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College of Business Alumni

Created for Students, By Students: NIU Investment Association Competition Winner Earns 32% Return on Investment

In 2009, three students wanted something different. Sure, listening to guest speakers in a large auditorium has its purpose, but these students wanted more interaction outside of the classroom experience. And they wanted something more personal than the typical FMA (Financial Management Association) meetings provided. As a result, the NIU Investment Association was born.

This discussion-based forum meets weekly and draws interest from students across disciplines and from all levels. "We have freshman students all the way to students in graduate school," shares association advisor and Assistant Professor of Finance, Gina Nicolosi. "We also have a large range of majors, including Economics, Engineering, Liberal Arts & Sciences, and Health & Human Services."

During meetings attendees spend most of their time discussing, or debating, current economic events like the government shutdown and the debt ceiling - most of which can have dramatic effects on the stock market. Members also do cursory analyses of a selected stock. Students volunteer to create and give brief presentations (for example, a graduate economics student discussed a handful of firms engaged in green technology), and there is an ongoing portfolio simulation competition currently hosted by WallStreetSurvivor.com.

Outside of meetings members are expected to spend time reading articles in preparation for the upcoming topic and spend time completing research and mock trades related to the competition. The Investment Association deals with hypothetical money and each competition spans approximately 14 weeks. Gina Nicolosi explains, "Because losses are not tangible, coupled with the short time horizon, many students adopt much riskier positions than they'd otherwise be comfortable with. They also tend to make buy/sell decisions on expected price changes over the upcoming few days or weeks, which may have nothing to do with whether or not a company is a good investment over the long run. As a result, competition winners usually greatly outperform the overall market because their positions tend to be much riskier than holding a broadly diversified portfolio."

The portfolio competition winner in the spring 2013 semester earned a 32.02% return during a period in which the S&P generated a 6.29% return.

For more information on the Investment Association visit their website (www.cob.niu.edu/investmentclub/) or contact Gina Nicolosi at gnicolos@niu.edu.