From the Faculty Advisor
Scott E. Pardee
Professor of Monetary Economics

The Student Investment Committee provides students interested in finance with four bridges.

The first bridge is to the Board of Trustees of the college, who established the SIC and funded it with $100,000 of the endowment in 1987, with the help of Professor Claudon. Nowadays, SIC officers report to the Investment Committee of the Board each May, and each of these sessions has been a heady experience for people on both sides of the table. The students get a chance to strut their stuff, showing how well the portfolio has performed over the year (beating the S&P in most years), explaining their investment strategy, and even presenting individual stocks. They get a chance to answer questions from the trustees, who themselves are MIDD alums and have successful careers in finance. The trustees have come to treasure this meeting because for all the effort they put into their officials duties for the college, they have very few chances to meet today’s students. You can be sure they are impressed, both with you as individuals (“I’d like to hire these guys” is one comment I’ve heard) and with the economics program the college now offers (“I should come back and take some of these courses; they weren’t offered when I was here”). That said, the trustees insist that the SIC structure the portfolio as professionally as possible, including adopting advanced risk management techniques.

The second bridge is between the classroom and the club’s activities. Many of the students find the SIC a natural outlet for the skill sets they have developed in class. The SIC’s best stock picks over the years have been initiated by students who have studied the company as part of specific industry or national economy. Most members are economics majors but students in other majors have also made profitable recommendations based on their own areas of expertise. Juniors and seniors have an advantage, but first and second year students can quickly pick up on financial terminology and data sources. The Bloomberg terminal in the library is an important tool these days for following the markets.

The third bridge is between the college and the financial markets. As the horse trainer once said, “A man’s gotta make at least one bet a day, else he could be walking around lucky and not know it.” Just about everyone in the club has a passion for markets. You trade the market for your own account. You have that itch to find the investments that will turn out to be winners. You are intrigued by arcane methodologies, such as charting and technical analysis. You enjoy developing options strategies—puts and calls, straddles, bull spread, bear spreads. A few of you even enjoy working through the mathematical models such as the Black-Scholes-Merton option pricing model. And frankly, some of you enjoy playing poker on Saturday nights or on the Internet. Early in my time here, a group of SIC members asked me if I would be faculty advisor to their poker club, an offer I politely turned down on the grounds that the SIC kept me busy enough. That said, I start my investments course by laying out the first rule of poker: “The only reason you should play poker is to make money.” The same rule applies to investing.

The fourth bridge is to the job market, through networking. MIDD alums are now in key positions in many major financial firms, and they are eager to help you either join them in their companies or find a job elsewhere. Each year the SIC sponsors student trips to New York and Boston to visit investment banks, mutual fund management companies, and management consulting firms. Often these are arranged jointly with the CSO, and officers of the club work closely with the CSO on a variety of other programs, including bringing in outside speakers to SIC meetings. Students who can list membership in the SIC on their resumes find that this is a big plus in job interviews, since it gives you a chance to describe what you have done, as though successful stock selections, to add value to the portfolio. But if the person who interviews you happens to be an alum of the SIC, you should be ready to answer penetrating questions about the club’s current strategy and performance.

Scott E. Pardee
Professor of Monetary Economics