SEMO STUDENTS LEARN TO MANAGE STOCK INVESTMENTS

Eighteen finance majors in the accounting and finance department at Southeast Missouri State University are preparing to make their first transaction of the semester in their real money portfolio.

That's the focus of a "Portfolio Theory" course being taught by Michael Devaney, a professor of accounting and finance.

"Managing other people's money is a serious responsibility and is typically defensive in nature," said Devaney, a chartered financial analyst and a previously licensed stock and commodity futures broker, explaining the benefits of working with real money. "Pretend money simulations reward risk taking and usually degenerate into games."

Such simulations also tempt students to assume risks "which would never be tolerated in a real money investment portfolio," he said. "Real money seems to crystallize their attention in a way that simulated investment cannot."

Southeast is one of only 22 schools nationwide that have student-managed portfolios.

"There are several components of our portfolio class that collectively make our course unique," said Deborah Beard, chairman of the accounting and finance department. "Students in this innovative course get hands-on experience in the selection and management of investments by being responsible for managing a real money stock and bank funds portfolio."

Beginning this semester, student managers are using "Value Screen II," a computerized stock data base with financial information on the 1,600 most widely traded stocks, as their primary source of information when selecting and tracking stock performance.

Students also are able to closely monitor the market and news that affects it through a satellite-computer link with major trading centers. The satellite information company, Data Transmission Network, also is used by brokers across the country.

In November, students will gain firsthand experience of the New York Stock Exchange when they travel to New York on a trip made possible by Margaret Woods Allen of Sikeston.

Allen, a successful investor and author of "Widow's Might: A Survival Guide to Investing," endowed two foundation funds in honor of her late husband, Thomas Allen. The earnings from one fund are earmarked for the New York trip, and the earnings from the other provide the opportunity for students to travel to the Chicago Board of Trade and Chicago Mercantile.

The trips, Allen said, "open up a whole new world" for students.

"The experience is so great," she said. "Many of these students have never been out of Missouri. Seeing how the markets work and experiencing a big city" is a tremendous opportunity for them.

"It makes my spirits soar to hear what the students think" after the trips and the course. "It's a marvelous experience."

In 1988, the Southeast Missouri University Foundation provided $10,000 to establish the portfolio. In addition, an anonymous donor contributed $1,000, and two Southeast faculty members contributed gifts of $1,000 each which were matched by the foundation, bringing the initial principal to $15,000.

Boatmen's Investment Services Inc. and Boatmen's National Bank in Cape Girardeau have worked in conjunction with Southeast's accounting and finance department to provide brokerage services since 1988.

Todd Woodfin, a Southeast senior finance major from Zalma, who is enrolled this semester in the stock course, said: "This isn't a case study. It is much more interesting."

Woodfin said the course will help him gain "a better understanding of how the stock market works and how to set up a diversified portfolio."

While the focus of the course is on the management of the portfolio, Devaney said students also learn about bond, options and futures markets. In addition, students are required to write a portfolio policy statement consistent with the objectives and constraints of the student-managed portfolio.

As of Aug. 17, the value of the portfolio managed by the previous class of student managers was $20,315.31.

During the spring 1994 semester, the fund will be managed by students in the "Futures Seminar" course. In addition to managing the portfolio, students will learn about agricultural and financial futures market fundamentals and strategies used for risk reduction and speculative investments.

Course activities will also focus on the historical origins of futures trading and the commodity exchanges.