STUDENTS TAKE SHINE TO INVESTING

If your investments are not reaping the kind of returns that you would like, you might check with Bud Barnes, dean of the Gonzaga School of Business Administration, because a select group of students he teaches had a whopping one-year return of 29.72 percent on their portfolio. The students are not dealing with toy money, either. D.A. Davidson & Co., a regional investment management firm with offices in 15 states, sponsors an investment competition each year among colleges and universities where it has offices. Last year, the company funded 18 schools with $50,000 each. The Gonzaga team won first place in the competition last year (Aug. 31, 2004-Aug. 31, 2005), beating the 17 other schools. The Zags’ team also beat Wall Street as the Dow Jones Industrial Average provided a return of 5.39 percent for the same period and the Standard & Poor’s 500 returned 12.55 percent.

The original $50,000 remains intact from year to year, supported by D.A. Davidson. D.A. Davidson guarantees students against any losses below the original $50,000, which are replenished annually as needed.

Barnes begins preparing students for the competition in January at the beginning of the three-semester class titled “Portfolio Construction, Management and Protection.” The two dozen students in that class learn the theories of portfolio management and investment. When they return in the fall, Barnes divides the class into three teams of seven or eight students each and gives each team $50,000 to invest for one year. 

The teams have done so well since Gonzaga entered the competition in 1998 that the University has given Barnes the OK to invest a portion of funds earmarked for School of Business scholarships and other financial aid. 

 “What I am teaching them is how to be good money managers,” Barnes said, adding that students must be upper-division finance or accounting majors with a minimum grade-point average of 2.75 to be eligible. “Our management objective is to instill within students the need to build a portfolio. In this field, it’s all about serving the client. You want to preserve the integrity of the investment and grow the corpus of each individual investor.”

Barnes said the most striking thing he has noticed since he began teaching the class has been the students’ energy and commitment.

“They take ownership of the money and failure is not a word that is in their vocabulary,” Barnes said. “It just amazes me. I tell them, ‘This is your kids’ scholarship money for when they come to Gonzaga.’ Every dime made goes right back into the University’s academic endowment.”

So far, GU students have earned $30,000 in profit for students’ scholarships and financial aid – a sign that the classes are working. Another sign is that several students from the classes have gone on to work in the field of portfolio management after graduating from Gonzaga.