3 ms·

You know, being controversial here and coming from a finance perspective, I've wondered if Excel has done more harm than good to the finance / M&A / investing i

You know, being controversial here and coming from a finance perspective, I've wondered if Excel has done more harm than good to the finance / M&A / investing industries. Endless iterations, countless different scenarios, simulations of whatever what-if analysis you can think of, exact numbers to 10 decimal places... it all creates the perception of critical thinking and useful work. Often, again in finance and investing, these things are actually only a way to make you feel like you did something useful. It is easy to do these things in excel - and you can show the numbers and the outputs that support all the "hard work" you did. However, at the end of the day they are just numbers in a spreadsheet that you can make do whatever you want. Critical thinking about investment rationale is lost, because it is hard and doesn't look robust because it is just words, and mindless number crunching is preferred because it is easy and looks robust.

short_sells_poo 6y ago
I don't know who or why is downvoting you. You are advancing a perfectly rational discussion and shame on anyone who just disagrees by downvote. What you describe is an easy trap to fall into, doubly so in a world of imperfect and insufficient data like finance. You very rarely know the full picture and everything you work with is basically stochastic. Yet this stochastic nature can be easily hidden behind copious numbers that seem to add up. However, I'd like to avoid blaming the tool for this. Just as a hammer cannot be blamed just because it enables plenty of "craftsmen" to cobble together rubbish constructions. Excel is an incredible enabler, and unfortunately it is indiscriminate in that it also enables people to do the wrong thing. The solution here is education I feel. There's also a flipside I often encounter by the way: analysis paralysis. Data analysis - whether we talk about sexy data science with python, Julia, etc on huge cloud server clusters, or good old boring pivot tables in excel - means that a lot of stuff can now be analyzed in minute detail. I've seen so many efforts get bogged down in a depth first search of fractal-like problems because one can find new and surprising things no matter how deep they dig. Again I think the issue is not the tools, but the practitioners who still have plenty of learning to do in producing concise results that are easy to digest. I consider this a form of art.
- stanrivers 6y ago
  100% agree with everything you said. Excel itself is never the problem. It user error, and sometimes even "boss of the user error," that leads to both situations you describe - analysis paralysis and overreliance. I call out the "boss" concept because as some people get away from what leads to the numbers that are ultimately output to aid in the decision making, they can sometimes rely on the numbers too heavily relative to other, less "hard" but more important qualitative factors. It also can become an expectation that "robust analysis" is always conducted, and the time required outweighs the value created. Obviously not always the case, but just a tendency you see in things like investment banking, corporate business development, private equity, venture capital even --- For the record - without excel my job would be nearly impossible, so I love it. I just took the chance (and am getting the downvotes for it) to put a reminder out there for the less hard-data centric fields you should always add critical thinking to what is an impressive tool.
- dang 6y ago
  Please don't break the site guidelines by going on about downvoting. https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html As they say, it never does any good and makes boring reading. Moreover, users often give corrective upvotes, as they did above, which means that the complaint about downvoting is now factually false, and lingers on like uncollected garbage in a thread. https://hn.algolia.com/?query=corrective%20upvote&dateRange=all&page=0&prefix=true&sort=byDate&type=comment https://hn.algolia.com/?query=corrective%20upvote&dateRange=... The rest of your comment is just fine.
- npunt 6y ago
  > Excel is an incredible enabler, and unfortunately it is indiscriminate in that it also enables people to do the wrong thing. The solution here is education I feel. As someone who's both worked in education and is a designer for a living, I've seen this argument a thousand times about a thousand things, and while there's sometimes merit in it, it's usually a cop-out. Why not bake some of the education into the product, rather than treat them as separate? You probably can't have finance 101 in there, but excel is an example of a product whose internal documentation is rarely sufficient to answer even basic questions. Most of it is also at the basic level of what some function is, rather than how to solve higher level problems or why you'd choose one approach over the other. This approach isn't unique either, there's lots of education technology exploring the overlap between learning and doing within a single tool. The reason we don't see this more is it involves a different team composition than traditional software teams, which tend to not even consider documentation a central part of the product experience, let alone teaching. I agree with any tool capable of doing complex enough things, there's a discipline and an art to its use. But to say Excel doesn't really have a place to improve here is false, it's just stuck in its ways like lots of mature software is.
kenjackson 6y ago
I don't know if Excel has done more harm, but it sounds like the fact that you don't do critical thinking about investment rationale is the problem. It seems like you need to do both. This seems akin to writing code w/o design. Sure you can do it, but you're going down the wrong path (and I don't think I'd blame the existence of software because some people write code w/o design).
agumonkey 6y ago
I think you're about to reach the point where you realize that the world optimum point is very low.
kfk 6y ago
Market growth that typically has high error margins precise to the decimal... I am with you and I would not give too much credit to Excel in 2020 and I used to work in finance. I think what people don’t realize is that code forces you to focus on the model and less on the “form”. Numbers should be numbers, not forced into telling a specific story, this type of work is for text, power point, and similar.
RichardCA 6y ago
It's not controversial. People have been saying that since the days of VisiCalc. The relevant part starts at around 38 minutes in. https://youtu.be/c1yzXkH5Pfo https://youtu.be/c1yzXkH5Pfo

short_sells_poo 6y ago

I don't know who or why is downvoting you. You are advancing a perfectly rational discussion and shame on anyone who just disagrees by downvote. What you describe is an easy trap to fall into, doubly so in a world of imperfect and insufficient data like finance. You very rarely know the full picture and everything you work with is basically stochastic. Yet this stochastic nature can be easily hidden behind copious numbers that seem to add up. However, I'd like to avoid blaming the tool for this. Just as a hammer cannot be blamed just because it enables plenty of "craftsmen" to cobble together rubbish constructions. Excel is an incredible enabler, and unfortunately it is indiscriminate in that it also enables people to do the wrong thing. The solution here is education I feel. There's also a flipside I often encounter by the way: analysis paralysis. Data analysis - whether we talk about sexy data science with python, Julia, etc on huge cloud server clusters, or good old boring pivot tables in excel - means that a lot of stuff can now be analyzed in minute detail. I've seen so many efforts get bogged down in a depth first search of fractal-like problems because one can find new and surprising things no matter how deep they dig. Again I think the issue is not the tools, but the practitioners who still have plenty of learning to do in producing concise results that are easy to digest. I consider this a form of art.

stanrivers 6y ago
100% agree with everything you said. Excel itself is never the problem. It user error, and sometimes even "boss of the user error," that leads to both situations you describe - analysis paralysis and overreliance. I call out the "boss" concept because as some people get away from what leads to the numbers that are ultimately output to aid in the decision making, they can sometimes rely on the numbers too heavily relative to other, less "hard" but more important qualitative factors. It also can become an expectation that "robust analysis" is always conducted, and the time required outweighs the value created. Obviously not always the case, but just a tendency you see in things like investment banking, corporate business development, private equity, venture capital even --- For the record - without excel my job would be nearly impossible, so I love it. I just took the chance (and am getting the downvotes for it) to put a reminder out there for the less hard-data centric fields you should always add critical thinking to what is an impressive tool.
dang 6y ago
Please don't break the site guidelines by going on about downvoting. https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html As they say, it never does any good and makes boring reading. Moreover, users often give corrective upvotes, as they did above, which means that the complaint about downvoting is now factually false, and lingers on like uncollected garbage in a thread. https://hn.algolia.com/?query=corrective%20upvote&dateRange=all&page=0&prefix=true&sort=byDate&type=comment https://hn.algolia.com/?query=corrective%20upvote&dateRange=... The rest of your comment is just fine.
npunt 6y ago
> Excel is an incredible enabler, and unfortunately it is indiscriminate in that it also enables people to do the wrong thing. The solution here is education I feel. As someone who's both worked in education and is a designer for a living, I've seen this argument a thousand times about a thousand things, and while there's sometimes merit in it, it's usually a cop-out. Why not bake some of the education into the product, rather than treat them as separate? You probably can't have finance 101 in there, but excel is an example of a product whose internal documentation is rarely sufficient to answer even basic questions. Most of it is also at the basic level of what some function is, rather than how to solve higher level problems or why you'd choose one approach over the other. This approach isn't unique either, there's lots of education technology exploring the overlap between learning and doing within a single tool. The reason we don't see this more is it involves a different team composition than traditional software teams, which tend to not even consider documentation a central part of the product experience, let alone teaching. I agree with any tool capable of doing complex enough things, there's a discipline and an art to its use. But to say Excel doesn't really have a place to improve here is false, it's just stuck in its ways like lots of mature software is.

kenjackson 6y ago

I don't know if Excel has done more harm, but it sounds like the fact that you don't do critical thinking about investment rationale is the problem. It seems like you need to do both. This seems akin to writing code w/o design. Sure you can do it, but you're going down the wrong path (and I don't think I'd blame the existence of software because some people write code w/o design).

agumonkey 6y ago

I think you're about to reach the point where you realize that the world optimum point is very low.

kfk 6y ago

Market growth that typically has high error margins precise to the decimal... I am with you and I would not give too much credit to Excel in 2020 and I used to work in finance. I think what people don’t realize is that code forces you to focus on the model and less on the “form”. Numbers should be numbers, not forced into telling a specific story, this type of work is for text, power point, and similar.

RichardCA 6y ago

It's not controversial. People have been saying that since the days of VisiCalc. The relevant part starts at around 38 minutes in. https://youtu.be/c1yzXkH5Pfo https://youtu.be/c1yzXkH5Pfo