Despite Market, U Investment Class Improves Over Last Year

By and

Imagine walking into a classroom where the teacher hands you $50,000 and tells you to go play the stock market.

This is a reality for 17 hand picked students at the School of Business.

Associate Professor Liz Tashjian teaches a year-long class that gives students a real-world approach to investing in the stock market. This is the third year of its existence.

“I really like it. The one thing that is different is that it’s real experience, not just bookwork. You’re going out there and doing it,” said Brett Lindsey, a senior in finance and marketing.

Tashjian invites finance juniors and seniors to apply for the class, and chooses less than 20 of them to participate.

“They stay with the fund all year, and they all participate in the running of the fund,” Tashjian said.

Every student is responsible for researching a stock they think would be a sound investment. They then present the idea to the class, and they all vote. A majority vote means the class invests in the stock.

So far, the students have chosen to invest in three main stocks this year: the exchange trading fund SPY, barbecue restaurant Famous Dave’s and textbook producer McGraw-Hill.

“I have the ultimate veto power, but I try not to emphasize it. If I think a vital point has been overlooked, then I ask questions that get the students thinking about it,” Tashjian said. “Either they realize something is wrong, or I’m persuaded to invest.”

Last Spring and Summer Semester, the students lost money because of the difficulties with technology stocks, Tashjian said.

“This year’s group is doing somewhat better than last year’s group,” she said.

This year’s class lost only about one-half percent of their money because they chose to keep about 80 percent of the money in cash in money market accounts, and they chose to invest only 20 percent into stocks.

This proved to be wise decision, especially in light of the Sept. 11 attacks.

“Students looking to the past for advice is not as helpful as it has been before,” Tashjian said. “The economy since Sept. 11 makes everyone feel uncertain. It’s been a very difficult market.”

Her students agree.

“After Sept. 11, there has been a ripple effect in every industry,” said Amy Hu, a senior in finance information systems. “We moved from slowly heading into a recession to being in a recession. It’s definitely shaken consumer confidence.”

Since the attacks, stocks have come back tremendously, Tashjian said.

In addition to the $50,000, the class has $12,000 that they haven’t even touched yet.

That money consists of $7,000 cash, and the rest is divided among Nokia, Knight Trading and Pacific Century Cyberworks stocks.

“The students have access to it, but because the class is all year long, the students work on [the $50,000 portfolio] and monitor the $12,000 portfolio. They’ll work with it later in the year,” Tashjian said.

If the students make money, then half goes back into the investment portfolio, and the students can decide to reinvest the other half or donate it to student activities, she said.

If the students lose money, then everything stays with the fund, and the original donor, D.A. Davidson and Co., replenishes the fund to its full $50,000.

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