Students Learning To Manage Money Through The Investment Club
SOCORRO, N.M. January 21, 2011 – A core group of Tech students are learning the ropes of investing, the stock market and financial research – and using real money.
Pat Miller earned a bachelor’s in petroleum engineering at New Mexico Tech in 1961. After retiring from the industry, Miller decided to give back to his alma mater in personal and unique manner. In 2006, he donated $100,000 to start the Pat Miller Student Investment Club.
Club president Ryan Halton, a senior management student said, “We’re having a great time, especially when we get in heated debates. “Students get excited when they realize that they can make money.”
The club meets weekly, but Halton spends several hours every day researching investment opportunities and communicating with club members via e-mail. The club has actively sought out advice from three investment experts. Students met with Charles Murphy, a vice president with Merrill Lynch in Roswell, Lee Munson, an entrepreneur who uses statistical analysis, and Jake Tolk, a Tech management graduate now working for UBS in Santa Fe.
“When the current officers took over, we liquidated the portfolio and started from scratch,” Halton said. “In doing so, we realized how little we knew. Self-taught wasn’t the best, so we talked to the experts. Between the three of them, we got a tremendous amount of information about what to do and how to do it.”
Halton said club members use a variety of tools to conduct research and apply their classroom knowledge as well. They use widely available sources like Yahoo Finance, Google Finance and mainstream media reports, as well as professional investment services like Morningstar.
Each week – and sometimes every day – the club buys, sells and trades stocks, bonds, index funds and other investment options. Halton said the club members reach consensus on investments before making any moves.
The club is set up so that students don’t have access to the funds. Department of Management chairman Peter Anselmo serves as a de facto broker, carrying out the students’ activities.
The club’s activities have helped students understand the lessons they’ve learned in the classroom, Halton said.
“You have to learn from mistakes and from experience,” Halton said. “So many things in the real world aren’t the same as in the textbook. Through the Investment Club, we can see the consequence of our actions.”
Club member Scott Woody said the overall experience has been very rewarding.
“It’s good to see how other people view these theories,” Woody said. “We meet as a large group and it’s really informative to see how other people see things.”
In just four months, the club has increased its portfolio’s value by 15 percent. Two of their biggest successes were investments in Google and CoinStar. They bought Google at $500, then sold at $620. The club held CoinStar for six weeks and saw the value increase 49 percent.
“Our accounts are making moves and making noise,” Halton said. “You can’t analyze it perfectly and get it right every time, but we’re using tools that help us make good decisions.”
Anselmo said the club’s results in just four months are phenomenal.
“I think their methods are somewhat conventional, but their results are remarkable,” Anselmo said. “The way to do it is hard work and that’s what they’re doing. They’re not running sophisticated models, but they’re spending the time doing research.”
Club member Joaquin Roibal – also the Student Association president – said he has learned much about investing through the club’s meetings and activities.
“I joined because I am interested in the economy and the way things work in the stock market and bonds and investing,” he said. “But I had no idea about it. I had no idea how to purchase stocks or evaluate them. This has given me a lot of insight about how to invest and save money.”
One piece of advice club members heard from the experts was to invest in areas that they know. Roibal, who is a mineral engineering senior, has brought mining investment opportunities to the club.
The club has purchased stock in Mosaic Potash, a Carlsbad mining company that regularly employs Tech students, both as interns and as full-time employees. The club is also considering Newmont Mining, U.S. Gold and precious metals as potential investments.
“Being in the club helps me on both sides,” Roibal said. “What I know about mining helps me in investing. And what I’m learning about investing helps me understand that side of the mining industry too.”
The club holds about 15 different investments, all of which have changed since September, Anselmo said. The club purchased stock in Abercrombie & Fitch before the holidays and reaped the rewards of a strong commercial season. The club also saw profits from holding stock in Apple.
“That’s fairly conventional stuff, but it’s working,” Anselmo said.
Anselmo said the 2010-2011 version of the club is fulfilling the vision of founder Pat Miller. He graduated from Tech in 1962 and worked in the petroleum industry.
“He graduated and got a good job – as most Tech students do,” Anselmo said. “He started investing and had to learn the hard way how to manage his investment portfolio. His idea was to donate the seed money for the club to give students experience in analysis and all the other things they need in their lives to manage their own money. It’s turned into much more than that.”
Anselmo said the club’s meetings with investment professionals were truly eye-opening experiences because the students got a first-hand glimpse into the world of high finance and investing.
The Pat Miller Student Investment Club is a rarity because undergraduates make the decisions with real money. Many university clubs only offer virtual investments for undergraduates. Some schools have real accounts but only for graduate students.
“At Tech, the undergrads do 99 percent of the work,” Anselmo said. “Obviously, because of the exceptional quality of our undergrads, they can handle the analytics and be successful investors.”
– NMT –
By Thomas Guengerich/New Mexico Tech