Student Investors Learning Real World Lessons

Dec 27, 2013

2013 was a good year on Wall Street, with many stocks breaking records.  Among those celebrating are 40 students at Washington & Lee University, who manage a portfolio of nearly two million dollars.  These novice investors have beat the S&P 500 more often than not. 

There’s no better way to learn than to do, and the Board of Trustees at Washington and Lee University has proven that point by giving a club of business school students the chance to invest a million bucks.  John Jensen, assistant dean of the Williams School, says trustees came up with the cash in 1997.

"The board of trustees committee initially thought it would be about $250,000, and the students argued that they needed the million dollars to run a diverse portfolio.”

Since then, the initial investment has grown to $1.9 million.  So what’s the secret to their success?  Trey Hatcher - business major and associate director of the Williams Investment Society - says it’s sometimes a matter of common sense.  In hard economic times, for example, people will be searching for bargains.

"One investment that we’ve looked at really positively over the years was Dollar Tree when we went into the recession.  At least that’s one I’ve seen perform really well.  It appreciated almost 200%.”

And David Fishman, the society’s executive director, says students sometimes do their homework as consumers.  This year, for example, they sold shares in Bed, Bath and Beyond.

“A lot of the argument with Bed Bath and Beyond was from people’s individual experience shopping there.”

So far, it sounds simple, but Fishman says members must have a fundamental understanding of economics and markets, be willing to crunch numbers and able to speak in the language of Wall Street.  They divide into nine groups, to study various sectors of the economy - like healthcare or energy.

“We naturally go through all the 10K’s, 10Q’s, quarterly earnings  reports.  You just definitely got to stay on top of what’s going on in the markets, what’s driving it from an economic, macro and micro level as well as just political.”  

They spend at least two hours per week in meetings with various experts - adding to the knowledge they gain in the classroom.   They will spend many more hours doing research - preparing to present to the group, recommending the society buy, sell or hold stock in various companies.  They receive no compensation for this work, but both Fishman and Hatcher had internships on Wall Street last summer, and there’s the promise of good jobs on graduation.