Nathan Jithendranathan‘Academic Research Has Taught Me Patience’ Nathan Jithendranathan July 28, 2014 I was raised in a small village in South India surrounded by our mother’s family members who kept careful watch over my brother and me. Their debates and discussions on a variety of topics enveloped us constantly even though we paid scant attention to the topics themselves. Career choices in India those days were limited and the most lucrative jobs were in the engineering and medical fields and hence I decided to pursue my undergraduate degree in the sciences. After finishing my undergraduate degree in chemistry, I went on to work for a few years as a manufacturing chemist. The economic conditions in India then were tough, and I realized that the opportunities for furthering my career were limited.My father, who was an accountant, suggested that I consider professional accounting as an alternative. I joined the program for public accounting certification and qualified as a Chartered Accountant, which is the Indian equivalent of a Certified Public Accountant. Later, I joined a consulting firm in Mumbai, India, and was sent to Africa on an assignment in 1980. A year later I joined a firm in Nigeria and worked there for six years, initially as financial controller and later as the CEO of one of their mid-sized manufacturing firms. During this time, and as part of my assignment, I was able to travel extensively in Africa and Europe.Spending those few years in the tumultuous and often risky political environment in Nigeria had me reassessing my future goals once again. One of the choices that opened up to me was further study and so I joined the graduate business program at Baruch College, City University of New York. After completing my Ph. D., my wife and I were looking for a suitable place to settle down and raise our young children. We had two choices: To continue in New York City or join the UST faculty. Even though my first visit to the Twin Cities was in chilly January, the warm and welcoming atmosphere at St. Thomas was enough to persuade us to come to Minnesota.During these years at UST I have had the opportunity to teach in China, Taiwan and Russia and to be associated with some of the finest and reflective scholars in the field. The Russian assignment was a U.S. State Department-funded project to help the Novosibirsk State University establish a business education program. There, I was assigned to teach an introductory finance course and found that there were no published finance textbooks in Russian. What began as a set of teaching notes eventually morphed into a textbook. With the help of Russian colleagues this was translated into Russian and continues to be used as the textbook for the introductory finance class at the Novosibirsk State University.My Ph.D. dissertation topic involved mathematical modeling of complex financial derivative instruments. At Baruch College, I also had the opportunity to study under the Nobel Prize-winning financial economist, Professor Harry Markowitz. His insightful analysis of financial markets and investigations on how investors allocate their funds into various asset classes encouraged me to delve into the area of asset allocation. Some of my research also is focused on how “shocks” in one market are transmitted to other markets; I also study why asset prices change. A common misconception about financial markets is that their movements are based on empirical models, analysis and established economic ties between countries. Market co-movements cannot solely be attributed fundamental economic linkages between countries. Herding behavior is yet another explanation for financial market co-movements. Herding happens when information asymmetry exists between informed and uninformed investors. The latter may not have the resources to acquire the information and hence mimic the actions of the informed investors or in some instances investor behavior may be construed as informed by domestic investors. The prices of financial assets are often results of an unconscious and subjective evaluation process, which to a certain degree depends on the overall mood of the market. When market participants are optimistic about the future, as in the case of the tech bubble of the 1990s, the stock prices tend to increase. The reverse is true when the market mood is pessimistic.Some of our research ideas also have been serendipitous. Recently when I analyzed the behavior of Russian stocks during the trading day I observed that they exhibit very high trading activity and price volatility around 4:30 p.m. (Moscow time) with no plausible reason for this flurry of activity. That is, none of the other markets are active at that particular time. It was during a visit to the Novosibirsk stock exchange that one of the stock traders pointed out that the increased activity corresponds to the opening of the futures markets in Chicago. This opened up a new area of investigation, namely, the impact of the foreign futures market on Russian stock markets.During the past 20 years at St. Thomas I have collaborated with some of the finest scholars and thinkers in the field and have also learned a lot from the students I teach. Academic research has taught me patience. It has to be pursued, I have learned, for its own sake!Thadavillil (Nathan) Jithendranathan is professor of finance in the Opus College of Business.From Exemplars, a publication of the Grants and Research Office.