Meet a Nordic financial research prodigy

Harvard, Yale, University of Chicago, UC Berkeley and London Business School stand in line to hire the newly hatched PhD-graduate Niels Joachim Gormsen as a researcher in finance. He picked a university where 29 Nobel economic science have studied or worked.

30-year old Niels Joachim Gormsen has landed a much coveted research job in finance at the University of Chicago. Photo: Jan Bjarke Mindegaard/FinansWatch

The 30 year-old Dane Niels Gormsen want to be frontrunner in his field, regardless of what that field may be.

For instance, he and his sailing buddy Andersen Thomsen won the youth World Sailing Championship in 2001 in the 49er class.

And recently, he accepted a job offer as assistant professor in finance at the University of Chicago. On that same day he defended his PhD thesis at CBS, Copenhagen Business School.

It is the first time in CBS-history that such an academically high-ranking university hires a newly minted PhD candidate in finance. No less than 29 Nobel prize winners of the Nobel prize in economic sciences have studied or worked at the University of Chicago.

"It's a unique situation that Niels Joachim gets to work at one of the best universities in the world. And on top of that, the best universities in the world in the area of finance were wooing him," says Gormsen's primary academic supervisor, professor Lasse Heje Pedersen.

Fierce competition for getting the best university jobs

To put the new job into perspective, every year about 300 newly hatched PhD finance candidates from the entire world apply for a research job at the University of Chicago. 20 of them receive an invitation to a job interview, and after the job interview, half of them fly to Chicago to present their research and be interviewed by a group of professors.

The university typically hires between zero and two young finance researchers every year.

On top of that, University of Chicago was by far the only university that wanted to lure the Danish researcher.

"I got job offers from all the American universities I visited. Among them were Harvard University, UC Berkeley, Chicago and Yale University, and I also got a job offer from London Business School," says Niels Joachim Gormsen.


On 8 June this year, Niels Joachom Gormsen accepted – together with PhD candidates from Harvard, Stanford, MIT and London School of Economics -- the annual AQR Top Finance Graduate Award which recognizes to the most world's promising PhD candidate in finance.

However, becoming a finance researcher was originally not part of his plans.

"I graduated from upper secondary school in 2007, and back then I liked maths. Our professor took us to the department of mathematical sciences at Copenhagen University, and they told us that we would do research in areas that only 10-15 people in the world understand. That was not for me, because I take great interest in social matters, and I thought maths was too narrow", he says.

He thought about studying economics, but he was admitted to International Business at CBS.

"My career plans were vague, but I had plans to work in the corporate world. Back then I loved sailing, so I spent a year longer at school than I had to," says Niels Joachim Gormsen.

The best professor was based in Copenhagen

He did not make it to the Olympics and gave up elite sailing, and after his bachelor, he studied in the Masters' program Advanced Economics & Finance at CBS, which is an elite program for the top students.

"The classes were old-school with blackboards and equations, but we were a small group with very skilled professors, and I was offered to study one year at Columbia University in New York. Which was where I got the idea of getting a PhD. And I realized that the best professor in the research field I wanted to do research was in fact at CBS."



To become a competitive researcher at the world's best universities, you must spend 5-6 years writing a thesis. Niels Joachim Gormsen did it in four.

The professor in question was Lasse Heje Pedersen who also had a meteoric career as a finance researcher. After qualifying in mathematical finance, he entered the PhD finance program at Stanford University and was hired as assistant professor at New York University in 2001.

After just four years, he received tenure as an associate professor of finance at New York University, and in 2007 at the age of 34 Pedersen he was appointed finance professor at New York University. Today he is recognized as a leading expert of market liquidity, and he is partner in AQR, one of the world's largest hedge funds.

"I was Niels Joachim's instructor and gave him the task of creating a set of complex data I thought would take a couple of weeks. The next day he gave them to me, and they were perfect," says Lasse Heje Pedersen.

Research reveals fluctuations in equity prices

The match between Niels Joachim Gormsen and Lasse Heje Pedersen is perfect, because they both take an interest in the theory of what is actually going on in the financial markets. "Empirical Asset Pricing Models" is the technical term for the field Niels Joachim Gormsen does research in.

"It's so obvious for me that the equity market is extremely important. Not only to investors, but also for trends in society as a whole. So my research is about what's going on in the equity market. I look at the return on equity and try to grasp the fluctuations. Why shares climb and drop over time, and why some shares go in a different direction," says Niels Joachim Gormsen.

He has written a scientific research article with Cliff Asness who holds a PhD diploma from University of Chicago, but decided to become head of so-called statistical arbitrage at Goldman Sachs. Later Asness established his own hedge fund, AQR Capital, using the basis of his mathematical models, and that made him a dollar billionaire.

"Of course it's interesting to see research that reveals what will happen and perhaps where you can make money. But for me it's quite interesting to try and understand why equity prices are fluctuating," says Niels Joachim Gormsen.

The instructor's close American contacts were valuable

As part of his PhD program, Niels Joachim Gormsen was going to Harvard University that usually do not accept PhD students. But it was helpful that Lasse Heje Pedersen is a big name in the US.

"I told them that we have a young scientist with a special gift. So they accepted him. And after a while, they asked him if he wanted to stay. But luckily, he came back to CBS," says Lasse Heje Pedersen.

In July, Niels Joachim Gormsen will move to Chicago. But before moving, he will marry his girlfriend who is an anthropologist.

"I think moving to Chicago will be great, but I'll also feel the pressure. They're very open-minded in Chicago if the arguments are good, and they really do argue," he says.

"Chicago school"

University of Chicago is known for the so-called Chicago school in finance headed by the Nobel prize winners Gary Becker, Milton Friedman and the still active professor Eugene Fama who fathered the theory that financial markets are always effective.

The school also hired Richard Thaler, Nobel prize winner, who argues for the opposite of effective markets, namely that markets are heavily influenced by the behavior of market participants, or what is known as behavioral finance.

The university is willing to pay for top scientists. Assistant professor Niels Joachim Gormsen is looking at a salary which is considerably higher than a full professor's in Denmark. On top of that, he will only teach a limited number of hours so he can focus on his research.


Photos of the Nobel prize winners associated with University of Chicago. Photo: University of Chicago.

According to Lasse Heje Pedersen, it is highly unusual that Chicago University hires a Danish PhD candidate.

"The top universities tend to only hire assistant professors from other top universities, and they usually don't read other applications. That's why it's so unusual that they hired Niels Joachim, and that several other top universities wanted him. Even at New York University it was very rare that a PhD candidate was taken from Chicago," says Lasse Heje Pedersen.

His employment is important for the study environment at CBS

He emphasizes that Niels Joachim Gormsen's success in the research job market has ripples:

"It's a huge boost for the institute and for CBS. Both for us professors and current and future PhD students. It puts us on the map which means we can attract top students," says Lasse Heje Pedersen.


Professor Lasse Heje Pedersen, CBS Foto: /ritzau scanpix/Erik Refner.

He says that hiring Niels Joachim Gormsen at CBS was never on the agenda.

"Like the top American universities, we don't hire the people we educate. We want them to go to a different scene. They may come back to us later if their research and competences keep developing," says Lasse Heje Pedersen.

Niels Joachim Gormsen may be the brightest star among young finance researchers, but he is not the only one. For several years, Danish National Research Foundation has funded CBS's research center for Financial Frictions, headed by David Lando, which has hatched a series of highly skilled PhD candidates and research that has attracted attention abroad.

Niels Joachim Gormsen's co-fellow, Christian Skov Jensen, is hired by the highly respected Bocconi University in Italy, and other PhD candidates are hired by Federal Reserve Bank of New York and University of Virginias Darden School of Business.

"I thought about studying PhD abroad. But Lasse was in Copenhagen, and that settled it. To me research is craft, and it's important to have a skilled master," says Niels Joachim Gormsen.


Some of the mathematical research based on Niels Joachim Gormsen's thesis.

English Edit: Lisa Castey Hall Nielsen

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