Stock highs eclipse lows for BW students managing real portfolio

The highs and lows of the stock market are not for the faint of heart, but members of BW's long-running Investment Club, who manage a designated piece of BW's endowment, have faced bear and bull markets with the poise of seasoned finance pros.

The value of the club's investment portfolio has grown from about $160,000 back in 2006 to more than $640,000 today, with fluctuations along the way.

"The investment strategy of the club focuses on long-term investing and passive management," explains current club president Joe DiLiberto '20.

"The portfolio experienced many ups and downs since it was first established but continues to be profitable over a long time. Many great investment decisions were made in the past to get where our portfolio is today."

Pandemic Fall, Rise as Teaching Moment

DiLiberto, a finance and accounting major, says the market crash in the early days of the pandemic is the latest white-knuckle event faced by club members. But, it has turned out to be an opportunity to learn about the unpredictable nature of the markets.

"The portfolio took a huge hit back in March and the value went below $300,000. We were unable to access the Bloomberg terminals in Kamm [Hall] and could not conduct our usual analysis. We held everything that we had, and the portfolio started to increase in April," DiLiberto recalls.

"The members were confused about why the stock market kept going up while the economy was suffering. The Fed continued to pump up the market with stimulus and fiscal policy. The interest rates are near 0%, so many people do not want to put money into the bank because CDs and bonds do not pay as much."

He continued, "The second quarter this year resulted in one of the best quarters for stocks ever percentage-wise. Technology stocks thrived. Job reports were better than expected. Despite the coronavirus and high unemployment, the market moved higher due to stimulus and liquidity. The performance of the stock market this year became a great learning experience for everyone in the club."

How the Club Works and Where the Buck Stops

DiLiberto says Investment Club is open to any student regardless of major. Each member is required to research and present a stock for members to consider. A lot goes into each pitch.

"A stock pitch includes an investment thesis, industry analysis and outlook, company overview, company news, financial performance, earnings and estimates, ratios, SWOT analysis, technical analysis and analyst recommendations," DiLiberto details.

Buy, hold and sell decisions are made by voting members with the mentorship of faculty adviser and finance professor Dr. Christian Nsiah, who vets the presentations for accuracy.

"Dr. Nsiah may provide guidance and feedback on the pitch, but the students decide whether to buy or sell a stock," DiLiberto says.

Outlet for aggressive investing

DiLiberto notes that students do have an opportunity to be less conservative in their investing by competing each semester using the Investopedia Stock Simulator.

"Students are more aggressive in the simulation than when managing the endowment fund. In the simulation, students can invest in any stock, trade options and short stocks."

A prize is awarded for the club member in first place when the simulation is halfway over and when the simulation ends.

Career-Boosting Experience

DiLiberto considers the Investment Club a highlight of his time at BW, one that helped define his career path.

"I have learned a lot about how to analyze stocks, make smarter investment decisions, understand how the markets work and control personal finances in my own life. One of my main career aspirations now is to help people achieve their financial goals."

The club also gave him friendship, a faculty mentor and a full-time job offer months ahead of his December graduation.

"This fall semester is my final semester at BW and being involved in Investment Club has helped me get an internship and a full-time position after I graduate. I have learned so much and made many great friends."