From Classroom to Real Financial World

 

Mr. Jack S. Rader from the University of South Florida gave a lecture to Master of Finance Degree students, as well as students from other master’s-degree programs at the School of Management, Fudan University on March 14 evening, and shared how his undergraduate students back in the US are gaining from real money investment experiences within the framework of an on-campus Student Managed Investment Fund (SMIF).


“We are making money now,” said Mr. Rader. He said that 30 to 35 stocks have been purchased by the fund. “Most of them have been sold, and we own 17 stocks right now.”


The fund was started in January 2010 with just 4 students and US$80,000 to invest, the sum of capital which came from the College’s endowments and foundation.


Mr. Rader is instructor for the applied security analysis course in the College of Business, and executive director of the Financial Management Association International.


Dubbed one of the “toughest courses you’ll ever take”, the course has the students to spend most of the semester researching and evaluating financial markets and stocks so that they can ultimately pitch their best investment ideas to their peers, faculty members, and the course advisory board which consists of several accomplished asset managers.


In 2011, 11 undergraduate students were enrolled into this course. Its primary objective is to assist those students, who are a select group of finance majors, in learning to apply financial theories and tools in the real world, by providing real-time and hands-on experience in stock analysis and valuation, developing the analytical and critical thinking skills necessary in the investment profession, and developing competencies in tools, techniques and philosophies that underlie security analysis and selection.


Under the direction of faculty, the students need to generate investment ideas and initiate research ideas all by themselves. “In traditional finance courses the instructor is the ‘sage on the stage’, while in a student managed investment fund the instructor becomes the ‘guide on the side ’,” said the instructor in the lecture. “Once you get into it, you will not feel like taking a course, because it’s tremendous fun.”


But convincing board members takes more than just research, indicated Mr. Rader. Students need to be prepared to provide compelling, persuasive valuation cases, and that will require excellent written and oral communication skills as well as sharp analytical skills. Mr. Rader said he is trying to make them “stop thinking like a student” and “start thinking like a fund manager”.


He said that students will never get harsh comments like “This is the stupidest idea I’ve ever heard of” from the faculty. However, with the advisory board – whose members are made up of professional asset/money managers from firms such as Wood Asset Management, Merrill Lynch/BOA, and many other leading regional and global firms – to attend each presentation, this can happen and will be exactly what the students may go through in real world in the future.



“Of those 11 students enrolled in 2011, 9 are now employed in financial services,” said Mr. Rader. “The students have leaped forward in terms of corporate finance and business in general!” he said to conclude his lecture.


 

 

Jack S. Rader: Executive Director of Financial Management Association International, Instructor for the “Applied Security Analysis” course, in College of Business at The University of South Florida (Tampa Bay).


Link: Student Managed Investment Fund