After stocks plummeted last Monday, several students from the Daniels College of Business’ investment classes met last Wednesday to discuss the impact the turmoil on Wall Street had on their investments, and the meeting was filmed and broadcast by Channel 9 News later that afternoon.
The discussion included four students from the Marsico investment class, a graduate-level class that invests $500,000 in various stocks, and one student from the undergraduate-level Reiman investment class that manages a portfolio of $100,000.
Last Monday’s market tumble was reportedly the largest one-day drop on Wall Street since Sept. 11, 2001, which was disheartening for students from both classes.
“At the end of trading, every stock in the portfolio was down,” said Julie Markham, a student from the Reiman investment class.
“It makes your heart sink because you’re dealing with real money and you know someone donated that money and you’ve lost it,” said Markham, who is also pursuing her MBA.
DU alumni Tom and Cydney Marsico donated the funds to the classes in 1999. The money is to be used at the full discretion of students to decide what to invest in, Markham said.
The portfolios carry over from quarter to quarter, and students can buy and sell stocks selected by a majority vote.
During the discussion, Markham recommended that the group take a more “defensive strategy” into investing in consumer staples that include products in the food and beverage industry, such as Coca Cola or General Mills, the cereal maker.
“Even though people may not have much disposable income to spend, they all have to eat food,” Markham said.
At this point, investing in stocks that are cheap and have a significant brand-name recognition such as Kraft and Kroger is wisest, she said.
Pepsi also might be a good stock to invest in, she said.
“When money is tight, people aren’t eating healthy because healthy foods tend to be more expensive. With such a market of uncertainty, we should be investing in what we know are the essentials,” Markham said.
Other graduate students at the discussion echoed her advice on investing in “essentials,” like manufacturers of personal care, household cleaning and hygienic products such as Proctor and Gamble and Johnson & Johnson.
Mac Clouse, a finance professor at the Daniels College of Business, was interviewed by ABC’s Channel 7News last Monday.
“A lot of analysts and forecasters are saying that we’re not going to be out of this mess until the end of 2009,” Clouse told a Channel 7News reporter.
For students who are thinking of investing in the stock market, Markham’s advice is to start early and invest often.
“You can be a little more aggressive in the stocks that you pick when you invest early because if you lose money you can make it up,” she said.
“Finance isn’t scary. It’s supposed to be accessible to anyone, and if you learn the jargon, it’s really simplistic,” Markham said.
