Even an Elegant Financial Model Often Falls Short of the Boss’s Judgment

Originally published 2023-10-29Robin’s commentary

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Collected in Robin Shen’s Field Notes · Content type and attribution are shown above

English translation of the Chinese post originally published 2023-10-29. Translated 2026-10-30 with AI assistance. Historical figures and claims have not been updated or independently verified. 中文原文

Reading guide

Robin points to the chapters on calculating investment-project returns in corporate finance or financial management textbooks. If time permits, he suggests revisiting the later chapters and working through the calculations again. He recalls getting very high grades in financial management in graduate school, with a laugh. His personal impression now, however, is that even elegant financial models and projections often prove less accurate than a boss’s experience-based, off-the-cuff decision. Building a model still requires many conditional assumptions, such as the growth rate.

Key points

The finance chapters on investment-project returns are worth revisiting and recalculating.
Robin jokes about his very high graduate-school financial-management grades.
Models depend on many conditional assumptions, such as growth rates.
His impression: a boss’s experience-based judgment is often more accurate.

Columns and beams in an open building are connected by central rods and balanced weights, suggesting structure and checks in governance. — Capital markets & governanceThematic illustration · AI generated

Full text — English translation

This is basically the material in corporate finance or financial management textbooks on calculating investment-project returns. If you have time, revisit the chapters in the middle and later parts of the textbook and work through the calculations again. As I recall, my financial-management grades in graduate school were very high. XDDD My personal impression now, however, is that even elegant financial models and projections often prove less accurate than a boss’s experience-based, off-the-cuff decision. Building a financial model still involves many conditional assumptions, such as the growth rate.

These articles are personal notes, book excerpts, and collected reprints. Figures and events reflect the time of the original publication, are not current information, and do not constitute investment advice.

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