The 'cool' factor

Academics Go for IE

1462.jpgFebruary 2008 | By Pablo Triana, Professor and Director of the Centre for Advanced Finance at IE Business School.

Although recent chaos in the markets brings back memories of past investment fads that ended in tears, this time itâ??s different. Hedge funds and derivatives have had some positive effects on finance markets and the economy.

Investors who seek fashionable products have been successfully persuaded over the last few years to invest in hedge funds and credit derivatives. Although the chaos that currently reigns in our markets reminds use of investment fads that went wrong in the past, this time there is a key difference, namely the fact that recently promoted strategies had a positive impact on financial markets and the economy in general.

In recent months, we have been bombarded by headlines like “Disappointing hedge fund returns”, “Hedge funds collapse”, “Problems with CDOs”, “Losses in CDOs”. If you allow me a certain amount of nostalgia, I feel myself transported back to 1989 (when I was a bit of a wild teenager) or 2000 (when I was a postgraduate student who wanted to continue being a bit of a wild teenager). In those days, as today, investments that appeared to be unquestionably “cool” suddenly became a source of misery. The must-have assets (junk bonds and dot-coms) became a death-trap for many of those who blindly obeyed the dictates of fashion. In their desperate attempt to become a member of the cool set, those investors paid a very high price.

Hedge funds and credit derivatives symbolise the trendy investments that were the (partial) disasters of our time. The modern, chic destination for your money. Unavoidable for those who did not want to be pointed out as old-fashioned and off-track. In recent years, the prevailing atmosphere seems to have been one of glorious exaltation of those with sufficient vision for transferring millions to increasingly complex financial structures and funds, together with the unlimited ridicule of those who, inexcusably, failed to jump on the train of new trends. Not very different from the days of junk bonds and dot-coms. In much the same way that a young woman is made to feel uncool if she does not buy her clothes in Zara or Prada, investors have been made to feel desperately off-track if they did not have positions in hedge funds and CDOs.

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IE Business School pioneers in Second Life

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ricardo-perez.jpgProf. Dr. Ricardo Perez Garrido talks about how IE faculty and students of IEâ??s Master in Telecom & Digital Business, as the pioneers in business schools, explore new ways of teaching and learning in virtual social networking platform Second Life.
Prof. Dr. Perez is the Program Director of this Master which is supported by companies like Accenture, Cisco, Nokia and Telefónica.

Prof. Dr. Perez, what are reasons behind IE’s initiative to use virtual platform as alternative teaching method?
We want to be ahead of the game in terms of understanding the link between technology and society, and given the growing adoption of these type of platforms for leisure and work, we cannot be left out of this trend. In fact, we want to be able to lead this challenging environment as we have done in the past with other collaborative technologies, and help companies, communities and society in general understand its relevance, impact and feasibility as learning and sharing tool.

How does IE promote and facilitate teaching on a virtual platform?
We have created an island and provided professors with the technical help needed to explore this virtual world as just another platform for their teaching. In fact several training sessions of the Master in Telecom & Digital Business have already taken place in this environment with great results, at least in terms of identifying potential and limitations of the platform.
During this process, what are reactions from students and teaching faculties?
This is completely new for all. For now, only a small percentage of students are part of Second Life or other online virtual worlds, and the same case applies for faculty. But in fact, given the identification of this phenomenon as a global trend, both students and faculty are eager and willing to try the new tool and accept the good and bad things that being a pioneer means.

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