Stocks Soar for Student Investors

Author: Charlie Goulding

The Student Investment Committee (SIC) is growing almost as fast as its portfolio. Each Thursday, a group of students led by Michael Cooper '06, Pieter Nijnens '05 and John Schirm '05 make presentations to one another and debate the merits of various stock investments. The group currently has $173,000 of real money in its portfolio, and that number figures to grow as the economy recovers.

In 1993, the Board of Trustees Investment Committee allocated $100,000 from the College's budget to the newly formed SIC, giving members free reign to invest as they saw fit. The SIC was designed to give students a taste of the financial world by allowing them to use real money in making investments that (hopefully) would return a real profit.

The weekly meetings are open to all students, and each investment requires the majority vote of those present at the meeting. Any attendee can make a presentation regarding an investment, and the group debates the merits of that investment until a decision is made. Given the democratic nature of the meetings, as well as the annual reports presented to the Board, the SIC believes it invests in the most sound, responsible way possible.

Indeed, the group has invested responsibly so far. Profits peaked at $193,000 in 1996 while riding the tech-boom wave. That number fell precipitously to $145,000 last year in step with the subsequent economic downturn. To the group's credit, however, the portfolio has grown by almost 20 percent in the past year, currently hovering around $173,000.

Schirm and Cooper attributed the club's recent success both to a spike in membership and in the quality of that membership. "The club's really growing," Schirm stated. "Last year, people would present stocks they thought were good investments and the rest of the room didn't say much. This year, people ask more questions and really challenge each other," added Cooper.

Club membership has grown extensively in the last three years. "When I first came to meetings three years ago, we usually had six to eight people each week. Now the room is always full," noted Schirm.

"I'd say we get 25 to 30 people a week," continued Nijnens. The club has closed its gender gap considerably as well. "Intially we didn't have many females in the club. Now I'd say the ration is somewhere around three to two, men to women," Nijnens said.

The club boasts a "highly diversified" portfolio. "We have investments in aerospace, defense, you name it," said Cooper.

Along with increased diversification, the group aims to gear up for the pending economic recovery, riding that wave as it did the tech-boom of the mid-1990s. "We're also looking to diversify our portfolio globally," added Schirm, "in order to hedge ourselves against any future crisis that may arise.

Given the SIC's obvious economic savvy, one drawback to joining the group is the perception that the club requires a prerequisite financial knowledge in order to join. One student commented that he stopped going to the meetings after one year because they were "way over my head."

The SIC disagrees with this perception. "The older members of the group offer tutorials to the more inexperienced members," noted Cooper. "We're willing to help build people from the ground up," continued Schirm.

Indeed, SIC members glean knowledge and networking tools that are helpful in pursuing a career in finance. "We have access to a lot of tools, such as the Bloomberg terminals, which are really helpful in understanding how the market works," said Schirm. "The Bloomberg terminals are the same machines everyone uses, whether you're a student or working at Lehman Brothers."

Alan R. Holmes Professor of Monetary Economics Scott Pardee serves as faculty advisor to the group, providing input and guidance when necessary. "He'll often put spins on topics that we hadn't considered," noted Nijnens, "And he helps guide us with his extensive market knowledge."

Board members also provide their own educational input. "Most members of the Board have had great experience in finance, and they critique us thoroughly. It's a real learning experience," commented Schirm.

The SIC also hopes to offer networking benefits to students planning careers in finance. Last year, the SIC helped sponsor Super Saturday with the Career Services Office and hosted the etiquette dinner. The group has plans for a trip either to New York or Boston and to host a panel discussion with members of the financial world. Though the educational benefits of the club are more readily apparent than those concerning networking, the potential for networking opportunities is an important facet of the club.

SIC meetings occur every Thursday night at 8 p.m. in Munroe 214. Meetings are open to all students.