Playing the market... for real
Asset Management Practicum give students the chance to manage a $7M portfolio
Kellogg students get a front-seat view of risk and reward through the Asset Management Practicum, where mistakes have real financial consequences.
The class requires students to monitor and trade within investment portfolios that currently stand at $7 million in total assets.
“It’s soup to nuts what an equity portfolio manager has to deal with,” says Robert Korajczyk, the Harry G. Guthmann Professor of Finance and co-instructor of the course.
It all began in 2007, when the first class had $2.7 million to manage. Assets have grown through student-based investments and endowment contributions.
Students spend two to three quarters in the class as equity analysts pitching long or short positions on stocks. One additional quarter is spent on the other side of the table as a manager for one of four portfolios. Investment pitches are sometimes critiqued by industry professionals. Once a year, students travel to NYC to consult an advisory board of alumni and get feedback from portfolio managers.
There are rules: Only 8 percent of the portfolio can be in a long position of a single stock and 4 percent in short positions. “We try to get people to not be pro-cyclical,” Korajczyk says. “Not just going long when the market is going up and not just short when the market is going down.”
There have been hits in the past eight years, like buying Apple Inc. shares before its recent run. And there have been misses.
“We’ve had [pitches to short a stock] where the portfolio manager didn’t take the position and could have made a lot of money,” he says. “There was a short pitch for Crocs and a week later, the stock went down 70 percent.”
Then there was the pummeling of 2008 and 2009.
“Going through the [financial] crisis was obviously an experience,” Korajczyk says.
Asset Management Practicum give students the chance to manage a $7M portfolio
Kellogg students get a front-seat view of risk and reward through the Asset Management Practicum, where mistakes have real financial consequences.
The class requires students to monitor and trade within investment portfolios that currently stand at $7 million in total assets.
“It’s soup to nuts what an equity portfolio manager has to deal with,” says Robert Korajczyk, the Harry G. Guthmann Professor of Finance and co-instructor of the course.
It all began in 2007, when the first class had $2.7 million to manage. Assets have grown through student-based investments and endowment contributions.
Students spend two to three quarters in the class as equity analysts pitching long or short positions on stocks. One additional quarter is spent on the other side of the table as a manager for one of four portfolios. Investment pitches are sometimes critiqued by industry professionals. Once a year, students travel to NYC to consult an advisory board of alumni and get feedback from portfolio managers.
There are rules: Only 8 percent of the portfolio can be in a long position of a single stock and 4 percent in short positions. “We try to get people to not be pro-cyclical,” Korajczyk says. “Not just going long when the market is going up and not just short when the market is going down.”
There have been hits in the past eight years, like buying Apple Inc. shares before its recent run. And there have been misses.
“We’ve had [pitches to short a stock] where the portfolio manager didn’t take the position and could have made a lot of money,” he says. “There was a short pitch for Crocs and a week later, the stock went down 70 percent.”
Then there was the pummeling of 2008 and 2009.
“Going through the [financial] crisis was obviously an experience,” Korajczyk says.
