Bulls Make Money, Bears Make Money, Pigs Get Slaughtered
By Chelsee Niebergall
“You guys are not going to believe this,” Paul Fjeldsted, a senior lecturer, said with a laugh as he stood in front of his 13-member class.
The Investment Practicum class at Utah State University hoped it was good news about the $5,950 they had invested the previous week. Their anxiety was relieved when Paul told them of the anomaly that had recently happened in the stock market. The stock the class wanted to invest in went down just enough so they could purchase it, but shot up just as fast as it went down.
“It never happens this way,” Paul went on to say with a surprised look on his face.
The Investing Practicum is an undergraduate class that was established about five years ago when DA Davidson & Company donated $50,000 to USU. The class will hold the $50,000 portfolio from September-September of any given year.
Paul said that the Investing Practicum class is supposed to be a learning experience and that sometimes the market thwarts plans instead of rewarding them. He said students are going to mess up every once in a while. That is how they learn – just like in life, he said.
The class is graded pass/fail because the goal of the class is not to memorize information but rather to put theory into practice by giving students experience in stock market investing.
“The pressure of investing $50,000 of real money is pressure enough,” Paul said.
Fred Dickson, DA Davidson's chief investment strategist, addresses students.
Photo by Connor Child
DA Davidson is a financial consulting company based out of Great Falls, Montana. that has a local branch in Logan, Utah. The company gives personalized advice on stocks, bonds, government securities, mutual funds, college funds, and other financial products and services.
Nolan Gunnell, vice president of the DA Davidson Logan branch, said, “This way the students have skin in the game, and until they feel that heart-thumping experience of knowing their stock is climbing or that it is crashing, they don’t really know what investing is all about.”
Before the students can start investing that money, however, they have to take four tests to obtain a Bloomberg Certification. The purpose of this certification is to teach students how to use the Bloomberg system. This system allows the students to research stocks, track the stock market’s activity, and analyze businesses. Students must also take a prerequisite class called “Corporate Finance.”
Those who watch the students work together to strategize and choose the best stocks to invest in get a feel that they take their work seriously.
“I want to update the sell price because the earnings per share might be changing more rapidly than we thought,” said Shuai Yuan, a senior majoring in finance, as he walked up to the front of the classroom.
Shuai was giving a pitch to the class on what he thinks the students should be doing with the stocks that have already been selected. Shuai was wearing sweatpants and an Aggie T-shirt, but talked about the stock market like a real broker.
Class members are assigned to groups or to a specific position such as stocks group, bonds group, commodities group, trader, and portfolio manager. Shuai is part of the stocks group in charge of researching stocks and choosing the best ones to invest in. After doing this research, they present their findings to the class.
“I would suggest that you write up your rationale of why you think the earnings per share will be changing rapidly and then bring it back to the class,” Paul suggested from the back of the classroom. Paul then went on to explain that it is very important to be organized when researching and buying stocks, because if not, it could lead to losing money instead of making money.
Justin Allred, a senior majoring in finance and economics, said Paul wouldn’t tell them what to do with the money; he would only give suggestions to make them think.
“I really enjoy that,” Justin said. “I feel like I am in the real world instead of in a classroom when I get to make the decisions instead of a teacher telling me what to do.”
Paul said that the number one goal of the class is for the students to learn, and they can’t do that when he is the one making the decisions.
“I sometimes have to hold myself back when I think they might be making a mistake,” Paul said. “I have to remind myself that they need to make mistakes and that I also don’t know how their decisions will turn out.”
After taking in the advice and making a note of it on his laptop, Shuai sat down. Next up was Whitney Dastrup, a senior international business and economics major and a member of the stocks team. She said she didn’t think the market would be making a major jump soon, so she suggested they make no changes at the time.
“Okay, thanks, Whitney,” Justin said as he took his place at the front of the classroom. “Based on what I have heard today, I am deciding to stick with my previous allocations.”
Justin was the portfolio manager of the class. His job was to decide how the money is allocated among the different groups, and he makes the final decisions.
“It can be really nerve-racking knowing that the decision of whether or not to invest $22,000 on a certain stock rests on my shoulders,” Justin said.
Jake Bevan, a junior majoring in finance, made his way to the front of the class. Jake was part of the bonds team and decided to pitch a purchase to the class.
“So, we decided to not go with the preferred shares ETF,” he said. “Okay, I suggest 450 shares at $37.45, sell at $41.53 with a stop loss at $33.70. All in favor?”
All it takes is a majority of the class members to raise their hands to approve the spending of $16,852. Since the investment was approved, the trader will then place the order with Nolan the following day.
Eddy Summit, a senior operations management major, walked to the front while running a hand over his face.
“I want to invest in this mining company,” he said. “They are a pretty cool company and are pretty diversified.”
Eddy is part of the commodities team, which is in charge of researching stocks that specialize in goods or products. After much debate on whether this mining company would be a good investment and analyzing what the stock market may do in the upcoming weeks, the class votes again and decides to buy 60 shares at $70 and sell at $80 with a stop loss at $62, adding $4,200 to the days total expenditure. By the end of the hour-long class, the group of 20-25 year-olds decided to invest $21,052.
Under the arrangement with DA Davidson, if the class is able to make more than a 5 percent return on the $50,000 invested in any given year, the Huntsman School is able to keep half of the returns over and above that amount. DA Davidson absorbs any downside risk. Last year’s Investing Practicum invested well and received a check from DA Davidson for $1,500. This money has gone into scholarships for Huntsman School students interested in investing.
“Okay everyone, that was a good class,” Paul said as students started zipping up backpacks and placing laptops into the protective coverings. “Just remember that bulls make money, bears make money, and pigs get slaughtered. See you next week.”