When the stock market took a dive last week, some of the University Investment Group’s stocks went underwater too, but most have found their way back to the surface by now.
“The market kind of took us down with it,” said George Kosovich, a senior finance business major and director of investments for the group. “One of our stocks took a pretty good hit.”
Students in the group and throughout campus say, however, that the market has been volatile before and they are not panicking with the recent ups and downs.
The Investment Group of about 20 students invests in the stock market after analyzing different industries and companies using money provided by Portland brokerage firm DA Davidson. Students started out with $50,000 and had earned a profit of almost 25 percent before last week’s turmoil in the market.
The group has to return the first 5 percent of any earnings to DA Davidson, and then the two parties split the remaining 95 percent.
Now the group is down by 5 percent from its initial $50,000 investment, but members are confident that stocks will recover soon. And some already have.
Kosovich said InFocus System stock went down dramatically last week, but is on its way to recovery now. Although students met briefly on Friday to discuss the stock market plunge, senior finance business major Steve Zogas, the group’s director of operations, said there was no panic and no stocks were sold in the heat of the moment.
“We like what we hold a lot,” Zogas said. “There was no reason for us to sell anything.”
Phil Richman, a first-year masters of business administration student, is the president of the Canvasback Investment Club, which differs from the University Investment Group because students invest their own money.
Richman said that his club took a hit as well, but students remained calm and many considered the drop in stock prices a good buying opportunity rather than a crisis.
John Chalmers, assistant professor of finance, who works closely with Zogas and Kosovich as the Investment Group’s advisor, said members in that group reacted exactly how he had expected them to react.
“Basically we didn’t do anything — we didn’t panic,” he said. “I think they did an excellent job.”
And the group’s calmness seems to have paid off.
“We’re back up now within two days,” Zogas said.
Kosovich said a common perception about student investors is that they are playing the stock market game only with short-term goals in mind. However, he said that is not true for the group.
“I don’t think that’s the reality for student investors,” he said. “We’re in it for the long run.”
Zogas and Kosovich said that pursuing long-term goals helps overcome short-term crisis and that investors always know they are taking a risk.
“With that upside risk, there’s always a downside risk,” Kosovich said.
To avoid too much risk, and to help students keep a well-rounded portfolio of stocks, the investment group cannot invest more than 20 percent of its money into one stock.
Kosovich said that just a couple weeks ago student investors jointly decided it was time to sell some Webtrends stock they owned since it represented more than 20 percent of their money.
“We don’t want to hold too much of our portfolio in one stock, so we rebalanced our portfolio,” Kosovich said.
Zogas said that the decision to sell the stock was not out of foresight, but simply an effort to retain a well-diversified stock portfolio. The move turned out to be a sensible one when Webtrends took a big hit last week.
Just like the other events upsetting the stock market last week, that drop did not take the group by surprise.
“We realize that things can’t go up forever,” Zogas said.
Chalmers said the market chaos last week provided an educational experience for the investment group.
“I guess it was a good lesson for all of us,” he said.