Finance Students React To Market Turmoil

Did you find yourself distracted by the financial meltdown this past week? Was the television in your office tuned to CNBC as markets reacted to the falling financial institutions?

Just imagine what it's like for business school students watching their future employers go down in flames.

Glued To The TV

Professor Elinda Kiss at the University of Maryland business school can't rely on old lecture notes for her class on banking and financial institutions. She keeps her eye on the headlines, because the companies she's talking about might disappear before long.

There are about 40 seniors enrolled in her course, and with graduation around the corner, their minds are fixated on the job market.

Student James Muench says he doesn't need to be hit over the head to understand that the crisis is relevant to him. Lehman Brothers offered him a job before the firm announced its bankruptcy on Sept. 15. He says he has been glued to the TV since the British bank Barclays announced on Sept. 17 it would purchase parts of the failed investment bank.

"If I'm not in class I'm pretty much watching CNBC all day to see what's happening with the deal between Barclays and Lehman," Muench says.

David Blank, a senior majoring in finance, says he doubts he'll be able to move back to his hometown of New York City to work on Wall Street. But he and Muench do view this as another opportunity to rise to the top of the heap.

"We're going to hit rock bottom and then there's nowhere to go but up, and it's just a matter of knowing when that's going to happen," says Blank. "That's the toughest part."

Muench says the students who are shaky about the financial situation are likely to get out of the field.

"And the kids who really want to pursue a career in it are going to stick with it and in four years the people that stick with it are going to be VPs," he says.

Shaken And Sober

Some graduate MBA students at the University of Maryland view the crisis through another lens.

These are top students who manage a million-dollar investment portfolio, a pile of real money they must now steer through a tanking stock market. (The fund was established in 1993 with a contribution from the university and has grown to $1.2 million thanks to appreciation and outside contributions.)

Professor Sara Kroncke says it's been a rough week.

"Yeah, inside this calm exterior is a very panicked individual," Kroncke says.

Her group is focused on the long term. They can talk for hours about whether to add a stock to their portfolio.

They had to decide what to do with stocks from Merrill Lynch and Wachovia. They ended up selling them.

At business schools around the country, the bad news from Wall Street has been hard to ignore.

"I would say the mood is very sober," says David Beim, who teaches finance at Columbia University in New York. "I think right now the students are shaken by these events."

Beim says his students are also rethinking their career options. But he's not steering them away from finance. Instead, he's telling them there's a lot to be learned when financial schemes designed by whiz kids go up in smoke.

"You should be willing to stand against the crowd," Beim says. "You should be willing to say 'I know everybody is making a lot of money and this looks like a great thing to do, but I'm worried this may not make sense.' "

At nearby New York University, Professor Aswath Damodaran says for a long time, too many students succumbed to the dream of becoming masters of the universe at the big investment firms.

"We've drained corporations [and] we've drained businesses of their brightest talent and brought them to New York and London and Tokyo and put them in investment banks," Damodaran says.

Now, Damodaran hopes students will go where they are needed most — to mainstream American companies that are struggling to survive in a global economy.