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Students in charge of managing investment funds at Indiana University's Kelley School of Business in Bloomington are learning there's no such thing as a sure thing. When U.S. and global stock markets are weakened and extremely high, volatile stock prices fall sharply.
But their professor says a market meltdown provides perfect seasoning for future careers on Wall Street. Second-year MBA students enrolled in the Kelley School's Investment Management Academy are managing a stock portfolio, valued at about $450,000, that's been prone to tremendous fluctuation over the past few weeks.
It's sometimes been a bumpy ride. As recently as July 17, the portfolio value was up by 22 percent for the year. But as of Aug. 31, it was down 10 percent, reflecting what was taking place in financial markets worldwide. Last week's 380-point rebound was then the largest one-day point boost in the market's history.
Over the long term, the IU students have had a solid track record, as seen by the fact that the value of the 12-year-old Reese Fund trudged steadily upward, from $100,000 when it was originally endowed in 1986, to about $450,000 today. Students sold some stocks over the summer, which means the fund now has about $100,000 in cash.
"You really have to go back to 1987 to have experienced anything like this year," said finance prof Robert C. Klemkosky. "The market in '95, '96, '97 and half of '98 was nothing but up, and everyone thought they were geniuses."
For more information:
http://www.hoosiertimes.com/stories/1998/09/06/news.980906_C1_SHZ00728.sto
Read about IUK's market wizards in the HP's "Move over, Beardstown Ladies" story:
http://www.iuinfo.indiana.edu/homepages/050898/text/beardstown.htm
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