I know what you’re thinking. Schreyer kid complaining about writing a thesis, how original.
But before you write this post off, let me tell you about a conflict I am having.
I am torn between two ideas for a thesis that pull me in completely different directions. One topic is at the core of my Finance major and the other has a much broader scope.
The topic that is ingrained in the study of the finance is the “random walk” theory of investing. This theory–based on the efficient market hypothesis and popularized by Burton Malkiel in his classic A Random Walk Down Wall Street–asserts that the market responds instantaneously to changes in information. Therefore, per Malkiel, not even the supposed experts have better chances of picking stocks that will outperform the market than “a blindfolded monkey throwing darts at a newspaper’s financial pages.” In my research, I would compare the performance of hedge funds to index funds over multiple decades to determine if investors are better off using a more passive strategy. Some questions I would want to answer in my research include: Are index funds the best bet for long-term growth? What effect will the rise of passive investing have on the liquidity of financial markets? How much of an advantage do institutional investors have over ordinary investors? And how likely is it to consistently beat the market (i.e. what role does luck play?).
The other topic that I am considering exploring relates not only to finance, but also economics, politics, international relations, and public policy. I would like to explore the paradigm shift in how the world powers view free trade and contrast their protectionism with the open economic policies gaining popularity throughout South America. For decades, a staple of U.S. foreign policy was the belief that a more interconnected world was to our benefit. Economic cooperation was encouraged among other countries following World War II to foster peace. The rationale was that countries that traded with, and were therefore economically dependent on each other would be less likely to go to war. That philosophy which long guided U.S foreign policy is at odds with recent geopolitical trends—Donald Trump’s Presidential victory, the UK’s dramatic exit from the European Union, and the rise of ultra-nationalist parties in Western Europe. South America, however, appears to be heading in a completely different direction. As stated in the recent Economist article, “A Newly Connected Continent,” “Latin America is opening up just as the developed world flirts with protectionism and nativism.” After years of economic deceleration, South America is turning away from populist interventionist policies, while trying to put in place democratic reforms. This could make for a compelling case study in juxtaposition.
Both of my thesis ideas need refinement, but determining which path to follow is a decision that contains many facets. The advisers I would be working with would be very different for each topic, and I would need to consider how I would want to relate my thesis to my career goals. Studying South America and paying specific attention to the continent’s largest economy, Brazil, could open opportunities to apply for international travel grants. There are many considerations to make, but I am excited to begin this process with Schreyer’s extraordinary faculty.
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