• Financial Analyst Program

If you had $600,000 to play with, what would you do?

That’s the question a small group of Southwestern University undergraduates answer every single day. They’re members of SU’s prestigious Financial Analyst Program (FAP), a business honors curriculum that enables students to develop their skills in managing an investment portfolio. The group gains intensive, hands-on experience by researching the stock market, recommending which stocks to buy, and abiding by preset rules of when to sell shares—all in the name of growing a significant portion of Southwestern’s endowment. The amount is currently about $600,000, but the value, as these financial wizzes will tell you, changes daily depending on the market.

With the exception of higher-ed administrators and faculty, to most people, the concept of a “university endowment” is mysterious. However, the term refers to the total value of money and other financial assets that have been donated to the institution. The endowment is intended to be invested to provide additional income that, in turn, can be used for specific purposes on campus, such as supporting faculty research, providing students with scholarships, and renovating residence halls or academic buildings. Southwestern’s FAP students thus have an important part to play in contributing to the maintenance and future of the University.

“It’s pretty intense, and we take it very seriously,” says Jared Welsh ’19, a business major and communication studies minor. It’s a challenge “trying to predict the future because you can’t be sure what’s going to happen with stock prices and companies, and you need to react before anything happens so you don’t lose the school’s money.” Nevertheless, Welsh relishes the experience. “It’s pretty cool and something I’ve definitely enjoyed,” he comments.

“I just enjoy it so much,” rhapsodizes economics and accounting double major Jebb Vandervalk ’19. “This is what I do in my free time.” His face becomes more animated and his speech noticeably faster as he recounts digging through indicators, researching and proposing stock recommendations, readings news about favorite stocks, and checking stock apps constantly. “I’m an addict when it comes to that,” he admits. Even his family knew he was hooked when he asked for an $80 book on options trading for Christmas.

A multifaceted learning experience

Gillian Glover ’19, a business, math, and Spanish triple major who has participated in the program for two years, agrees that managing real-world rather than simulated investments is a rare résumé-building experience that requires immense responsibility but is also highly enjoyable. “We’re very, very thankful because the experience of managing real money is great,” she says. But beyond the fun of the program, she stresses that ultimately, “It’s a learning experience. We’re very lucky that the school lets us use part of the endowment, but I think it’s important for us to know that it’s for a learning experience.”

Part of that learning means making mistakes and sometimes being more wrong than right about which stocks to sell and buy and when. But such effective failures have enabled the students to learn how to recover from losses.

Another part of that learning experience is just learning the lingo. If you talk to any of the current student financial analysts, you’ll hear them casually throw around terms many of us haven’t heard since our AP economics classes in high school—if ever— such as “bull market,” “bear market,” “sell points,” “value investment,” “indicators,” “price projections,” “short seller,” and “S&P 500 Index.” But as math and financial economics double major Hannah Freeman ’20 comments, the value of the experience is in growing from knowing a little to knowing a lot in a short amount of time. She had taken only Introduction to Economics by the time she applied, so “I didn’t really fully understand what was happening when I came in. … I realize how much I know now compared with when I started. I know way more than I used to.” For her, being able to not just read about and be tested on investment concepts, as in a regular class, but also to apply those concepts in a real-world situation has helped cement her knowledge. She and the other FAP members now bandy about the names of investment websites and databases off the tops of their heads the way others might rattle off social-media slang and pop-culture references.

Taking stock of relationships

They’ve also had to learn how to exercise discipline and avoid “marrying their stocks”—that is, indulging in personal attachments to their stocks.

To those of us whose idea of investing goes no further than direct-depositing our monthly paychecks into a savings account, the notion of developing an intense devotion to an abstract, monetary concept like a market share might seem odd. But throughout the year, each FAP member is responsible for researching stocks they think will be good investments—not unlike how some singles might do a little innocent Googling while others might do some low-level cyberstalking when they first meet a new date. The student then presents a formal recommendation of that stock to the rest of the group, trying to persuade the other members to invest—much as someone might try to convince their close friends to like their new significant other. If the group decides to purchase a share in that company, that financial investment can quickly turn into an emotional one as the investors watch its value rise, fall, and recover—which tracks with the ups and downs of certain romantic relationships.

However, the FAPers must also abide by clear rules about selling stocks when they reach a specific selling point; if the relationship sours, you have to say goodbye. But the students begin to get a little starry-eyed as they reflect on the favorites that they’ve had to let go, such as Ferrari, Dekko, and Aldi, and some start to talk about how they’re still hoping their individual stocks bounce back so they can reinvest (you should be hearing echoes of, “No, really, they’ll change! They weren’t that bad! They can be really wonderful!”).

All analogies aside, Freeman admits that the program does affect many of the members on an emotional level. “Your life will become tied to the markets: when your stock goes down, your life will go down,” she says. “I was surprisingly sad about my stocks going down and having to sell.” Still, she recognizes that such attachments are based on personal bias. Glover confirms that she, too, has had to learn that “your brain knows better than your heart in finance.”

A truly collaborative effort

Beyond the emotional roller coaster of playing the stock market, an important benefit of the FAP is building collegial relationships and learning how to work as a team. But each participant emphasizes that this is not at all like the group projects that many students grumble at when they’re assigned them in courses—the kind in which, inevitably, one or two people end up doing all the work while the other members coast. Instead, the FAP is a genuine group effort, with each participant serving a specific role and other members relying on the others. “We’re all working toward a common goal, and we’re all diverse” says Emma Cooper ’20, a business major and music minor who’s considering minoring in Spanish as well, “so it’s a good experience for the future.”

Cooper, for example, is in charge of compiling and editing the annual report to stakeholders, whereas Welsh’s trader responsibilities include handling secured transactions, which means that when the group decides to buy or sell stocks, he drafts the orders, fills out the proper forms, and executes them through the University Business Office. Glover started in the public relations position—a recruiting and team-morale-boosting role now occupied by Freeman—but is now the statistician, which she loves because she’s “crunching numbers and running through calculations.” Vandervalk worked as the economist last year, creating monthly reports on jobs numbers, business outlooks, and other news about the market, and is now the portfolio manager, who leads and motivates the team and monitors the portfolio as a whole.

Students who participate in the FAP multiple years usually switch roles to broaden their perspectives and contributions, and Cooper says that “it’s all tailored to what you’re most interested in and excel at.”

Assistant Professor of Business Hazel Nguyen, who has acted as the faculty advisor for the FAP for the past five years, says that “the sense of community” is one major impact of the program. “The department is small already, but the students who are interested in the stock market and investing is even smaller, so being in this program, they get a chance to meet other students who are like-minded individuals with similar interests.” The students can therefore “engage in discussion more deeply, … learn to connect with the other students, and learn the soft skills of arguing and getting their point across—or compromising—when they have different opinions.”

A career-building experience

Of course, Dr. Nguyen continues, the students “learning how to invest in stocks” and “understanding whether to make investments or not” are major outcomes of the FAP—professional skills that the team members can easily channel into careers in financial and investment analysis. Those skills will only be enhanced when the program receives its first disbursement of a $3 million gift later this spring—a generous donation that will be distributed incrementally over the next five years. The students are excited to see how their buy-and-sell strategies and how the value of their investments might change given the substantial influx of funds, but all are confident that it’s just another part of their learning process that will help them “find ways to further better the program,” as Vandervalk says.

The group is also benefiting from attending professional-development events. In October 2018, the FAPers traveled to Ann Arbor to the Engage Undergraduate Investment Conference at the University of Michigan—the largest such convention in the U.S. Along with more than 1,000 students from other universities and colleges, the Southwestern FAP team got to hear talks by successful representatives of the hedge-fund and private-equity industries, from the chief investment officer of Morgan Stanley to the recently short-lived White House Director of Communications Anthony Scaramucci, who is known in the finance world as a former investment banker with corporations such as Goldman Sachs. “They had fantastic speakers,” recounts Vandervalk. “It was a really great experience to get to hear from all these panelists who we wouldn’t have been able to hear from otherwise.” Freeman liked being able to hear from experts who weren’t just reporting on markets but were actually making things happen in those markets.

The students also got to witness a few entries in the conference’s stock-pitch competition, in which student investment groups from other universities competed in recommending stocks in a dynamic tournament that had echoes of the NCAA’s March Madness. Seeing how other students recommend stocks helped Southwestern’s FAP team reflect on their own process and how they might change or improve it.

Cooper “didn’t think [she] was a conference person,” but she says she was “never bored,” and she thought it “was fun seeing so many young people there interested in this field and having.” The trip also became a bonding experience for the SU team, which helped facilitate their conversations once they were back on SU’s campus.

Applying to the FAP

Throughout the early part of the Spring 2019 semester, the FAP students will be hosting information sessions about the program in relevant classes. They’re looking to recruit members to replace the seniors who will be graduating in May. Each group per year averages 10 students, and as many as 20 to 30 have applied in past years, says Dr. Nguyen. So it is a selective process, but some current members, like Welsh, have been rejected in previous years only to win a spot with a few more classes or other experiences under their belts.

Most students apply in their sophomore or junior year and begin work the junior or senior year, respectively; Glover was one rare exception for being accepted into the program her sophomore year. Students accepted for their junior year usually stay on for two years, gaining even more experience and training the new members their senior year.

All the current members suggest that although some basic knowledge of the stock market—such as through reading financial news and familiarizing yourself with the market—is helpful, it’s not a requirement, especially considering that members will enroll in the University’s Investments and Financial Statement Analysis classes to complement their real-world work. What is requisite is a “passion and willingness to learn,” says Vandervalk. Cooper confirms that “loving knowledge” is definitely a plus. For example, incoming members are asked to do a substantial amount of required reading before the fall semester, but the participants say that doing such work improves the experience once the FAP meetings begin. “Even though you’re not going to understand everything you’re reading, it’s laying the foundations,” Cooper advises. “This semester has honestly been the most learning I’ve done in almost any class. Just the sheer amount of learning and tying it all together—that’s such a cool thing. I love learning more,” she reflects.

Glover adds that the FAP is a wonderful opportunity for “people who want to learn and voice their opinions and [for] people with a good work ethic.” Although she came in with minimal knowledge, she began her first semester with the program asking questions, contributing to the conversation, and listening to others’ opinions; “give and take,” she says, are key to a successful team effort. Dr. Nguyen confirms that the group is always looking for students who demonstrate “commitment, self-direction, and motivation” because they are expected to work independently—as faculty advisor, her role is limited to answering questions, offering guidance, and reminding the students of the rules governing the portfolio, but the student members are in charge.

The current members of the FAP can boast that they’ve engaged in an extraordinary experience that opens the doors to multiple opportunities, from successfully applying to law school and graduate programs in finance and economics to considering careers in development, actuarial science, accounting, investment banking, event planning, and PR. But Dr. Nguyen says that regardless of where FAP graduates land professionally, participating in the program is about learning while developing relationships and having a good time. “It’s not about doing math, and they don’t have to want to go into finance after graduation. It’s about learning. It’s just like a club: they attend, and they have fun,” she says. “This is the kind of group that brings people up outside of their comfort zone and rise to that level of challenge. It is such a privilege teaching these students because they are so smart, funny, and bright.”

The FAP celebrates its 20th anniversary at Southwestern this March.


For more information about the Financial Analyst Program, or if you are interested in joining the FAP, contact Gillian Glover. You may also contact Dr. Nguyen for details.