Finance Students Get Taste of Real World Stock Market, Investments
Getting a glimpse of real-life stock brokerage, students in the Investment Analysis finance class used a simulation software to trade on the U.S. market for seven weeks and track how their stocks performed, giving them a practical experience that they can draw upon in their future careers.
"At the beginning," said student Sandra Boutros, "we didn't check our portfolio frequently, so we made losses, but as soon as we started checking it on a daily basis and replacing all the losing stocks with new ones, our portfolio recovered and we ended up with a return of 1.40 percent."
In addition to trading on the Stock Trak market virtualization software, the students also put together a valuation of real stocks that are currently trading on the New York Stock Exchange, in the same way that professional analysts would, to indicate to current and potential investors if they should buy, sell or trade shares of a certain stock.
“The experience I gained is one that I am hugely grateful for,” said student Mayar El Ashry. “I can now confidently say that I can come up with a company’s fair value. I’m actually working on building another valuation model for a company I’m interested in during the Winter Break in my spare time. At the end of every class, I’d imagine myself tucking another finance weapon into my back pocket to use in my future endeavors. This not only shows the importance of the information being transferred, but also reflects the intense applicability and practicality of the course.”
Aliaa Bassiouny, assistant professor of finance and course instructor, explained the importance of such experiential learning classes that are based on not just theory, but mainly practice. “In these courses,” she said, “students are doing what they will do when they pursue their careers.”
Boutros, who decided to double major in finance based on her experience conducting the valuation assessment, will be competing in the CFA Institute Research Challenge in Spring 2014. “This project made me realize that I want to work in the valuation field,” she said. “I did a valuation of the second largest manufacturer of carpets in the United States, so I had to learn about this industry, research the company and its competitors, and put the information together in a concise way, using an Excel model to determine recommendations for investors. I learned the importance of research and teamwork, and gained practical knowledge that I can use in my future job.”
Another finance class, Portfolio Theory and its Applications, also taught by Bassiouny, had students team up into build global, emerging market or U.S. equity funds. The teams had to do everything a finance professional would do, from gathering data and research and conducting analysis to determining how to market the fund. “The idea of the project was to come up with a fund, which is a financial product we are marketing to investors,” explained Dina Khalil, an economics and business finance major.
Khalil, along with classmates Marina Iskandar, Ingy El-Morally, Nada Faltas, Soha Saniour and Basma Ashmawy, created a model fund targeting recent graduates from anywhere in the world. “We give them certain expected returns and risks,” said Khalil. “According to specific investment profiles, young, fresh graduates are willing to take high risks and they want high returns, so the aim of the fund was high returns.”
Recent graduates could buy into the fund for $100 per month. The fund invests in top-growing industries that are likely to keep growing in the next five years, such as 3D printing, biotechnology, and Internet games and mobile applications. “We learned how to choose stocks and create a diversified portfolio,” Faltas said. “The course was about portfolio management, so we learned how to manage risk and return, compare investments and come up with a portfolio that would best fit our criteria and the objective of the fund.”
Gaining hands-on experience in the financial services sector was invaluable for the students, enabling them to narrow down their career goals and specialize their studies. “I know I want to work at an investment bank, so this course was very beneficial because it’s almost the same thing,” said El-Morally.
Added Iskandar, “I want to work in asset management because of this class. It has been the most interesting course for me.”
Photo caption: Dina Khalil, Marina Iskander, Professor Aliaa Bassiouny, Soha Saniour, Nada Faltas, Ingy El-Morally and Basma Ashmawy giving a presentation in FINC 415: Portfolio Management