Weathering the storm
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The bank account of many college students is quite a few zeros less than $100,000, the amount generously donated to start Messiah College’s Investment Club in 2003. With nearly $150,000 at its disposal, Investment Club members receive invaluable, hands on experience buying, trading, and selling stocks.
The real deal
A lot of college investment clubs use a software program and fake money to practice their finance skills, says junior Daniel McClure, co-president of Messiah’s Investment Club. It is uncommon for a college, especially one of Messiah’s size, to have such resources at its disposal.
Gary Page, professor of accounting and advisor to the club, says, “While simulated portfolios are useful tools and have their place, they do not begin to have the impact of investing real money. It is one thing to lose thousands of dollars in a computer game, as realistic as that might be. It is quite something else to see the equivalent of a year’s education at Messiah disappear in a short time from a real portfolio for which you are responsible.”
“It’s such an opportunity and a real privilege,” McClure, a business administration major, says about Messiah’s club, which has significantly more resources than similar clubs at most colleges and universities.
The original donation to the Investment Club was $100,000. In the past seven years, the club has weathered the national financial crisis and still managed to outperform the Dow Jones and S&P. The club’s gains – $44,000 – are well above the current market’s progression.
Investment strategies
Messiah’s 15-member Investment Club meets weekly. The club is open to students from any academic department and each meeting includes an education component so that even a novice can learn the basics of investing. The club receives a report from a student “economist” who provides an overview and update about the general market. Then, they open their account and review their portfolio, assessing how each stock is performing and discussing whether any trades are appropriate. Each member is assigned one or two stocks to monitor. If a stock isn’t performing as well as expected, members of the club research other options and then vote whether to purchase that particular option.
The students also drafted their own socially- and biblically-responsible investment strategy that guides their decision-making when purchasing stocks. The three-tier strategy takes into consideration the mission and ethics of corporations and determines whether they are in keeping with Messiah College’s mission and ethos.
The club also practices a diversification strategy, meaning they purchase their stocks from across all 10 sectors of the market.
The club takes its stewardship role seriously, says McClure. “We see ourselves as somewhat of a broker for the College,” he explains.
Calm in the storm
That stewardship role got a little dicey in 2008 and 2009 when the financial world was severely shaken by a series of bankruptcies and government bailouts. The club’s portfolio reflects the national crisis, a time that was certainly “scary” for club members, McClure says. “It was hard to know what to do, so we just held tight for awhile.”
Page, reflecting on this tumultuous time in the club’s and country’s financial history, adds, “It was tough—especially when the portfolio dipped below the original $100,000 that was donated to start it. The students took it in stride though and worked hard and persistently to claw their way back.”
Their wait-and-see strategy seems to have paid off. The portfolio rebounded nicely, and at the end of the semester, the club’s earnings were 20.4% ahead of the Dow Jones and 21.09% above the S&P.
Going through that challenging economic time while managing real money in real stocks in a real market was an invaluable lesson, McClure says. Experiences like that have given him confidence, and “helped him to feel very comfortable making investment decisions,” he adds.
Students who were part of the club during the financial crisis learned very important lessons, Page notes, and because of managing a real portfolio are all the better prepared for managing their own or their client’s investments.
Looking ahead
Besides continuing to research stocks, follow the market, and invest its funds wisely, the Investment Club hopes to establish an alumni network so that club members have the opportunity to hear from Messiah alums who are working in the fields of business or finance. Towards that end, the Club plans to begin creating an annual report that chronicles for alums the portfolio’s progress year by year.
Questions about the Investment Club at Messiah? Interested in joining? Contact co-presidents Daniel McClure and Nathan Weaver at investmentclub@messiah.edu.
