John Hussman of the Hussman Funds has a Ph.D. in economics from Stanford. He used to be a professor of economics and international finance at the University of Michigan. Now, he’s a highly successful money manager.
Here, John describes the moment that led to his career change:
There’s an economists’ riddle that goes “Why are the debates in academia so bitter?” – the answer – “Because the stakes are so low.”
Now, very often, that’s true.
I remember a presentation that Paul Krugman gave at Stanford where he was talking about a model of economic development. Paul drew a diagram on the board, and as he described it, he drew a few little arrows indicating migration of businesses from one area to another. A respected economic theorist at Stanford, Mordecai Kurz (who never drew an arrow without a differential equation), immediately jumped up and shouted “You haven’t described the dynamics!!” to which Paul responded that he was indicating a general movement of economic activity toward one place to improve efficiency. Dr. Kurz pounded the table and screamed “Then erase the arrows!! ERASE THE ARROWS!!” and then stormed out of the room and slammed the door behind him.
I think that was probably the exact moment that I decided to go into finance.