St. John’s Students Play the Market

By Steve Vivona

This fall a number of St. John’s students are participating in the Barron’s Challenge, an online investing contest where participants set up a hypothetical portfolio and invest a theoretical $100,000. The investor with the largest percentage gain by the December 15 deadline is the winner.

“The most important (educational) aspect of the contest is getting students interested in the stock market,” said Professor K. Thomas Liaw, Chairman and Professor of Finance for the Department of Economics and Finance in The Tobin College of Business.  “It’s very important for (students) to know what kinds of stocks are traded in the marketplace.”

Contestants can make as many as 50 trades, including those used to set up the initial portfolio. The minimum investment for any one holding is $5,000 and the maximum is $10,000. Winners receive $1,500 and a two-day visit to New York and lunch with the Barron’s editors. Second and third-place winners receive smaller cash prizes as well.

Dr. Liaw stressed that it is important students realize there are no “downside risks” to the investing they do within the scope of the contest. Since no real money is at stake there are no financial consequences as there is with real investing. He added that both graduate and undergraduate students in the Tobin College also have the opportunity to manage real money through an endowment fund.

Students research commodities such as bonds, pharmaceutical products and high-tech stocks and produce a research report which is then presented to their class. If the class approves the plan it is presented to an investment committee comprised of faculty, members of the Educational Policy Committee from the Department of Economics and Finance, representatives from the University’s Treasury Office and invited businessmen.

Students’ grades are based upon how they contributed to the process and the quality of their research and how effective their presentations are. “They take it very seriously and learn very practical and important lessons,” Dr. Liaw stressed.