A dozen students, fueled with ambition and pizza, used tablets, laptops and smart phones to study company balance sheets, income statements and quarterly cash flows at Weber State University’s Investors Club.
Club president Kimball Potter led the research effort. A general market sell-off earlier in the day prompted the research session. This presented an opportunity for the club to purchase stocks at a discounted price. “Buy low, sell high” is a standard investing maxim.
The club actively manages a stock portfolio worth about $100,000. Students do not contribute any personal funds to the portfolio and are immune to the portfolio’s dips and spikes. Potter and the club’s faculty adviser Dr. Yuhong Fan hope the collective research, portfolio management effort and associated learning experiences will translate into personal investing success for club members.
Bank and credit union savings accounts cannot match the rate of return offered by the stock market. However, 46 percent of Americans do not invest. The Wildcat Investors Club wants to give students the fundamental skills and confidence to start investing.
Despite being the worldwide leader in stock trading per volume and being home to the New York Stock Exchange and the NASDAQ, the U.S. faces an investing disparity. According to a 2016 Gallup poll, only 54 percent of American households own stocks. A report by CNBC revealed that within the group of American stockholders, the top 20 percent of households owned 93 percent of all the stocks traded.
The same CNBC report also illustrated that the aftermath of the 2007-2008 Financial Crisis is still rattling Americans. Because of this, many choose to put their money in low-risk accounts such as high-yield savings, money markets and certificates of deposit. However, a survey by Bankrate.com presented that 26.2 percent of millennials do not know their current savings rate, and 41.1 percent are earning less than one percent on their already meager savings.
A report by Bloomberg demonstrated the risk associated with relying solely on savings accounts. According to the report, many savings accounts offered by banks do not offer interest rates that keep up with the two percent rate of inflation. This means that money stored in these accounts is slowly losing its purchasing power. In comparison, a conservative stock portfolio, even in a down year, could produce returns between three and five percent, easily beating the savings and inflation rates. In a good year, a well-managed stock portfolio could produce even higher returns.
This is the “secret” that Fan wants to share with Weber State students.
“I think everybody should have some knowledge about investing,” Fan said. “Because nowadays, there are no pensions. You just have a 401(k) or I.R.A that you manage yourself.”
In a report for the St. Louis Federal Reserve Bank, Ray Boshara explained that millennials do not start investing because they are confused by the markets or they feel that they do not have enough money to start.
Former club president and WSU graduate, Jake Kruitbosch, sees the Wildcat Investors Club as an important resource for helping young students overcome these objections.
“I think investing is a key component to retirement. I do not think anybody can retire without investing,” Kruitbosch said. “It is really scary how few people have any kind of plans for retirement.”
Kruitbosch invites students from all majors to participate with the club.
“Members in the club develop a good qualitative sense and quantitative skills that any kind of employer values,” Kruitbosch said.
The club meets every Tuesday at noon in Wattis Building room 218. Free pizza is available. The club also organizes a yearly trip to New York City in the spring. Participation in the club does not require previous investing experience and students do not need to be business majors.
