The real deal: finance students get in the trenches to learn portfolio management. (Update).The University of Dayton's Center for Portfolio Management simulates a Wall Street investment firm, complete with a stock ticker Stock ticker A letter designation assigned to securities and mutual funds that trade on US financial exchanges. board, televisions tuned to CNN CNN or Cable News Network Subsidiary company of Turner Broadcasting Systems. It was created by Ted Turner in 1980 to present 24-hour live news broadcasts, using satellites to transmit reports from news bureaus around the world. and CNBC CNBC Center for the Neural Basis of Cognition (artificial intelligence) CNBC Consumer News and Business Channel CNBC Congress of National Black Churches, Inc. , and two Bloomberg News terminals providing securities information. But the money students invest is the real thing. Fifteen finance students have been entrusted with $2 million of the university's endowment to invest. And they are not alone. Approximately 120 colleges and universities now give their students real money to invest, a phenomenon that's taken off in the past five years. "More and more colleges are recognizing the value of training future portfolio managers by actually having them manage a portfolio," says Larry Belcher, chairman of the finance department and director of the George Investments Institute at Stetson University Stetson University is a private, co-educational, liberal arts university that consistently earns high rankings in national college guides. In the 2007 U.S. News and World Report guide, Stetson ranks 2nd (tied with Elon) in the category of Southern Masters-granting institutions.. in Florida. "A lot of schools run simulated portfolios or use stock-picking games, but the real test is in functioning exactly as a professional money manager would. This means doing research, making recommendations to some sort of investment committee, and living with the results, even if they are painful. Real-money portfolios are growing because they offer an unparalleled experience for investment students." Belcher advises that schools considering giving students real money to play the market should carefully set up their custodial and trading arrangements. There are generally university-specific reporting requirements as far as accounting is concerned. At Stetson, students manage a portfolio in a $2.7 million range--and outperform Outperform An analyst recommendation meaning a stock is expected to do slightly better than the market return. Notes: Exact definitions vary by brokerage, but in general this rating is better than neutral and worse than buy or strong buy. the average investor. "If we benchmark against Standard & Poor's 500 Index, in 2000 and 2001 our returns were between 30 and 35 percent over the S&P," says Belcher. He attributes the students' success to having a defined strategy and sticking to it. "A lot of individuals do not have the discipline to do that, or the time and skill necessary to do the research that our students get credit for doing." Belcher says the students' failures have been similar to other investors. For example, the students owned both Global Crossing and WorldCom, and lost most of their position value in them. "They were companies that looked good on paper, but were fraudulent The description of a willful act commenced with the Specific Intent to deceive or cheat, in order to cause some financial detriment to another and to engender personal financial gain. ," he says. "There was realty realty n. a short form of "real estate." (See: real estate) REALTY. An abstract of real, as distinguished from personalty. Realty relates to lands and tenements, rents or other hereditaments. Vide Real Property. no way for the students to know that." He adds, "The biggest downside Downside The dollar amount by which the market or a stock has the potential to fall. Notes: You might hear someone say that the downside on stock XYZ is $10. What that means is that the stock could fall by this amount if things got bad. to real money portfolios is that students make mistakes. But the last time I checked, so do professionals." |
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