PhD Student testimonial

Stefano Dova

Managing Director, Co-Head of European Structuring - Structured Finance, Deutsche Bank, London, Italian and British

Could you tell us about your background and what you are doing today?

I am originally from Italy, where I studied at the Bocconi University and then I had a brief experience in Germany working for Allianz in quantitative asset management. That is when my interest for finance and quantitative topics started to develop. I then moved to London, where I took a range of different jobs in different asset classes including equities, fixed income products, derivatives and cash in a number of investment banks (JP Morgan, Merrill Lynch and Deutsche Bank). I have been a Managing Director at Deutsche Bank for 5 years and I am now European Co-Head of Structuring for “Structured Finance”, which includes many credit products ranging from securitisation to non-performing loans.

You have worked in many different asset classes. How does this help you in your current job?

It helps me a lot. I have experienced the market for corporate bonds, so I know how a CFO thinks about issuing debt and that is a corporate finance decision. I have seen cash and derivatives on equities in the 2000s, when this was a very fashionable market. I have seen the impact of liquidity stresses in the swaps market when I was doing swaps and swaptions. I have felt the pain of institutions being hedged only on Delta One instead of having a good convexity hedge as well. I have gone through most of the large mergers and acquisitions and all the lending structure, the lending activity right before the crisis; I have witnessed the CDO bubbles first inflate and then explode, which I think gives me a very broad understanding of the market operators, both investors and investment banks.

Why did you decide that you needed to do a PhD at this stage of your career?

In all honesty, I had already decided to do a PhD when I finished university and took my first job in Germany. I applied for a doctorate then but an opportunity to join investment banking came up. It was a bullish and extremely positive time to develop a career in banking so I dropped my doctorate. I left Germany and I came to London to start a career in investment banking. It has been a roller-coaster journey where I have learned a lot in the first few years, because being a humble soldier on the ground you have to pick up all market technicalities, as I mentioned earlier. Now, I have been lucky enough to get to a managerial role. My job is rewarding, but I felt that I needed to enhance my professional experience with a challenging intellectual pursuit. I therefore came back to my original idea of building high-level academic knowledge and acquiring research skills, because you never stop learning in life.

Why did you choose this particular Programme?

I looked around and found a number of MBA or MSc offers. Doing a residential Programme in any institution was not currently an option for me because I have a family that entirely depends on me so I have to continue working. So I looked at parttime programmes. MBAs were not really of interest to me, because it is mostly about management. I wanted something that would be in the finance space. And within finance, I found the EDHEC PhD in Finance Programme which is clearly deeper than a master’s Programme. I have, during my life as a manager, interviewed many candidates who have come from business schools, as well as many MSc candidates, and I felt that their preparation was not the type of inquisitive attitude that I was looking for. Therefore, I decided to select a doctoral programme taught in a school based in London and offering a part-time option. It was really the best choice for me.

At that time, did you talk to alumni or PhD candidates who were involved with the Programme?

I mostly decided by myself. Before starting the Programme, I talked to a colleague of mine, Igor Lojevsky, who recently successfully completed the Programme. He gave me very good advice and said that the Programme was high-standard and very challenging. That was the magic word! I wanted to take on a real intellectual challenge so it confirmed my first impression.

You have attended the first two courses, taken exams on these courses and now you have completed the last two core courses of the first academic year. Did these courses correspond to what you were expecting, particularly in terms of an intellectual challenge?

Before starting the courses, all I had on my shelves at home was Frank Fabozzi’s book on fixed income securities and a couple of wildly published books on equity, derivatives and credit derivatives. As of today I have 55 books…This probably points to the fact that I have a tendency to buy books or maybe it is just because I have been stimulated in looking into a number of different topics. I have to say that the first two courses were a bit of a shock. Although the shock was a bit anticipated, since I had not been actively studying for 15 years, apart from taking the GMAT to enter the programme. You have to recover the necessary concentration to listen for hours to lectures and try to understand concepts that are explained to you. I am very happy about the shock because it gave me adrenaline to continue; I have so far learnt a lot. I had never imagined that I would learn so much. Working in financial markets for a long time tends to foster a bit of arrogance about your knowledge of the world. This has been a humbling experience for me because I acquired a deeper background on many things that I took for granted and it helped me understand the “many more elements” that I have to go through and look at. This explains the 55. Overall, the Programme has been absolutely at the highest standard as far as I can judge it and teachers are of outstanding quality; I really hope that I can complete this first year successfully. All of the assignments have been crucial for me because I have been trying to study these topics just before joining the classes and just reading the books is not enough. It does not fix the knowledge in your mind and it does not give you a practical approach to theoretical concepts.

If you had to mention one main challenge in the Programme for you, what is it?

Due to the nature of the Programme, the challenge is time. Finding the time and being able to concentrate in very short lapses of time is a test, as you may have two hours on a plane or two hours in the morning for which you have to be concentrated from the very first minute and stay focused until the very last. Whereas when you are studying in a residential Programme, you can actually let your mind wander a little bit more during the day. Over here, you have to switch off every other stimulus to your mind and then just focus on the things you are reading, otherwise this time is not enough if you have a full-time job.

So, how do you manage your time? Do you use any possible free time, do you get up before your family?

Yes I do. I get up and go to the office before everyone else. I study a bit there, and then in the evening when my son goes to bed. I study on weekends, in the morning, and I take turns with my wife; I also try to find time for the family because it is important, in the afternoon and in the evening. I fly every week and I study on the planes, I take my books with me. Essentially, I study everywhere. I try to think about things even if I do not have the books in front of me, for instance if I have some spare time, when I am around or when I am travelling or when I am waiting for someone. I try and rethink about everything that we did and everything I have been reading because I found it a productive way of rehearsing.

I generally just try to be as attentive as possible in class, and every evening at home I try to review the material immediately to fix it in my head. Then when I study, I study each chapter and then the related literature together. So, generally I am studying in parallel the notes and the books or the papers.

Do you feel the Programme impacts your daily life at work?

It makes me think more about things that I would have normally done mechanically. It improves my self-confidence with respect to what I am doing, because I have foundations behind it and I believe that because of the theoretical foundations what I am doing is probably more justified. To judge the spillovers in terms of practical applications, I would have to see what happens when I try and write something…it will probably be somewhat related to what I do in my daily job. Then, my research and the conclusions I will draw are going to directly impact my job.

Have you been enriched by the diversity of backgrounds of your fellow classmates?

Massively! I think this is one of the most surprising facts about this Programme. I believe there are at most two people of the same nationality in the classroom. It’s incredible, you have Europeans, Asians, Americans, people that come from the buy side and the sell side, people working in governmental agencies… it is possibly one of the most enriching factors of the Programme. To be able to have discussions with your fellow classmates, to find out about their experiences, their points of view with respect to lectures, assignments, and everything that we do in class, and see how different it is from yours… all this gives you like a 3D-dimension around a problem that you may have looked at only from your own perspective. Confronting all these different approaches increases your mental diversification, which in my view is critical to learn. For an assignment, I recently worked with a gentleman from the United States. We were 10,000 miles apart and had to discuss issues and exchange points of view about this assignment. That was a first for me. Moreover we were coming from different horizons, since he works in hedge funds and I work in a bank. It was very good for my learning experience. To go back to my point earlier, the experience is humbling because you are reminded that there is not one way of looking at things.

Do you have a good idea of what you intend to do in your dissertation?

At the moment I have too many ideas, which is a problem because when you have too many things that you would like to investigate it is like being in a shop with too many pairs of shoes, you do not know which one to bring home. For some of them I have a bit of fear, fear of the mathematics involved; for some others, I have a bit of concern with respect to finding the right data. One of the ideas is to incorporate big events such as Greece restructuring its debt or, or North Korea deciding to test a new nuclear missile or other significant political events into a usual time-series model. You can consider them as special unique features, but they seem to be occurring regularly, so what approach should be considered? Work has been done in this area so how can you contribute to measuring the effect of these events on security prices and volatilities? At which frequency should you consider these events? Are you a portfolio manager, a risk manager or a central banker? All these questions are essential in determining the way to approach the problem. So everything has its own challenges and I will have to find the right one for me.

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