A group of UC Irvine students recently won the opportunity to apply their financial management curriculum directly to the stock market through a competition sponsored by the Chartered Financial Analysts Society of Orange (CFA). The students were put in charge of $25,000, which they will invest in the market for the next six months.
In order to qualify for the money, the students were asked to assemble a financial investment plan that detailed how they would manage the funds if given the opportunity. This is the first time UCI was represented in the competition, which is in its fifth year. UCI finished third behind California State University Long Beach and California State University Fullerton, both of whom had 5 years of prior experience in the event.
“We were extremely impressed with the team’s ability to organize themselves in a relatively short period of time, especially given the fact that they don’t have any dedicated class or student organization,” said Benjamin Lau, president of the CFA. “That was a big disadvantage to UCI, relative to other schools.”
Although UCI’s team was supported by the Paul Merage School of Business, the bulk of the work was given to the on-campus Undergraduate Finance Association, which is governed by fourth-year business economic major David Li.
“First we put together a plan book,” Li said. “[Then] in December, the teams gathered in front of the panel and got a chance to make a 20-minute proposal. [Afterward] we were asked detailed questions by the panel, and the other teams got to ask each other questions also.”
Li worked closely with third-year business economics major Oxana Kachtanova, both of whom selected the final 15 students who would represent UCI before the four-member CFA panel.
“The first thing we looked at was the resumes,” Kachtanova said. “In finance, you have to know how to make your resume, and it’s easy to tell whether or not the applicant has done his or her homework. Secondly, we looked for people who [were] passionate and had a lot of time on their hands.”
The group’s faculty advisors were Todd Richey, a lecturer at the Paul Merage School of Business, and Michelle Garfinkel, an economics professor at UCI.
Once the team had been selected, they began to utilize the textbook information that many of them had learned in class.
“We had to get familiar with investment instruments like equity and fixed income,” Li said. “And finally, we collaborated on investment philosophy.”
The group decided on a relatively conservative investment plan that fell somewhere in between that of Cal State Long Beach and Cal State Fullerton.
“Long Beach had a safe, very conservative approach, while Fullerton had an aggressive plan,” Li said.
After about two months of deliberation, the judges awarded Cal State Long Beach the grand prize of $100,000. Second-ranked Cal State Fullerton was awarded $35,000 and UCI was given $25,000.
Over the course of the next six months, all the participating students will be given the chance to invest the money in whichever stocks they like. But all the funds stay in the pockets of CFA.
“For security [reasons], they never actually turn over the money to the students,” Lau said. “We maintain custody of the money; but the students actually control it. Come winter of next year, they start anew.”
At the end of 2009, the students will be required to put together a report of their earnings.
“At the end of the year,” Lau said, “the teams are required to complete an annual report. It’s not just winning the contest, but also managing the portfolio, and then reporting the results in an annual report. I think that’s where the students get a lot of experience – on the reporting side.”
Li would like to see UCI absorb the program into its curriculum.
“We want to eventually institutionalize this so it’s run by the school,” Li said.
Until then, the program will continue to be under the umbrella of the UCI Undergraduate Finance Club.