Westminster Students Outperform the S&P 500
By Brent Wilhite
Fifteen colleges and universities participated in D. A. Davidson's Student Investment Fund Program, but only one school produced positive gains--Westminster College. Students in the Investment and Portfolio Management course earned top accolades as their portfolio out-performed portfolios of the other institutions, as well as the S&P 500.
Finance students in the Bill and Vieve Gore School of Business had the opportunity to invest $50,000 to create a working stock portfolio from September 2000 to August 2001. Each of the 15 colleges and universities from the Western United States participating in D. A. Davidson's Student Investment Program experienced losses ranging from $2,000 to $37,000. Westminster College was the only participating school producing a positive return, totaling $1,505, or 3.01 percent. For comparative purposes, the S&P 500 produced a net return of 24.38 percent.
The positive return is a noteworthy accomplishment given the turbulent market conditions during the previous year. However, more important than the dollar amount of the return is the practical experience the students gained by developing an investment strategy, researching and investing in specific stocks, listening to investment professionals, and tracking the fund's movements.
Hands-on courses such as the Investment and Portfolio Management class typify Westminster's approach in providing business courses that mirror the real world. M.B.A. students manage the fund part of the year, but undergraduate students manage it during the remainder of the year, offering them a unique, hands-on experience early in their academic career.
Students in the Investment and Portfolio Management course are broken into five groups, each group responsible for tracking one-fifth of all the stocks in the S&P 500. After thorough analysis and research, the group selects two or three stocks from each sector of the S&P. The students then present a formal argument discussing the pros and cons of the proposed stocks and the class votes on which stocks to buy. After selection by a majority vote, the class projects a target price when the newly purchased stock will be sold. At that point, the class selects another stock from the same sector in order to maintain a balanced portfolio.
D.A. Davidson replenishes the fund every year, so we'll see how the next class handles the fund. Congratulations to last year's class for maintaining a strong portfolio during a very difficult year, and best wishes for your continued success in finance.