Bowdoin Finance Society Tracks the Markets

Bowdoin College Finance Society co-presidents Tom Gawarkiewicz ’15 and Ujal Santchurn ’15

Bowdoin College Finance Society co-presidents Tom Gawarkiewicz ’15 and Ujal Santchurn ’15

Tom Tyree ’16 managed to make a 13.59% return on $100,000 in just six weeks. It’s too bad in a way that he was dabbling in virtual money. But no matter, Tyree won this semester’s campus trading contest and was awarded a cash prize of $100 for his accomplishment.

Twice a year, once in the fall and spring, the student-run Bowdoin College Finance Society organizes a stock market contest, open to all students, to allow players to invest fake cash in real bonds, stocks, mutual funds, etc. The point is to help familiarize students with the stock market without risking losing real money, the club’s website promises. “Having a basic understanding of investment and risk management strategies will be helpful [after leaving Bowdoin.] We’ll need to manage our own savings at some point.” Read the full story.

Comments

  1. John Carter says:

    If one has been following the “macro-way” that finance and economics have been proceeding for the past thirty or so years (pick your own period), several trends have become apparent. First, the so-called “ONE PERCENT” have continued to acquire more and more of the Gross Profit of American Corporations. Second, somehow the characters in charge of the government (party does not seem to be relevant) have convinced millions of retired folks. . .and maybe a few others as well…that the government HAD to loan the banks money for 0.25% interest (or even less). Corporate executives discovered that when they laid enough folks off without catching public eye that their part of corporate profit was not affected that the basic workers were now afraid of losing their jobs so their wages could be kept low. Workers in the paper business, for example, who were making more than $40,000 annually 20 years ago are now earning $41,000.
    As increasing numbers of people received messages from their banks that the true cost of borrowing to buy a house (which was supposed to be on a percentage basis) had more than doubled (provided that they paid attention in high school math), they gave up saving money for retirement. [Just check the growth of the lottery business which started in New Hampshire in the 1960’s as compared to today–which I propose is directly related to decisions that the only way to end up with enough money on which to retire is to pay a new tax–which, of course, was disguised as “you can’t win (the lottery)unless you play” ads. The fact that the payout of the top prize was about one in 170,000,000 was only specified in the fine print (and often grey at that). Recently one bank was advertising that they were dramatically increasing their rates–they were going to pay 1% interest on 12 month CD’s! (Never mind mentioning the cost of living increase, if the compilers eliminated gasoline and a few other “choice” items, it was only 01.5%.) Well, after five years of this “mickey mouse”, folks with a fair amount of assets decided that if they were going to get some sort of decent return, they needed to invest in equities. {I am sure smart Bowdoin students noticed that when the “news” reported that the “leaning” of the Federal Reserve was to maintain low cost loans to the financial infrastructure through 2014 or even 2015 the stock market “surged ahead”.)
    So where does this leave individual investors? Remember Warren Buffet’s Number One Rule: Never buy stock in a business that you do not understand. Its corollary is “…and make sure it has a good cash flow.” To this I would add, if you are fast enough, buy stock in companies which have vastly over-priced products with a cachet that ensures significant sales, but be ready to “bail-out”.
    Alternatively, check the performance of the Mutual Fund investments industry and select a management company that consistently has done well over the long haul and which does not charge “an arm and a leg” in management fees and put your money in their hands. Learn well the concept of portioned portfolios (Cash, Bonds, Preferred Stock, common stock, etc.), and set up a long range investment strategy. Keep in mind, too, that there are mutual fund management companies where 70 to 80% of their funds have outperformed the market. If one is interested, check out the dollar value of mutual fund investments twenty years ago versus today–there is a message in the mathematics. [AND, take a good look at Bowdoin’s “success” in attracting new buildings, programs, staff, and funds with which to help support students whose families do not make $57-60,000 a year. A good case could be made for calling Bowdoin’s portfolio of assets a “small, special purpose mutual fund”.
    In short, chaps, just as most of you should not dream of tuning the engine of YOUR Ferrari V-600 or your Rolls Royce Wraith, preferring to pay a “real pro” (defined as one who “eats, sleeps, dreams about, and works on them–all the time”– with demonstrated success) unless you REALLY KNOW WHAT YOU ARE DOING, take the same approach to your future investing. Really folks, what you are currently doing is another form of “going to the racetrack”–where, in contrast with the stock market, all the horses run in the same direction. I think it would be more interesting if the contest started in October of your freshman year, allowed a another “kicker” at the end of the sophomore year (just before the “horses” entered the back stretch) and made a cash award to the winner at the student’s class graduation ceremony.

    If I am still around, I would probably attend…

    John S. H. Carter, 1958.

  2. John Carter says:

    P.S. Herbert Ross Brown AND E. B. White would join me, I am sure, in protesting turning over formatting of Bowdoin documents to computer programmers who have eliminated the time-honored (and CORRECT) INDENTATION (5 spaces)of each new paragraph no matter how correct the original.

  3. Uncle John says:

    Just decided to check this comment and see if anyone wanted to take me to task for my comments. Answer: No.
    It is similar to “Letters to the Editor” in newspapers. The Newspaper’s editor does not seem very interested in answering any questions posed by readers. It reminds me of the old saying: “My mind is made up. . .don’t confuse me with any facts.” I was working in the Watergate Office Building when the famous “Watergate Affair” took place and I can assure any reader that all the facts were never brought out. If you are old enough to remember the situation, you can probably express an opinion about why. Have a good day!
    Uncle John

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