Models

Equityprivate has a post about the blog of an alleged associate at Elevation Partners. The post has a great comment about financial models.

Large unwieldy models are almost universally produced by financial “professionals” who have no clue whatsoever about their predictive value (hint: it is vanishingly small) and therefore the size of the model is, in my view, inversely proportional to the technical competence of the employee.

I agree. I have seen a lot of large models that when examined, don’t actually work. While a small well built model that is driven by a few key inputs can be very useful.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: