Real world: U. finance students call the shots on investing $50,000

Eighteen barely-twenty-something college kids could do a lot of damage with $50,000.

The students in Liz Tashjian's Finance 5380 class have done just the opposite.

As part of the University of Utah's Student Investment Program, students have the opportunity to apply and test the information they're learning in the real world, with real money.

Usually, this kind of experience is reserved for highfalutin' graduate school students. Tashjian's pioneering, yearlong class is among the first in the country reserved for undergraduates.

The program began in 1998 with what Tashjian calls an "exceptionally motivated" finance class and a $50,000 loan from the Montana-based brokerage firm D.A. Davidson.

The 12 students formed a Student Investment Fund Club and met regularly — including during holidays and between academic semesters — to develop their investment strategy, do research and invest in stocks, and track their investments.

By the end of the summer that first year, the portfolio's annualized return was 35 percent, and in 1999, the Student Investment Fund developed from a club into a restricted-enrollment class.

"I wanted students to see how things really worked, instead of just words in a textbook or other paper trading games," Tashjian said. "At the same time, I found the students got more and more to wishing that they had the opportunity to put the theories into practice."

Tashjian went to D.A. Davidson, which had funded similar programs at other nearby universities, and Davidson stepped up. Chairman Ian Davidson, a former instructor at the University of Montana business school, committed $50,000, which the firm replenishes year-to-year if necessary.

"Personally and as a firm, we are advocates of higher education," Davidson said. "It occurred to me that one thing we could do is start a program where we'd give the students real money. With the other programs, like those funny stock-picking games from the Wall Street Journal, all the kids do is pick wild stocks and hope they do well. We're more interested in long-term investing."

Davidson now supports similar funds at 18 Western universities, including the U., Brigham Young University, Utah State University and Westminster College. Of those 18 programs, Davidson said BYU and the U. saw the strongest returns based on the latest available data — at 33 percent and 30 percent, respectively.

Coming in second to BYU is significant, according to Tashjian, because the U.'s program is restricted to undergraduates. Most are exclusive to, or dominated by, MBA students.