning in finance, 
monetary policy, endowment management, 
investment banking, option, money managers, exchanges, public finance, 
nonprofits, and finally, that last lecture will be on the purpose of all this. 
So that's this course. 
So, I wanted also to just reflect on the relative. 
I said this course looks more vocational in a way, 
but I don't consider this vocational school. 
This is, I like to say, useful. 
One thought, perspective I wanted to give you was how important is finance anyway. 
Unless you go into academia, 
you will get a job somewhere in the real world. 
So where are the jobs? 
Well, I looked up on 
the Bureau of Labor Statistics – it was a publication of the U.S. government. 
On their website, they have data on 
just how many people are in different professions in the United States; 
and they also have a forecast. 
So what I'm showing – the latest data is for the year 2014, 
and it has the number of people in thousands. 
And then also on there we have the projection for 2024. 
So, you note that at the top I've got finance – these are specific finance profession, 
not all finance professions. 
Financial analysts, financial managers, 
personal financial advisors, they all have hundreds of thousands of people. 
But I wanted you to note, 
what about the other majors that you have here? 
I'm not diminishing them. 
But economics, economists, not so many. 
But you might also be interested in astronomy – I actually love astronomy. 
When I was a kid, I thought I'd be an astronomer. 
But I had to reach reality – there's lots of 
exciting fields where there are almost no jobs. 
How many astronomers are there, 
sociologists, political scientist, or mathematicians? 
This is not to diminish your majoring in this field, 
but you just don't expect to get a job in those fields. 
I also put down at the bottom massage therapist, OK? 
I didn't know that was a profession, 
but there is projected to be about 200,000 massage 
therapists in the United States in 2024. 
So we don't have a massage therapy major here, 
but that's a sign of how the market makes things important. 
Now run up, Farahar might be right about this. 
There's something wrong with having so many finance people – maybe 
we need more massage therapists than finance people. 
But there's a sense of reality that I think 
that part of the reason that there's so many of 
them is that they deal with important issues that can't be quickly, 
they can't be more easily solved; 
we need all these people. 
That's why I take some pride in this course in being connected to the real world. 
There are real job opportunities in finance. 
And there also I think in the new Industrial Revolution period, they will still be. 
I think this is one of the fields that is not going to be totally replaced by a computer. 
The problem with finance is a high inequality in this field. 
Some people make a lot of money, 
but on the other hand, you have to give it away. 
This is another thing about this course. 
If you make a lot of money in finance, it's a game, 
you enjoyed it, now give most of it away – that's going to be a theme.
Previously saved note: So, how shall I begin? This is the blurb for the course,
So the idea is, I said this before, 
finance is a technology, it can be used for good or evil. 
It has a tendency for 
a successful practitioners to start attracting a lot of money.

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That doesn't mean that you can't be a moral and ethical person in finance.

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So one thing I note in giving talks around the world 
that when you go to poor countries and give a talk, 
they are intrinsically interested in finance because people today recognize 
that financial markets are part of economic success. 
They understand that in China, they understand that in Russia, 
they understand that in Brazil and many more countries.

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Because finance is a real technology. 
They're not so interested in getting foreign aid, they don't need foreign aid, 
they just need the right principles and the wealth appear on it's own. 
So this is not a course about how you can lead a rich and self indulgent life.

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It's a course that involves some moral purpose. 
Andrew Carnegie was one of the richest men in America. 
He said that he thinks that rich people, people who succeed in business. 
He doesn't use the word business. 
People who succeed in affairs. 
Now that sounds different today, but affairs meant business back then. 
People who succeed are people with a natural, practical talent.

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And the business world selects for people with this natural talent.

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And so when they make a lot of money it is their obligation to give it away for 
the benefit of society and not to their useless children or spoiled children. 
Moreover, Andrew Carnegie said, you can hear him say this,

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he said that you should give it away while you are still young because 
you've amassed all this wealth, what's going to happen to it? 
It's absurd the story that happens. 
Young people make a lot of money when their talents are at their strongest. 
Then they get old and they don't know what to do anymore. 
They work until they die or they become self indulgent. 
And it ends up with their children. 
And then it ruins the children's life because now they have no purpose and 
they're just filthy rich. 
And they just squander it. 
So like Vanderbilt and his grandson, 
William Henry Vanderbilt, made huge amounts of money. 
And then his son married a socialite, the famous Mrs. Vanderbilt, 
who spent all the money in showing off her wealth and having big parties. 
Maybe that was good in some sense, but you don't want that to happen. 
So what Carnegie said is you have to retire early. 
And become a philanthropists that's the second stage of your life. 
So I want to come back to this thing that if you go into finance 
think of you life as having two states. 
Like Bill Gates, Bill Gates was running Microsoft then he retired and 
set up the Gates foundation and he's actively working on giving it away.

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So this is not a course, again, repeat, not a course. 
It's a course on how you can make your mark on society, but 
it's not a course on how to get rich.
So the idea is: Added to Selection. Press [CTRL + S] to save as a note