Assistant Professor of Finance
Desautels Faculty of Management, McGill University
The impact that Sebastien Betermier has on students is undeniable. It’s also remarkably consistent. As a favorite among students, this investment management prof is praised time after time for investing in the academic and professional success of his students. He embodies a contagious passion for the course work he teaches, inspiring learning through practical hands-on examples that make the his subject come alive before students’ eyes.
As a result, Betermier’s teacher ratings are sky high with a median rating of 5/5. No wonder, he’s been nominated for the Desautels Distinguished Teaching Award four times. In academic circles, Betermier is establishing himself as a rising thought leader. His work on the relationships between risk and return and how these drive investors in their investment decisions appears in top finance journals and has received several distinctions. Just this year, he landed the lead article in the Journal of Finance.
At current institution since: 2010
Education: PhD in Business Administration, Finance, University of California Berkeley, Haas School of Business, 2010
List of courses you currently teach: Investments and Portfolio Management
What are you currently researching and what is the most significant discovery you’ve made from it? The purpose of my research is to design efficient and usable guidelines for both individuals and professionals that facilitate wealth management decisions. With this in mind, I aim to better understand the relationships between risk and return and how these drive investors in their investment decisions. I’ve worked extensively with Scandinavian datasets that are uniquely rich in information on the portfolio holdings and socio-economic characteristics of large population samples. Research with this data has helped me to determine sources of risk that prompt investment decisions.
In a recent study with Laurent Calvet and Paolo Sodini, we contribute new observations addressing one of the most puzzling anomalies of the financial markets. Over the history of the financial markets, we have been trying to figure out why value stocks tend to yield greater returns than growth stocks. This opposes standard asset pricing theory which says that value stocks should yield lower returns because they are less volatile. In our research with Swedish data, my coauthors and I were able to analyze for the first time the determinants of value and growth investing. Our significant discovery is the observation that investment decisions for value stocks result primarily from a rational balancing of the risk and return trade-off of these stocks.
Professor you most admire: Jonathan Berk and Greg Duffee. They are relentless and uncompromising in their expectations for research excellence. They were, and likely still are, dreaded by PhDs and others in the field because they are unapologetic about rending an argument apart until they flush out the underlying logic and what is really important. Their seminars and conference discussions were always the feature event for us, both for the quality of the intellectual gymnastics and the entertainment value. Above all, they taught us how to build a strong intellectual foundation on which to ground our ideas and, through trial by fire, gave us the confidence to question everything and take nothing for granted.
“I knew I wanted to be a B-school professor when…I wrote an undergraduate thesis in my last year at UC Davis. I had the ideal mentor in Prof. Peter Lindert. It was the first time that I was exposed to and came to appreciate the process of finding a research question and then doing the hard work of thinking independently to find an answer for it. This exposure led me to pursue an academic career and I entered the Finance PhD program at Berkeley the following year.”
“If I weren’t a B-school professor…my biggest regret as an undergraduate at UC Davis was not taking a winemaking course. Since the school is renowned for its oenology research, it was a missed opportunity. Who knows, maybe I would be harvesting grapes in a vineyard in France and making wine instead of being a b-school professor.”
One word that describes my first time teaching an MBA class: Demanding and dynamic. MBAs are professionally more experienced and as a result are more demanding. Time is precious and the course is expensive. This means that for the professors, every single topic of the course must have a clear take-away and obvious practical application. It is a good exercise for academics because we are forced to ground the conceptual in the applied. I have become a much better teacher as a result.
Most memorable moment in the classroom, or in general, as a professor: Last year, I coached a team of talented students who won the PRMIA international risk management challenge – the top risk management competition in the world. These students embody the best of what we hope for in our graduates. They are incredibly smart, competitive, and are driven to be the best. Being able to mentor them toward a goal and then seeing them succeed at the highest level of achievement has been immensely rewarding.
What professional achievement are you most proud of? My recent work with Laurent Calvet and Paolo Sodini on value and growth investing, which was recently selected as the lead article in the Journal of Finance. It was a highly demanding project in terms of time and resources (it took four years of full-time work!) but the investment paid off. The paper breaks new ground in providing micro-level foundations for one of the most difficult puzzles in asset pricing research.
What do you enjoy most about being a business school professor? Academic freedom. Every profession has its pros and cons, and one of the pros for academia is that we are given the freedom to pursue our own curiosity and interests. For me this means that I get to pursue my particular interest in asset management practices and portfolio management.
What do you enjoy least about being a business school professor? Wasting my time on academic integrity issues. Though it rarely occurs among my students, when it does, it takes up a disproportionate amount of my time that could be spent in more productive ways. It never ceases me to amaze me what some students will come up with to avoid an exam or get an exception. Several years ago, I had one student who tried to fake cancer.
Fun fact about yourself: I’m the proud dad of two ‘Obama babies.’ Each one was born within days of President Obama’s 2008 election and 2012 re-election!
Bucket list item #1: Run a half-marathon.
Favorite book: The Years of Lyndon Johnson by Robert Caro. Caro is an incredible biographer and writer.
Favorite movie: The dinner game – French comedy at its best.
Favorite type of music: Hard to say, what I listen to is pretty eclectic.
Favorite television show: The Sopranos
Favorite vacation spot: Point Reyes in Northern California. The French Alps too.
What are your hobbies? My hobbies are ballet, playdates, and legos. Schlepping the kids around is pretty much where my extra time goes.
Twitter handle: None
“If I had my way, the business school of the future would have…more applied and project-based learning. At Desautels the students manage a real investment management firm and this is great. What they learn of theory is only as useful as it can be used in practice, and they really only appreciate it when they see how it is working in the real world. I strongly believe that, when theory and practice are understood and used in a relationship, it has an enormous impact on student appreciation and confidence in the subject.”
“Little did I know the impact it would have on me when I took his Investment Management course in Winter 2013. From day one he had all our names memorized, and that good first impression of him just escalated from there on. He has a charisma, passion, and ability for teaching that I have not seen throughout my time at McGill. He also cares for his students, with his door is always open for advice for the course, career or life. His course single-handedly taught me everything I needed to know in Finance. He made me passionate about his class and projects, and earning his praise for the best project in class is one of my proudest moments. Everyone who takes his course regards him as the best they’ve had and I still recommend this course to everyone I meet. Thank you for everything Sebastien!”
“Often business schools have courses taught by industry professionals without the theoretical and academic knowledge of research professionals. Prof. Betermier was therefore able to provide me with the strong theoretical underpinnings necessary to fully understand and appreciate the subject taught. He presents material in an uncomplicated way and his dedication to students comes through in his patience and availability. My experience with Prof. Betermier made me remember material thanks to my deep understanding of it, even a year later. I am very grateful to this professor and would be happy to see his recognized for his work.”
“He is young, knowledgeable, hard-working and extremely smart. He gave us a great overview of the entire financial market through his course Investment and Portfolio management. Every lecture was so well-designed that lots of examples, games and guest speakers are involved, in order to help us get a better understanding about each topic. Everyone in my class loves his course.”
“A professor’s ultimate purpose is the dissemination of knowledge. Sebastien Betermier’s ability to make formidable knowledge accessible to his students is a rare skill. I know his class was instrumental in my career switch from Marketing to Finance, and I hope he is recognized for making complex concepts accessible to his students.”
“I took Professor Betermier’s Investment Management course during the Winter 2014 semester and found it to be one of the best taught courses I took throughout my 4 years at McGill. Professor Betermier was highly invested in the success of his students, reflected by his thoroughly prepared course material, straightforward teaching methodology, frequent office hours and visible passion for the subject.”