Precision in Modeling: Sam Sivarajan’s Wisdom on Balancing Art, Science, and Decision-Making
Financial Modeler's Corner
The Importance of Critical Thinking and Validating Assumptions in Financial Modeling
This chapter emphasizes the significance of critical thinking in financial modeling, highlighting the need to validate assumptions, take an outsider's view, and model scenarios that have never occurred before.
Welcome to Financial Modeler's Corner (FMC) where we discuss the art and science of financial modeling with your host Paul Barnhurst. Financial Modeler's Corner is sponsored by Financial Modeling Institute (FMI) the most respected accreditation in Financial Modeling globally.
In this episode, Paul Barnhurst is joined by Sam Sivarajan , who is a Speaker, Wealth Management Consultant, Behavioral Scientist, Stoicism Padawan, Fintech Advisor, Podcast Host, Bestselling Author and an Adventurer. He has a law degree, an MBA, a PhD in behavioral science, and has also earned a CFP.
Sam’s work is focused on how we can make better decisions so that we can get to better results – in investing, in leadership, and in our personal lives.
Listen to this episode as Sam shares:
- His journey working in Telecom during the tech boom.
- Advice on balancing the art and science of Modeling.
- His advice on making smart assumptions.
- The importance of Decision Making.
- How to think critically when building a model and making assumptions.
- Everything about his books ‘Making your money work’, ‘Uphill’ and ‘Am I Ok?’
- His position on controversial modeling issues, including circular references, dynamic arrays, modeling standards, AI in modeling, and more .
Quotes:
“ Never forget and lose sight of why you're creating the model, and who will use it....... ”
“ In my view, the model is simply a numerical representation of some prior deep-rooted strategic thinking , a nd you're bringing that to bear in that model as a representation . ”
“ A model is a simplification of reality. It isn't reality. And to remember that the model is but one tool in making key decisions. It shouldn't be the be all and end all...... ”
Sign up for the Advanced Financial Modeler Accreditation or FMI Fundamentals Today and receive 15% off by using the special show code ‘Podcast’.
Visit www.fminstitute.com/podcast and use code Podcast to save 15% when you register.
Go to https://earmarkcpe.com , download the app, take the quiz and you can receive CPE credit.
Follow Sam:
Website - https://www.samsivarajan.com/
LinkedIn - https://ca.linkedin.com/in/samsivarajan
Podcast - https://www.samsivarajan.com/podcast
Twitter - https://twitter.com/SamSivarajan
Sam’s books:
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In today’s episode:
(00:22) Intro;
(00:45) Welcoming Sam;
(01:01) The worst financial model Sam has ever seen ;
(02:57) Sam’ s background;
(04:22) Sam’s experience at Telecom;
(10:27) How to balance the art of Art and Science of Modeling ;
(12:27) Why is the process often more important than the actual Model? ;
(17:07) Advice on Assumptions;
(21:51) Sam’s technique to get better at Modeling;
(22:30 - 23:15) Validate your Financial Modeling Skills with FMI’s Accreditation Program (ad);
(23:21) How people think about making decisions;
(24:35) How to make better decisions;
(27:40) Frameworks that help with Decision Making;
(31:57) Sam’s experience while writing his books - Making your Money Work, Uphill and Am I Ok?;
(34:20) Rapid Fire;
(37:38) Connect with Sam;
(38:17) Sam’s advice on being a successful Modeler;
(39:34) Paul’s Top Picks
- The importance of the Thinking Process
- Validating Assumptions
(41:00) Outro
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