Wisdom passed from class to class

The students who took the Student Investment Fund class last year collectively wrote a letter to future class members to encourage them in their studies, offer some sound advice, and encourage them to take full advantage of everything the class, and the David Eccles School of Business, has to offer. It’s a great example of how our students look out for each other year to year. Here’s the letter: 

Advice to the Incoming Fund Analysts

For many of you, this will be the first time that you have ever translated what you have learned about equities to actual real-world applications. In most cases, you probably already know what stocks are, how they can be used, how they derive their value, why your portfolio needs to be diversified, and so forth, but in the actual scrutiny, research, presentation, and purchase of holdings, you will likely run into many situations that are not always foreseeable.

As a class, we had a pretty good run. We were fortunate in that we inherited a robust market and a strong portfolio. We had the right approach in that we took our responsibilities seriously and did our utmost to make solid decisions. However, we nevertheless found ourselves in many difficult situations. We ask that you do your best to learn from our experiences, our shortcomings, and our successes. We leave you with a few pieces of advice, in hopes that they will serve you well.

First and foremost: do not be mistaken; being successful in your current capacity takes a lot of hard work. This will very likely take more dedication, more time, and more teamwork than any of your courses before this and after. There will be long nights. There will be arguments, rest assured. However, these are nothing that cannot be taken on with some late night food runs and sensible compromise.

Secondly: you have excellent resources; use them. You will be the first analysts that have access to the new trading room. Expect to spend a lot of time there. Get to know the software programs available to you. At first, they may be intimidating, but you will learn to love them, for when properly applied, they make your job much more manageable. You have a knowledgeable and open advisor in Liz (Tashjian). Approach her. Ask questions. Ask advice. At times you may feel intimidated, but she will always be there to assist you with your best interests in mind. You will find yourself among some of the best and brightest students that the university has to offer in your discipline. Get to know each and every one of them. Learn from them, for they are headed for great things.

Thirdly: you will spend a lot of time in group situations, especially in your second semester. You likely are already very familiar with the various ways in which group dynamics can break down or fall apart completely. This may be the biggest challenge you face here, so learn to work together with your colleagues. Trust in each other, but always double-check everything that is done. Then check it again. Deliberate and become an expert in your role, but make sure you familiarize yourself with the material assigned elsewhere. Never assume what others will ask you about your research, so be ready for anything. Be able to explain EVERYTHING on your company’s financial statements. When you think you have learned all there is to learn, dig deeper. Learn to manage your time. Your reports will always take longer than you think they will. Plan for it. Stay on top of things and do your best to stay ahead of schedule.

Lastly: learn to be flexible. Do not get hardheaded about anything. There are times in the next year that you will get outvoted. There are times that people will disagree with you. Do not take it personally. Allow room in your approach for changes in course.

Remember, a strategy is merely a foundation; there are always exceptions. For example, we had the unique opportunity of good timing. We had a strong market, in which we wanted to employ all of our idle assets. In general, we believed that the bull market had some room to go yet and wanted to capitalize on its momentum. We looked to get into solid companies that outdid competitors, had loyal customer bases, and room to expand. However, overall market momentum will not fully drive the momentum of singular entities. We had (and still do have) a large position in Apple. The company had given us strong returns when the market was less robust and we believed that it would continue to do so with the reinvigorated overall economy. We believe we failed to fully consider that such a company could already be overvalued simply on account of one of our overall portfolio strategies. We discussed selling our stake, and unfortunately, made the wrong call in choosing not to. Try to avoid making similar mistakes. Remember to have a reason for owning (and holding onto) every single security you have.

We congratulate you on getting here. We implore you to take this opportunity, for which you have already worked so hard, to learn everything you can about equities, about group dynamics, and about investing in general. If you approach this year with the right preparation—with the right attitude—you will leave it with many things that you did not have when you arrived: experience; perspective; a few worthwhile colleagues and friends.

Every single one of you has a good head on your shoulders. You know how to apply yourself. That’s how you got here in the first place.

We proudly pass on our fund to you. Now roll up your sleeves, have fun, and good luck.


Student Investment Fund 2012-2013

(photo of the class courtesy of Liz Tashjian, center)

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