MIDDLETOWN, Pa. — With the stock market reaching record highs in 2017 and the Dow Jones industrial average topping the 21,000 mark for the first time in history, investing in the stock market would seem to be a sure win.
A group of finance and business majors at Penn State Harrisburg are about to find out. Members of the Student Investment Committee will be taking their academic background in finance and turning it into a real-life experience investing real money in the stock market.
“I have been adviser to the Finance Club at Penn State Harrisburg for 12 years, and this is something we have been building toward for many years,” said Patrick Cusatis, associate professor of finance and business administration in the School of Business Administration. Cusatis, who holds a bachelor of science degree in finance and a doctoral degree in finance and statistics from Penn State, joined Penn State Harrisburg in 2002, and has been an instructor at the University since 1993.
Through the years, the seed money to grow the fund has gradually increased to $15,000 with the generous support of dedicated Penn State Harrisburg donors. That, Cusatis said, gives the Investment Committee the funds needed to have a real investment portfolio that they can use to fund scholarships for finance students.
“It’s a big responsibility,” said Cusatis, “one that these students do not take lightly. This is real money that they are investing.”
Cusatis knows about the real-life financial marketplace. Prior to joining Penn State, Cusatis was a senior vice president in charge of municipal derivatives and municipal remarketing at Tucker-Anthony. Prior to that, he served as a director at CoreStates Bank and First Union National Bank and worked in municipal new product development for Lehman Brothers in New York City. Having worked in the heart of the nation’s financial district, he is able to put his Wall Street background to work as adviser to his students.
“Even though the students will be making their decisions on which stocks to invest in, there is a safety net with the advisory committee. They monitor what the students can buy or not buy,” said Cusatis, who serves on that committee, along with School of Business Administration faculty members Oranee Tawatnuntachai, David Buehler, and Premal Vora.
One of the key factors that the Investment Committee is focused on is diversification. To determine which stocks to select for the Penn State Harrisburg’s Investment Committee portfolio, the seven students on the committee must do their homework.
The Investment Committee typically meets every other Tuesday, sometimes more often as they hash out the stocks that they will invest in. Each member of the committee comes to the meeting with details on stocks they have researched in each sector, such as financials, consumer discretionary, consumer staples, industrials, utilities, materials and telecommunications.
Senior Christine Emminger, of Saxonburg, Pennsylvnia, has been looking at pharmaceutical stocks. The group has decided to steer clear of health care, expecting volatility surrounding the Affordable Care Act, but pharmaceuticals might be a good way to be in that market sector.
Senior Jeremy Dippel, of Fleetville, Pennsylvania, has experience in the petroleum market sector. He has been researching energy stocks that might be considered as investments. Other committee members are researching other potential investments; for example, Afif Fahmi bin Rosli, a senior majoring in finance from Malaysia, has a passion for the tech industry.
The president of the Penn State Harrisburg Finance Club, Jessica Reitenbach, of Harrisburg, Pennsylvania, is a dual major in finance and accounting who will graduate in May. “The idea for a student run Investment Committee was started by a previous Finance Club president. As the current president, I had a strong desire to see this club become established,” said Reitenbach. “I wanted the chance to be involved in the decisions and to learn more on investing strategies from our professors in a real life situation.”
The Student Investment Committee is dedicated to making profitable investments with the seed money donations. Rather than working to earn returns for investors, a vital part of the committee’s mission is to fund scholarships for future business students with their portfolio revenue.
“It is important to make sure we make sound investments so that the fund can grow and future students have the same opportunities we are being given. If we make poor decisions, the fund could decrease in value,” Reitenbach said. “The pressure of knowing we could lose real money is definitely on all of our minds. We take this very seriously.”
Dippel, a finance major, became interested in the Student Investment Committee for the chance to propose ideas on how to best allocate funds under the guidance of Cusatis.
“It's one thing to talk about how to properly invest money, but shifting gears from theory into investing actual money is the best way to learn how to properly invest. We're the first Student Investment Committee at Penn State Harrisburg, so the chance for other students down the line to learn from the decisions that we make is groundbreaking,” said Dippel.
While 2017 has started off with a bull market, the Student Investment Committee is cautious in its investments. A few expressed concerns that the market might be rising too quickly. What could that mean?
“The best approach is always to diversify,” reminded Cusatis, adding that the fund will be used to build an investment portfolio that will provide valuable insight into investing for the committee, while paying it forward for future finance students.