A year ago, Kal Vepuri was riding the roller coaster we call the stock market. But with the economy reaching an apparent turning point, Vepuri decided in late January that he'd had enough of a bumpy ride. He pulled all of his investments from tech stocks and decided to let the professionals handle it.
"I was fortunate enough to get out before some of the downturn happened, but even when I sold early I lost most of my previous gains," he says.
Vepuri, a junior and co-president of the Duke Business Club, is not alone. A growing number of Blue Devils, like fellow college students nationwide, are playing the stock market. And though not all are success stories, a majority are using these years as a financial learning opportunity.
Connel Fullenkamp, visiting assistant professor of economics, says that he often hears from students about their experiences in the market--but only when they lose money. Almost all of these trading losses, he says, have come about through online trading.
For the past three or four years the student-investment trend has pointed toward online trading, says senior Allister Peera. It's very easy to establish an account with a web site such as E-trade or Datek, he adds.
Fellow senior Paul Blanchfield agrees, but warns against the quick-turnover, high-activity habits of day traders. "Day trading is a very bad idea," he says. "I know numerous people who have run into problems with it, and they usually act on a tip and don't know what they're doing."
Instead, Blanchfield advises taking a more long-term approach, and viewing college trading as a learning experience. He says that, naturally, college students tend to take more risks because of their longer time horizons, and notes that potentially risky behavior is easily found at Duke. "People throw around stock tips all the time and buy and sell on a whim."
Rob Salisbury, a sophomore, agrees completely. He says that his average investment lasts around one year, though if he actually took his own advice, he would hold his stocks longer. But he does try to practice what he preaches in terms of looking at the fundamentals of the companies into which he invests.
Despite being a relatively experienced investor, like some Duke students, he uses a brokerage to invest his money. Many find it much less risky to put their money in the hands of finanical experts, rather than risk playing the market themselves.
Salisbury says that although he started to invest in eighth grade, it took him a long time to gain experience in the investing arena. But being young, he feels that he can afford to be riskier than average. "For most college students, if they make some mistakes with their money, their parents will be there to back them up."
Fortunately, however, Duke students seem a little less likely to lose their shirts in the market than the average investor.
Vinay Kumar, a senior and fund manager for the Duke Investment Club, says that he's been surprised by the level of sophistication shown by Duke student investors. He says that they take the time to examine a firm's fundamentals--the harder numbers behind stock valuations. He also feels that Duke students keep themselves abreast of current macroeconomic trends.
Peera, also a fund manager for the Investment Club, adds that Duke students are not likely to get into aspects of the market in which they don't have sufficient understanding or might be better suited to a more experienced investor. "I only know one person who's done [stock] options trading," Peera says, "and he definitely knew what he was doing."
Fullenkamp adds that riskier investing tools, such as short selling, are often unavailable to college students. He says that for things like that, you usually have to have an account with a large margin--often as high as $25,000.
Vepuri says that many of the students who invest take it very seriously. Occasionally he has heard about people spending four to five hours per day monitoring their holdings.
Still, it's not uncommon for college-age investors to make poor decisions, Vepuri says. He adds that many students don't have the understanding to properly analyze stocktips and advice they hear elsewhere. Acting on a whim based on such advice, without doing their own research, can prove costly.
Students who are not completely comfortable with their own stock-picking ability often look to mutual funds, and it's fairly easy to pick one that fits your individual investing goals. In addtion, a convenient way to gain investing experience alongside more experienced college students is the Duke Investment Club. The purchase of a single share--around $45 to $50 right now--is all it takes to gain admission and take part in investment decisions. The fund opens to undergrads again towards the end of September.
At each of the club's monthly meetings, the board, which meets every week, proposes investment ideas to the shareholders, whose votes decide the holdings of the fund. The monthly meetings can be very productive for students who want to gain investment experience.
The board generally tries to start up a roundtable discussion on most issues. "People can talk about what they're investing in on their own," Kumar says. "And even if we don't act on every idea, it might spark an idea for someone else."
However you decide to plunge into the big investment game, most agree that now is the best time to learn. People like Blanchfield--who started investing at the age of 15--and Salisbury, may have a leg up on the general student population. But Blanchfield believes that there is plenty of opportunity to learn about investing, especially at Duke.
He notes that many people have the advantage of having older brothers and sisters who work in the world of finance, and it is no secret that many Duke students have a little extra money to play around with.
"My freshman and sophomore year people were talking about [the market] because you could invest in anything and it would go up." Those people have since gone through a learning experience, says Blanchfield, one of the primary reasons they were involved to begin with.
And though entering the market today may be trickier than several years ago, it's also guaranteed to provide a valuable lesson.
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