What better way to invest in the stock market than to do it with someone else’s money? Students in UCI’s Graduate School of Management will have the opportunity to do just that.
Thanks to money donated by Charles Martin, co-chairman of the board for the school, teams of students have the chance to participate in the Polaris Investment Lab, a year-long project where each team of four to six students will invest $300,000 in the stock market that, if proven successful, could result in each team member taking home up to $12,000.
Martin, a venture capitalist from Laguna Beach and also a trustee of the UC Irvine Foundation, will divide $1.5 million among five teams of students to invest. Students will only have to pay a $200 entry fee to begin the project. Thechallenge is students will have to impress Martin with their investment proposals before money will be given to their teams.
‘[Students] will have to hurdle high to make their case. They’ll have to be able to sell their ideas to me,’ Martin said.
The contest is open to all second-year MBA students in good standing. Submission of proposals are due on April 9. Upon selection of suitable proposals, shares will be purchased May 15.
Changes to investment portfolios during the investment period will be allowed but must be approved by Martin.
Furthermore, teams will be required to meet periodically and keep Martin posted on their discussions.
At the end of the year-long investment period, teams will be awarded in cash based on the success of their investments in comparison to the competing teams.
Profits will be split between Martin and each team member. The first-place team members will pocket up to $12,000, followed by the second-place team taking home up to $10,000, then $8,000 for the third-place team, $6,000 for the fourth-place team and $4,000 for the fifth place team.
However, if students’ investments fail, they will only lose their $200 deposit.
‘There’s no downside risk for [students] at all. That’s missing from the equation,’ Martin said.
Creating this educational environment with minimal financial risk is Martin’s goal.
‘Students will have a practical opportunity to learn what makes a good company by studying real companies in real-life situations where something significant is on the line,’ Martin said.
This ‘something significant,’ according to Martin, will not only foster student focus but will also encourage students to work their hardest because there is a significant amount of money on the line.
‘[Student] focus will be much sharper [in this program] than when they are competing for grades in a classroom,’ Martin said.
One of the main reasons that Martin is willing to sponsor this program is to give students an intimate look at the real business world.
‘Learning by using case studies and simulations is like learning marksmanship with blanks,’ Martin said. ‘You need to fire live ammo to really learn.’
If students master marksmanship, Martin said they also have the chance to pay off some of their tuition fees. This is certainly music to any graduate student’s ears and also an incentive to participate and do well in the program. Currently, full-time graduate students in the M.B.A. program pay almost $17,000 in tuition and approximately $37,000 each academic year in total expenses.
With the Graduate School of Management becoming more prestigious, Martin is seeking to thrust the school into the national spotlight.
‘I have a very strong fondness for [the Graduate School of Management] and a desire to see it emerge as a distinguished business school in America,’ Martin said.
The Polaris Investment Lab is believed to be the first investment program in the nation for business students that is privately funded and in which none of the financial transactions or stock market strategies are handled by the school or its university.
Despite an unstable global economy, Martin has faith in the graduate students. Martin is certain they will succeed and worries little about losing money.
‘This is not a frivolous, highly speculative, long-shot project. It’s based on finding good quality growth companies and sticking with them,’ Martin said. ‘There might be unanticipated world events that might cause a market downturn, but the chances are good that the teams will make money.’