Why Finance Students Must Learn Discipline Before AI Replaces Their Jobs with David Stangeland
In this episode of Financial Modeler’s Corner, Host Paul Barnhurst sits down with David Stangeland, a finance professor at the University of Manitoba, to talk about teaching financial modeling, how students learn best, and the tools that have changed over the years, from PV tables to Excel. David shares what he's learned from more than 30 years in the classroom, why planning is so important in modeling, and how he uses real money investing through a student-managed fund to teach hands-on skills. He also talks about the value of the FMI curriculum, the role of judgment in modeling, and why he still learns something new every time he teaches.
David has been teaching at the University of Manitoba’s Asper School of Business since 1991. He has a PhD from the University of Alberta and is both a CPA and a CMA. His research focuses on corporate governance and performance and has been published in top finance journals. He’s co-authored two corporate finance textbooks and currently advises the school’s $2.8 million student-managed investment fund.
Expect to Learn
The most common mistakes students make when building models
How Excel helps students better understand what they're doing
Why structure and layout matter in a financial model
The importance of combining modeling with real-world context
How the FMI curriculum is used in teaching valuation and asset management
Here are a few quotes from the episode:
“There’s no one right answer in valuation. It’s about making good assumptions and thinking through your logic to build a credible story.” - David Stangeland
“Don’t think you know it all. Always be open to learning and improving. That mindset will take you further than any formula.” - David Stangeland
“Spreadsheets aren’t going anywhere. Whether it’s Excel or something else, that flexible grid is still the best way to work with data.” - David Stangeland
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In today’s episode:
[02:03] - David’s Background
[06:36] - Love for Teaching
[10:05] - Starting with NPV Tables
[13:54] - From Calculators to Excel
[22:20] - Teaching with Three-Model Framework
[27:54] - Current Projects Outside Teaching
[33:19] - Modeling Standards Followed
[35:20] - Favorite Lookup Function
[37:18] - Advice for Aspiring Modelers
Full Show Transcript
[00:00:59] Host: Paul Barnhurst:. Welcome to Financial Modeler’s Corner. I am your host, Paul Barnhurst, aka The FP&A Guy. And this is a podcast where we talk all about the art and science of financial modeling with distinguished financial modelers from around the globe. The Financial Modelers Corner podcast is brought to you by the Financial Modeling Institute. FMI offers the most respected accreditations in financial modeling, and that's why I completed the Advanced Financial Modeler and encourage you to do the same. This week, I'm thrilled to welcome David Stangeland, welcome to the show.
[00:01:53] Guest: David Stangeland: Well, thanks, Paul. Nice to be here.
[00:01:54] Host: Paul Barnhurst: Yeah, really excited to have you and get to chat. I know you and I got to chat a couple of times before the episode, and I was really excited for my audience to hear what you have to say. So a little bit about David Stangeland. He is a professor of finance at the University of Manitoba's Asper School of Business, where he has taught since 1991. He holds a PhD in B.Com. Distinction from the University of Alberta and is a CPA and a CMA. His research focuses on corporate governance and its effects on corporate performance, examining takeovers, shareholders' rights, and ownership structures. His work is published in leading journals, including the Journal of Corporate Finance and Journal of Banking and Finance. With support from the National Bureau of Economic Research, he is a distinguished educator. He is a two-time winner of the CMA Canada Academic Merit Award and a four-time recipient of the Certificate of Teaching Excellence. He developed the first investment banking course at the University of Manitoba and has taught internationally in the Czech Republic, China, and Poland. He coauthored widely used corporate finance textbooks. He has served in leadership roles, including department head and associate dean, and serves on various pension and investment committees. So again, welcome to the show. I love the background. So you've had quite the career so far.
[00:03:26] Guest: David Stangeland: It's been a lot of fun.
[00:03:28] Host: Paul Barnhurst: That's what I like to hear. It's always good when you enjoy what you're doing. So obviously, you teach a lot of students. So I'm curious, what are some of the most common issues you see when students first start modeling? What are some of the challenges?
[00:03:41] Guest: David Stangeland: Well, the most common issue I would say, is not planning ahead. What I mean by that is when they're setting up their model, they really need to think about what they're going to be doing with it, and that they may need to be changing inputs and those sorts of things. So when you see students that are hard coding some data, having links to other data and all that, and then you talk to them, it's like, well, you need to change this. It becomes a nightmare for them. So I always say that's the most common issue, and I really try to steer them away from that.
[00:04:12] Host: Paul Barnhurst: Yeah, that doesn't surprise me. I think that's a common issue. Everybody faces early on. And you, you learn the hard way after a few models hopefully. So what's the most unique thing you have seen a student do when submitting their models? Kind of for the first time. What's probably the most unique one you've had?
[00:04:29] Guest: David Stangeland: Well, unique good or unique bad? I guess it would be a question.
[00:04:33] Host: Paul Barnhurst: You can go either way. You could do one of each if you want.
[00:04:36] Guest: David Stangeland: All right. Sure. So for unique bad, this is years ago when I was teaching international finance and the students had set up the whole model and they were using some form of interest rate parity to look at rates across the different countries. And then this fed into a discounted cash flow model for the project. So as they're presenting this to the class I am looking at what they've got up on the screen. And I said, you know, there's a little error right at the beginning of your model. Can you, can you just change that number in there and show us how that will flow through into the whole model? That's when one of the students admitted that what we were seeing on the screen was actually done in a word table. They had done all the calculations by hand. Like, I don't want a calculator or something like this in the background. So changing one little thing that wasn't possible. So that would be the uniquely bad one. I would say that's like the extreme of what I just said about not planning ahead, right?
[00:05:34] Host: Paul Barnhurst: Yeah, putting it in a word document and calculating it all by hand is pretty bad.
[00:05:39] Guest: David Stangeland: So that would be the most unique good one, which I've seen. Several of them are when the students are doing a valuation of a company, and they've got all the direct links to the Bloomberg data cells, and because we have Bloomberg at our university so they can do that. And that's pretty cool. I mean, that's much better than trying to export things and drop them into a spreadsheet when you can just link directly to Bloomberg's data source.
[00:06:03] Host: Paul Barnhurst: I can imagine anytime you can link directly, especially when you can make things dynamic and data sources can update. And so much easier than copying, pasting or trying to extract it from a PDF or whatever it might be of how you're trying to get the data into your spreadsheet. Never fun. I've unfortunately done that more than I'd like to admit. Much easier now with AI though.
[00:06:25] Guest: David Stangeland: Yeah, I think we all have. Right. And then it's just a matter of learning and learning how you can link things and everything like that. So yeah, always be willing to learn, right?
[00:06:34] Host: Paul Barnhurst: Totally agree. So you've been teaching at the University of Manitoba for almost 35 years now. So what is it you love about teaching what's kept, you know, kind of teaching there so long?
[00:06:44] Guest: David Stangeland: I really love teaching. Well, generally what I really love about teaching is just interacting with the students. But the two components that I love the most, especially when I'm teaching in an intro course, is to be able to explain something to students. They may have a little trouble understanding it at first, and then you see the light bulb go off over their head. And, uh, that gives me a great deal of satisfaction when they finally understand something. And not only do they understand it, but then it's easy for them. So that's great. And then the second, uh, thing that I love about teaching is to see the students when they're near the end of their program, and to find out about what kind of fantastic jobs they're getting. And, uh, so I've been lucky because I've been teaching, like some really good students watched them go off into investment banking or portfolio management or or, you know, working for, uh, some of the big five accounting firms and doing merger and acquisition analysis and all this stuff. And it's just like, wow, that's I'm glad I could be a little a small part in helping you get there. And it makes me feel great. Yeah.
[00:07:56] Host: Paul Barnhurst: No, I could imagine it's always rewarding when you see, I'm sure those students get job offers. I know it's rewarding for me when I teach students and they're like, yeah, I teach a course on Excel or whatever. I had one go, you mean you could save me like six hours every Monday if I use Power Query? Like, yep. All right. You know, teach me more. It's like and you get those notes where they've streamlined something and just saved tons of time. And it's really rewarding. So I can only imagine how rewarding it is when it's a job and how excited they are when they land that job they wanted. Because it's hard finding a job out of college. It's not an easy experience.
[00:08:34] Guest: David Stangeland: And a kind of a follow up on that. I had one student who I taught when I was in Poland every summer. And so one of my MBA students from there, about six months to a year after the course was done, he emailed me and he started asking about some various things in terms of what he was doing at work. He said, in your class, you taught us to make sure that you include this and don't ignore it and everything like that. And I said, yeah, for sure. It was basically a cost savings that the project was going to generate. And, uh, his bosses were telling him to just look at the new cash flows that the project was going to cause. But in a sense, to ignore the cost savings, which doesn't really make any sense. So I said, no, no, no, you're you're absolutely right. You need to you need to capture those cost savings in this new project. And that's going to really influence whether you go forward or not. And so he pushed on. And then he got back to me a while later. And he said that he convinced his bosses and they were really happy that he did this. And, uh, they're going forward with this project. And I was like, wow. And again, it's nice to see when they can use the stuff that we teach in our classes now.
[00:09:49] Host: Paul Barnhurst: It makes a lot of sense and it definitely costs savings or something you want to include. Those can be material in many projects, unless there's a very specific reason you're not including them. But as a general rule, I am 100% with you. You should always be including that. That's a great example. So when you and I chatted, you mentioned when you were working on your PhD, you started with using NPV tables.
[00:10:11] Guest: David Stangeland: Yeah. Or just PV tables I guess. Yeah. So yeah.
[00:10:15] Host: Paul Barnhurst: Pv tables. Can you tell us what those are?
[00:10:17] Guest: David Stangeland: Yeah. Well I'm sure most of your viewers have never heard of them or seen them and they should be thankful for that.
[00:10:24] Host: Paul Barnhurst: Yeah. I've never used them so I don't think when you were on your PhD was what, junior high in high school. So the computer was kind of starting to come around for me on the things I was doing.
[00:10:33] Guest: David Stangeland: Yeah. So, so when I was a PhD student at the University of Alberta, actually, even when I was an undergrad student at the University of Alberta, uh, in the first finance class, we kind of had a choice then to use these PV tables, and the PV table would basically be you'd have two, two sets of tables. One was for single cash flows and one was for annuities. And you have a TV table and FB table for both of them. And uh, and so, you know, it was all based on $1, so $1 single cash flow or $1 annuity. And then of course you could scale it up by the amount of the actual cash flows. And so you would look across the column in terms of how many years. And then you look down all the rows in terms of what the interest rates are. And then from that you'd get a factor, a discount factor or a future value factor. And then that's how you would discount cash flow analysis. And uh, fortunately, my professor at the University of Alberta gave us the choice that we could use those tables. But if we wanted to buy this new thing called a financial calculator, we could do that too. And so I bit the bullet and I bought an HP ten V or something like that. I think that was HP 12 C like one of the original financial calculators. Okay. Yeah, yeah.
[00:11:52] Guest: David Stangeland: And uh, and it was great. And I used that and I thought, why on earth would I ever want to use this table if I can use the financial calculator? And so when I, when I started my job at the University of Manitoba, and again, I was going to teach intro finance for the first time there, and I met with my colleagues and guess what they were using? They were using pivot tables. And I said, okay, guys, we have to switch to a financial calculator. And they're like, oh, you know, if they use a financial calculator, they won't know what they're doing. They're just going to punch in numbers and not know what it means. And I'm saying, well, what's the difference between that and a pivot table where you're looking at one column, you're looking at another column, you got this thing and you multiply it by your number. You still don't necessarily know what it means unless you understand the formulas. So when we went to financial calculators, which, uh, they did pretty willingly, uh, we had to we always did. And we still do. We always present the formulas and give a brief derivation of the formula so the students really know where it's coming from. So whether they're using a financial calculator or if they're using an Excel function, they should know what it's really doing. Otherwise there's a good chance that they would misuse it.
[00:13:07] Host: Paul Barnhurst: Yeah I agree. And it's funny as you describe the table, I remember them being in the back of my textbooks.
[00:13:13] Guest: David Stangeland: Exactly.
[00:13:14] Host: Paul Barnhurst: I remember looking at them. You'd open up the last page, there'd be big, along with all the columns of $1, 8%, 6%, five years, you know, whatever. And you could see the different numbers. I just didn't think of those as the tables. But as soon as you describe it, I'm like, oh, I remember those.
[00:13:30] Guest: David Stangeland: Yeah, yeah. And actually when I first started working with, with my publisher on, on the two textbooks where I'm a coauthor, they said, you know, the competition has PV tables in the back of the textbook. Should we have that too? I said, absolutely not. So we never did. We never did. Yeah.
[00:13:49] Host: Paul Barnhurst: So it definitely wasn't your textbook I was using then.
[00:13:52] Guest: David Stangeland: No. That's right, that's right.
[00:13:54] Host: Paul Barnhurst: So today I noticed you mentioned when you teach your students you don't use calculators. So we've come a long way from PV tables to calculators. You made the switch to Excel. Why can maybe talk a little bit about how you made the switch. What prompted it?
[00:14:08] Guest: David Stangeland: Well, I think the main reason is that you can do everything in Excel that you can do on a financial calculator, plus you can do a whole lot more. And the nice thing about Excel is that learning how to use Excel is learning how to use something that you're going to use in your job afterwards. So whereas in most jobs, you're not going to be going back to a calculator. And the great thing about Excel too, is that when you're doing calculations in Excel, even if you just punch in the numbers all in one cell and do a calculation, it's kind of using Excel like a calculator. The nice thing about and also I don't recommend that, by the way, the nice thing about Excel is that you've got a record of what you did. So if you want to go back and check to see, did I put the numbers in right now or did I? Did I use the right function or did I use just the right mathematical formula or whatever? In Excel you can see it. And whereas on a calculator you punch your stuff in and you get. You get a result. That's it. It's gone. If you want to see if you did it right, you have to try to do the whole thing again. And if you get a different result, then you have to try it again.
[00:15:16] Host: Paul Barnhurst: Yeah. No, I mean I think it's great we've moved to Excel. I still remember taking, you know, level one of the CFA and the calculator and memorizing a million different functions. And I'm just like, when am I ever going to use this again? I mean, yes, it's rigorous and you do learn a lot from doing it, but there are areas where I'm just like, isn't there a better way? So I really appreciate Excel. And I think it like you said, the key is they understand the functions, the formula, the math behind it, you know, what's going on. And as long as they understand that it doesn't matter what method they use. And in today's world, a spreadsheet is by far the quickest and easiest and what you're going to do in the real world.
[00:15:56] Guest: David Stangeland: That's right, that's right.
[00:15:58] Host: Paul Barnhurst: You know, speaking of Excel, you often have new students that some of them probably haven't even opened Excel. Some have used it a little bit. But you know, their skills are very rudimentary. Right. So how do you get started as you're teaching them finance? How do you kind of bring them along in Excel?
[00:16:15] Guest: David Stangeland: First of all, I tell all my students that you should have your laptop in class with you and have Excel open. And, uh, in my classes I usually create, uh, Excel sheets with, with the data in it, but not the calculations. So it saves a little bit of time because then they don't have to input the data. And these are basic, you know, basic examples. So and then what I do during class is to toggle over from the PowerPoint presentation to the Excel sheet. And I will work through the stuff on the screen live with them. And I always tell them, make sure you're working through it, too. And, uh, so, you know, I try to explain everything. So if I'm using an absolute reference, I tell them why I'm using an absolute reference, and if I'm using a relative reference, I'll tell them why that, you know, at least at first. And then later on, I'll tell them. So here we have, you know, we have to use an absolute reference. And they kind of get the idea as to when we're doing that. And I always say to the students, you know, the best thing that you can do in class is to be doing it yourself, working along on your Excel sheet. And the best thing that can happen for you is that you get the answer wrong. Because if you get it wrong, then you can look back and say, okay, well, what did I do wrong? And how can I avoid doing that again? And so that's kind of where I start. And then, you know, eventually introduced them to, uh, the time value functions, which we use a lot in Excel II and a lot of them, I'll show kind of both ways. I'll show it with a formula like let's input the actual formula or with the time value function. And that can be useful in its own way.
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[00:18:33] Guest: David Stangeland: Well, especially if they're using a function like an NPV function. And uh, let's say you've got a project with a project or a company that you're trying to evaluate. But let's say let's say some of the years the number is zero, right. If you don't actually input a zero in there, and you just leave it as a blank cell that you're selecting in your array for MPV. It just ignores it. And so all your other years end up being off because it ignored the blank cells. So you know, that's why I like to show it. Let's do it with a calculation. Do a cash flow at a time. Sum them up to get NPV. And let's do it with the NPV function. And then let's change a few things. And then they're shocked. It's like oh why doesn't it do that. Well that's what you need to learn.
[00:19:14] Host: Paul Barnhurst: Yeah it's a great way to teach because there's all those little quirks nuances whatever you want to call them in Excel that you don't know until you either experience it yourself or somebody shows you and you're like, oh, that's why this is all wrong, and you have no idea. You teach a valuations class and talk a little bit about that, how you think about teaching valuations to students and what all goes into that.
[00:19:40] Guest: David Stangeland: Okay. So we look at uh, various discounted cash flow models and then we look at comparable company Comparable transaction type models as the main things. And I think one of the in a lot of our classes, you know, especially when you're going more towards the intro classes, the students want to know what's the right answer. And when you get into the evaluations, you quickly realize, first of all, none of these models give you exactly the same result. And quite often they're quite different from each other. And so I tell the students, you know, don't expect there to be a right answer. You need to get used to this. And you need to start thinking about, you know, using your judgment and your experience to influence what's going in there for your inputs. And do the outputs make sense and all that sort of stuff. So yeah, it's a lot of fun because, uh, you can see them kind of growing as students. It's not just applying formulas or functions or whatever, but it's now thinking about, is this making sense and is what I'm putting in there making sense. So that's a big part of what we're doing in our valuation model. And then in addition to the numerical calculations that we do, we always, always do a qualitative analysis to look at if you're trying to value a company relative to its peers, you know, think about what's the company's competitive advantage or disadvantage. And uh, that should have a lot of implications in terms of whether it's going to have a better or worse valuation ratio. So if you got you got to think about the, uh, qualitative side too.
[00:21:22] Host: Paul Barnhurst: And that's one of the things that I appreciate most about my grad school Professor Gallagher. That was over our finance department. Is he required in every one of our assignments? We did. We always had to do a Porter's Five Forces right up.
[00:21:33] Guest: David Stangeland: Okay. Yeah.
[00:21:34] Host: Paul Barnhurst: Around the strategy. And he graded that almost as you know, he's been putting in as much effort as he did. On how he did the math, because he wanted to know our thinking and what went into our assumptions, because as we all know, anyone who's done any modeling. Every modeler is going to get a different answer and every answer is wrong. The question is, is it valuable? Have you made good assumptions where you can make a decision that will give you enough confidence to say, yes, we should get a return on this or yes, this makes sense. Yeah, I, I always joke that if I could forecast with that level of accuracy, I wouldn't be here because I'd be on a beach somewhere. I would have made a fortune in the stock market.
[00:22:12] Guest: David Stangeland: Right? Exactly. For sure.
[00:22:14] Host: Paul Barnhurst: I know you're a a big fan of the FMI.
[00:22:19] Guest: David Stangeland: Yes. For sure.
[00:22:20] Host: Paul Barnhurst: And you know, you believe that curriculum is great for teaching people how to build three models. So what is it you like so much about that maybe. How do you use that in the teaching you're doing?
[00:22:30] Guest: David Stangeland: Yeah. So in my I teach an applied asset management course where we're looking at doing the valuations of companies to, to select them for a portfolio basically. And so, so there's it's all about valuations. And so obviously the FMI material is perfect for that. And what I do I require them to do a couple of the FMI modules. Uh, and then if they want to finish it off afterwards, they can do that on their own. But it gives them a really good structure in terms of how to set things up, and then great layouts in terms of how to present things very, very clearly. And, you know, I love the fact that they have specific pages for inputs and things are color coded and all that. So, you know, you know, where you should be inputting things and where you shouldn't be inputting things. And you know, all of these all of these things to make it a very robust model and one that you can change if you need to change it. All the good things about a model is exactly what they teach. So yeah, I'm a big fan.
[00:23:38] Host: Paul Barnhurst: No, I am too. I know when I took it and yeah, I built a lot of models at that point. I took it last year. I was a better modeler when I was done. There were just ways and things they taught that I wouldn't have thought about it that way, and it made a lot of sense. So I'm a big fan. I can totally see why you're teaching it. And, you know, you mentioned your investment class. You have a small, uh, investment fund the students invest in. How does that go? What's that experience like with the students? Because I'd imagine most of the students have probably never invested in a stock or any kind of asset at this point with their own money. So it's probably a little intimidating for them.
[00:24:16] Guest: David Stangeland: A little bit. Yeah. Well, surprisingly enough, when I pull the classes, even some students in the intro class have done some investing, so I'm actually quite impressed with that. But, So that course I was talking about, the Applied Asset Management course is kind of the precursor to the students working in our student managed investment fund. It's called the Price Student Managed Investment Fund. It's actually not that small a portfolio anymore. I checked today before we came on air, and it's got a little bit over $2.8 million of assets in it. So not bad. It's you know, it's not a big financial institutional size portfolio, but it's but it's pretty good. So what the students are doing, they're, they're, they're taking a lot of what they learned in that applied asset management course where we did the valuations. And now they're doing real valuations on real companies for the purpose of trying to pick which companies to include in the portfolio and make recommendations. And uh, what's interesting about that is that because they know it's going to influence what we buy for the portfolio, they and when we're buying something and we're buying $100,000 of a stock or something like that. So it's not insignificant, right? They know it's got real consequences.
[00:25:33] Guest: David Stangeland: And so they are super keen on making sure that they're not going to give bad recommendations. The level, the level of engagement in that program is amazing. Like, the students come in and they're talking about their knowledge of the finance and business news when they're in. That is probably better than almost anybody else, because they are so keen on knowing what their companies are, and knowing what the industry's knowing what's going on internationally. You know, tariffs, whatever, you know, all that sort of stuff. Right. And uh, and then how it all fits into, into the valuation and how it's going to impact the company in the future and, and all that sort of stuff. So yeah, it's a great opportunity for our students. We've only had this, this portfolio going for a few years now. And the uptake by the students has been great. And I feel so fortunate because I get to be their faculty advisor for it. And, you know, you've got like the best students wanting to get in there. And they do get in there and, and it's a lot of fun.
[00:26:40] Host: Paul Barnhurst: While my background is in fact, I am also passionate about financial modeling. Like many financial modelers, I was self-taught. Then I discovered the Financial Modeling Institute, the organization that offers the Advanced Financial Modeler program. I am a proud holder of the AFM. Preparing for the AFM exam made me a better modeler. If you want to improve your modeling skills, I recommend the AFM program podcast listeners save 15% on the AFM program. Just use Code Podcast.
[00:27:35] Guest: David Stangeland: Yeah, these students don't want to leave. They when we're done like the allotted time. They don't want to leave. They want to keep talking about it.
[00:27:43] Host: Paul Barnhurst: That is great.
[00:27:45] Guest: David Stangeland: Yeah.
[00:27:45] Host: Paul Barnhurst: So I want to ask one more kind of question about teaching and being a professor. And then we're going to move into some standard questions we ask every guest.
[00:27:54] Guest: David Stangeland: Okay.
[00:27:54] Host: Paul Barnhurst: What are you working on outside of teaching? What are you, what's your project at the moment?
[00:27:58] Guest: David Stangeland: So the main thing I'm working on these days. I'm a coauthor on two finance textbooks. And so, uh, they're always doing, we're always doing revisions and trying to get them up to date, trying to improve them. So that's taking most of my time. And I've really enjoyed being a coauthor on these textbooks, because lots of people read them. And it's nice too, just like lots of people watch your podcasts. Right. It's nice to do something where you've got a big audience and, uh, and the textbooks definitely allow for that.
[00:28:31] Host: Paul Barnhurst: That's cool. Yeah. And you're totally right. It's a textbook, right. Every student needs one or a finance class. And so you get a wide audience on those. All right. So this first one, the question we ask everybody. Everybody has an answer. It will vary a lot from person to person. But do you have or what is your favorite Excel shortcut?
[00:28:52] Guest: David Stangeland: I would say it's the Vlookup. I use that a lot just because I've got even even in terms of grading, uh, I've got different packages of data coming at me from different sources and just putting it all together and allowing Vlookup to look it up and put it all together in a nice spreadsheet that I can then do, do my stuff. That's perfect. So that's it. Yeah, that's what I use a.
[00:29:17] Host: Paul Barnhurst: Lot is fabulous. It makes it really easy. Yeah. Vlookup Xlookup all of them. I'm a big fan of being able to quickly look up data. I was using it for something earlier today. All right. What's the number one lesson you have learned throughout your career that's helped you the most as you look back on your career?
[00:29:37] Guest: David Stangeland: I would say it is. Don't think you know it all and always be ready to learn and always strive to learn. So I can say that pretty well every time I teach, even when I'm teaching the intro finance class, I'm learning something new by the time we're done in class and have had student questions about various things. And, you know, there's something new that I've learned. And so, teaching other people doesn't mean you can't learn by yourself. So yeah. So don't think you know it all. Always be ready to learn. And it's and it's great to enjoy learning too.
[00:30:14] Host: Paul Barnhurst: Yeah. One thing that I love about this podcast is I learned something from all the guests, I'm sure.
[00:30:19] Guest: David Stangeland: Yeah, yeah.
[00:30:20] Host: Paul Barnhurst: I'm curious, what's the most unique or kind of fun thing that you've created a model for that you've built in a spreadsheet for your personal life?
[00:30:29] Guest: David Stangeland: Yeah. Okay. I was thinking about this. Uh, I would say one of the fun and actually very satisfying things. It wasn't really building a model for myself, per se, so I've bought a few properties over time and I've always dealt with the same lawyer. He's a great lawyer, super guy. And uh, when he would be doing the closing costs and everything like this, he would be calculating because the bank doesn't always transfer the money to the seller right on the closing date. So there would be some interest owing because of that. So he would calculate the interest charges. And I remember the first time that I was involved with him and I looked at how he had done the calculations, and I was quite young then, kind of a new professor, and I thought, oh, well, it doesn't matter that much, I'll just live with it. And then as I got older and I dealt with him on, on other occasions, I thought, okay, you know, you are a full professor in finance. You should n't let him keep doing this. So I built him an Excel model in terms of taking the inputs that you would get from the bank and their unique ways of quoting various rates and so on. And, uh, and then how to and of course, the number of days that you're dealing with and the amount of money and so on. So basically how to get the correct charges that, uh, that he should be quoting back to his clients and, and where I got the most satisfaction was when I presented this to him, and I told him that I wasn't going to charge him. This is on the, on the house.
[00:32:01] Host: Paul Barnhurst: So I'm sure he appreciated it.
[00:32:05] Guest: David Stangeland: Yeah. And I hope he still uses it. So yeah.
[00:32:08] Host: Paul Barnhurst: Made his life easier. So yeah, I would imagine he's still using it, but if not, you, uh, at least you help teach him.
[00:32:15] Guest: David Stangeland: That's right, that's right.
[00:32:17] Host: Paul Barnhurst: All right, so now we're going to move to the section we called rapid fire. And this is where you get to give a yes or no answer.
[00:32:23] Guest: David Stangeland: Just yes.
[00:32:24] Host: Paul Barnhurst: Or no, just yes or no. You can elaborate on a couple of them, because I know you could say it depends on all of them. You can plead the fifth on one of them if you really want. We'll give you one again, the whole idea is to make people take a side because everybody wants to say it depends, all of them. And that just doesn't make for good radio. But then you can elaborate at the end. So in models circular references. Yes or no?
[00:32:45] Guest: David Stangeland: No.
[00:32:46] Host: Paul Barnhurst: Vba yes or no. So do you prefer horizontal? So lots of sheets or verticals. Kind of the model. All in one sheet.
[00:32:56] Guest: David Stangeland: Horizontal.
[00:32:57] Host: Paul Barnhurst: All right. Excel dynamic arrays. Should you use them in your models? Yes or no.
[00:33:02] Guest: David Stangeland: Uh no I don't.
[00:33:04] Host: Paul Barnhurst: What about external workbook links? Yes or no?
[00:33:07] Guest: David Stangeland: Yes.
[00:33:08] Host: Paul Barnhurst: Okay. Named ranges yes or no?
[00:33:11] Guest: David Stangeland: Yes. But I don't really use them much.
[00:33:13] Host: Paul Barnhurst: So yeah, that's usually what I get. If someone says yes, it's usually sparingly.
[00:33:17] Guest: David Stangeland: Yeah.
[00:33:19] Host: Paul Barnhurst: Do you follow any formal standards boards when you're modeling like there's fast and smart, these other, you know, big standard book kind of standards out there.
[00:33:27] Guest: David Stangeland: No.
[00:33:28] Host: Paul Barnhurst: Okay. Do you think financial modelers should learn how to use Python in Excel?
[00:33:33] Guest: David Stangeland: Yes.
[00:33:35] Host: Paul Barnhurst: What about Power Query?
[00:33:37] Guest: David Stangeland: I don't know that one, so I can't say.
[00:33:40] Host: Paul Barnhurst: Ah, alrighty, I love Power Query. It's basically like SQL, but it's built into Excel for pulling data. So in the corporate world it was incredibly helpful because we're always pulling data from different sources, and it allows you to kind of clean it up. It's an ETL tool. What about power BI?
[00:33:57] Guest: David Stangeland: Yes.
[00:33:58] Host: Paul Barnhurst: Okay. Do you think Excel will ever die?
[00:34:01] Guest: David Stangeland: I'm going to change the question to do I think spreadsheets will ever die? And the answer is no.
[00:34:06] Host: Paul Barnhurst: I'm the FP&A guy and a passionate financial modeler. When I wanted to improve my modeling skills, I turned to the Financial Modeling Institute. Save 15% on FMI's program with code podcast at http://www.fminstitute.com/podcast.
[00:34:29] Host: Paul Barnhurst: And I would agree with the spreadsheets that the form factor is never going away. Will it always be the same software? That's another story.
[00:34:37] Guest: David Stangeland: I do remember Lotus one, two, three, so.
[00:34:40] Host: Paul Barnhurst: I do as well. I used that in high school. And I remember, you know, before the toolbars having the, bar that you'd put atop the top of your keyboard, the little piece of paper that would tell you all the different commands. I remember that on our personal computer and going in and using it and dating myself. Right. Will AI build the models for us in the future?
[00:35:02] Guest: David Stangeland: Uh, I hope not.
[00:35:06] Host: Paul Barnhurst: Might have you elaborate on that one here in a minute. Do you believe financial models are the number one corporate decision making tool?
[00:35:13] Guest: David Stangeland: Yes, but I'll elaborate on that one when you give me a chance.
[00:35:17] Host: Paul Barnhurst: All right. Well, uh, well, let me do one more, and then we'll let you elaborate. What's your favorite lookup function? And I'm going to guess Vlookup.
[00:35:23] Guest: David Stangeland: Yeah. Vlookup. Yeah.
[00:35:25] Host: Paul Barnhurst: So feel free to elaborate on a couple of those. What about let's do corporate decision making. Maybe we'll start there.
[00:35:29] Guest: David Stangeland: Yeah. So definitely I mean, models are extremely useful in making corporate decision making, but kind of like we talked about already. You need to have a qualitative analysis as well. And so you need to blend the model with experience, judgment and just a really sound qualitative investigation. So the two go there. I think they have to go hand in hand.
[00:35:52] Host: Paul Barnhurst: Makes sense I can understand that one. When I asked you will AI build the models. I think you said something to the effect of I hope not. Want to elaborate?
[00:36:00] Guest: David Stangeland: Well, a couple of reasons. Number one, I want my students to still get jobs. Number two, they don't trust AI to do it properly. And I mean, at least not from what I've seen so far. Maybe it will. But I also think people need to know what's in their model when they're using a model. And if AI builds it and you don't know what's in it, then, like, I think that kind of cancels out your ability to have judgment and experience and all that. I think it can cause some problems there.
[00:36:32] Host: Paul Barnhurst: Yeah. And it's interesting, you know, lots of different opinions. I think most people say yes, it will build the model, but there should always be humans in the loop.
[00:36:38] Guest: David Stangeland: Well, that was for sure. For sure.
[00:36:40] Host: Paul Barnhurst: Yeah, yeah. And I definitely think that I was talking to an experienced modeler who mentioned he goes, yeah, I use it for 100 to 1000 tasks. And he goes with an experienced modeler. It can be extremely valuable. He wasn't saying it was building a model but using it. He goes to put it in the hands of someone who's brand new. It goes. And it's just a disaster.
[00:36:58] Guest: David Stangeland: Right, right. Yeah, yeah. So, yeah. So so maybe guided AI, guided by experienced professionals or whatever.
[00:37:05] Host: Paul Barnhurst: Yeah. And it will be interesting for sure to watch. It's amazing how quick that's all developing. Every time I turn around I hear something new. I'm like, wait, we're doing what? Alright, just two more questions and we'll let you go here. The first is if you could offer advice to our audience to be a better modeler, what would be your, uh, piece of advice you'd give to people?
[00:37:27] Guest: David Stangeland: Well, just continue trying to learn, because there are always new tools that you can use. You know, some of the things that you mentioned were I didn't really know too much about it or, you know, whether it's the AI. So just try to keep learning and keep improving. I think that's the best thing you can do to be a good modeler.
[00:37:48] Host: Paul Barnhurst: Makes a lot of sense. Always be learning. So if our audience wants to learn more about you, potentially get in touch, what's the best way for them to do that?
[00:37:56] Guest: David Stangeland: They could search for me on the University of Manitoba's website. So it's you, Manitoba. And from there you get my email address and phone number and whatever else. Although don't fall into the office number because generally speaking, everything goes to my cell phone. So email is the best way to get in touch with me. We can go from there.
[00:38:15] Host: Paul Barnhurst: Perfect. Alrighty. So they can find you on the Manitoba website there. And they can look that up.
[00:38:21] Guest: David Stangeland: Yeah, again, that's Manitoba ka as it's a Canadian institution.
[00:38:25] Host: Paul Barnhurst: Yeah, it makes sense for. Yeah. Perfect. Well, thank you so much for joining David. It's been a real pleasure chatting with you. I, I love getting to talk about the PV tables. Brought back some memories Reese, as soon as you explain those, I'm like, oh, I remember those in my textbooks.
[00:38:40] Guest: David Stangeland: That's right, that's right. Well, it's been a lot of fun.
[00:38:42] Host: Paul Barnhurst: People listening are probably wondering what we're talking about, but I'm sure.
[00:38:46] Guest: David Stangeland: Yeah. That's right.
[00:38:47] Host: Paul Barnhurst: Well thanks again. I really enjoyed it.
[00:38:49] Guest: David Stangeland: Oh, yeah. Well, thanks for having me. And I enjoyed it too. And, uh, good luck with all your future podcasts.
[00:38:54] Host: Paul Barnhurst: Well, thank you. I appreciate that, David, and good luck with your students. Keep teaching.
[00:38:58] Guest: David Stangeland: Take care.
[00:38:59] Host: Paul Barnhurst: Financial Modeler's Corner was brought to you by the Financial Modeling Institute. This year, I completed the Advanced Financial Modeler certification and it made me a better financial modeler. What are you waiting for? Visit FMI at www.FMInstitute.com/podcast and use Code Podcast to save 15% when you enroll in one of the accreditations today.