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If I Want to Be a Professional Investor, Do I Need to Get an MBA?

Pop142638 views  2011-02-13 12:53

A reader sent me this email:

I've been studying value investing for about 2-3 years now. The more I speak to my friends and family about investing the more they tell me I need to go back to school to get my MBA. Since my background is in computer programming I've looked into all the different ways to go about switching my career. I've looked into different MBA programs around the country but I have reservations about spending a large sum of money on a degree that probably won't teach me how to become a better investor. I also have reservations about spending large sums of money period. The curriculums at many of these schools really don't interest me except for a few classes. And if I'm not interested in a subject, I will fail it. What I really want to do in the end is become a better value investor and manage a small portfolio. So my questions to you are: 

  1. What is your (educational) background?
  2. What are your thoughts on getting an MBA?

I'm a high school drop out. I never completed any school year beyond 8th grade. (That’s age 14 for our non-U.S. blog readers). I have a GED. And I briefly went to college.

I don't think an MBA will make you a better investor. However, an MBA can be used to show you are serious. Basically, it’s like having a liberal arts degree from an Ivy League school. It’s useless. But it might convince employers you’re smart or at least hardworking.

The three things that make people take you more seriously for a career in investing are: a CFA, a MBA, and an undergraduate degree in economics from a top U.S. school. A CFA is best.

The most useful designation by far is the CPA. It's not even close. 

Training as an accountant and training as a lawyer are the two most useful educational backgrounds for an investor to have.

Accounting knowledge is directly useful. Legal training is indirectly useful. The way law schools train their students to become lawyers exercises the same mental muscles you use when you invest.

The eight most useful courses for investors to take are:

  1. Financial Accounting
  2. Managerial Accounting
  3. Tax Accounting
  4. Business Law
  5. Marketing
  6. Business Administration
  7. Microeconomics
  8. Macroeconomics

The cheapest way to learn these subjects is to buy the textbooks and read them yourself.

None of those courses are hard.

Like I said, I dropped out of school after 8th grade and I had no problem passing those 8 courses when I briefly went to college.

If someone who never really went to high school can pass those courses, I’m sure someone who finished college – even if it was as a computer programmer – can teach himself those 8 subjects at home using the standard textbooks.

To answer your question: I would strongly advise against getting an MBA.

But – then again – I’m a high school drop out. So I'm not sure you want to take my advice on higher education.

Talk to Geoff About Higher Education

Comments Comments (2 )

  • pirot 2011-02-17 07:46
    You're an amazing individual!  I read your blogs and I think HOLY! HIRE THIS GUY!  I honestly thought just by reading your blogs that you had every degree underneath the sun.  You rock!  I know a handful of MBA's - not too impressed by them.
  • kfh227 2011-03-03 20:57
    I am a software engineer myself.  Quite honestly, I know a retired ex-wall streeter and I know more about investment than he does.  He is a good talker though!

    There is one guy I work with who I think could be an incredible investor but he doesn't care to learn.  He can learn, retain and use information like no one else I know but he just wants to accumulate knowledge of new technologies.  In one year he could be a value investor that is among the best.

    Value investing is not hard.  It is mostly an issue of discipline and willingness to read.

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