Nov. 5, 2010
MBA students challenge Tippie faculty in investment competition
Students in the Tippie College of Business are putting their stock-picking acumen against the experts, challenging Tippie finance faculty members in an investing competition that ultimately benefits the Tippie Build project for Habitat for Humanity.
The competition, sponsored by the Graduate Financial Management Association, pits the wits of 40 bright and eager MBA students in the Tippie School of Management against six grizzled investors on the finance faculty. Jared Marks, a second year MBA student and competition organizer, said each competitor gets $100,000 in play money to invest for four weeks, and the person with the best portfolio return after trading ends Nov. 19 is declared the winner.
Marks said the winner will get a prize of some sort that has not yet been determined, while the last place person will be christened Least Likely to Work on Wall Street. Awards will also be presented to the best and worst-performing faculty portfolios, and faculty members who don’t win will be mocked.
"They’re supposed to be the experts, so we’re expecting them to finish at the front of the pack," Marks said.
The contest raised $500 from sign-up fees and other contributions for Tippie Build 4, the Tippie College of Business' annual Habitat for Humanity homebuilding project.
Marks said that fun and philanthropy aside, the project does carry lessons. Since the investing window is so short, competitors are looking for all or nothing investments that can pay off quickly, but can also just as easily turn into big losers. That means they’re buying high-risk stocks and trading in options that show how volatile the market can be.
"This is an inexpensive way to learn about volatility, and show that it’s true that it’s difficult to beat the market," Marks said. As an example, he said a trader who led the contest one day found himself in last place just two trading days later.
"The winner is going to be the person who makes one good pick," he said.
Marks said his own trading strategy has been to focus on the agriculture sector, so he loaded up his portfolio with Deere & Co. and Teucrium Corn Fund, a corn futures investment. He also owns HNI, the Muscatine-based office furniture maker that also happens to be his former employer. So far, his portfolio is nestled firmly in the middle of the competition.
Meanwhile, second year student Joel Bennett is near the top with a value investing mentality.
"I owe my success to my Henry Fund teammates," said Bennett, who is a fund manager in the Tippie College’s award-winning graduate school student investment portfolio. "Most of the companies I bought were companies they presented to our class. I am confident that my fundamental, long-only approach will continue to perform well."
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