ICCI students benefit from Butterfield bank’s experience

Students taking the investments
class at the International College of the Cayman Islands this past fall term
favoured technology, energy and healthcare stocks in an investment competition
that simulated real-world stock trading.

The investments class was taught by
Brad Bishop, who specialises in private wealth management at Butterfield
bank.  He said the stock simulation
competition was a key feature in the course because it encouraged business students
to research and evaluate company data and learn from their successes and
misses.

“Until students can live and
experience investing themselves the theory taught can only go so far,” Mr.
Bishop said.  “So experience, in my mind,
trumps theory.”

To kick off the stock simulation
competition, students started with $100,000 in imaginary cash and were required
to invest in stocks over several weeks.

As the weeks went on, Mr. Bishop
noticed that students gravitated toward companies or industries they were interested
in from either a professional or personal capacity.

Technology, healthcare and energy
stocks were favoured by many students. However, one student broke out from the
pack and invested in companies producing beauty care consumer products.

 

Enthusiasm

“At first, a number of students
were hesitant to risk any of their imaginary capital.  Certainly, as the competition progressed and
the students became more comfortable with what they were doing, we saw a little
more excitement, energy and risk taking. 
It was great to observe the enthusiasm,” Mr. Bishop said.

What struck student Theodecia
Sonlin was the enormous amount of information on the stock simulation website
www.investopedia.com.  She quickly made
use of the educational financial videos and tutorials to help her pick her
stocks and track performance versus the S&P 500 Index. 

Ms. Sonlin picked her first stock
from the technology sector using the “most popular buys” feature.

“This stock was the worst
performing of all my stocks, so I realised that I couldn’t rely on the basis of
what’s a hot pick,” Ms Sonlin said. 
“After that, my strategy was to diversify my portfolio, buying stocks
across different sectors such as technology, healthcare, consumer staples and
energy.  My best performing stock was Procter
and Gamble, part of the consumer staples sector. I found my diversification
strategy worked because I was able to balance losses in one sector with gains
in another even when the S&P 500 Index was down.”

Another student, Davin Barrett, who
also works at Fidelity, said he chose Google as one of his performing stocks
because of its reputation as a stable company, expected growth rate of 15 per
cent, and a low debt-to-equity ratio.

“A company that has a low
debt-equity ratio is one of many good markers for a potential stock pick and
one of the reasons why I invested in Google,” he said.

Massey Energy was another stock Mr.
Barrett bought during the stock simulation, especially when he noticed an
interesting trend.

Early in the day, Massey Energy
would trade at lower rates and would gradually edge up higher as the day progressed.  Mr. Barrett decided to use this
morning-afternoon, taking advantage of a time horizon style of trading to his
advantage to increase his capital gains.

Following the simulation
competition, Mr. Barrett said he was interested in furthering his stock investment
experience in real life; however, he will take a cautious approach.

“It is a quick way to make profits
if you know what you are doing. But it is can also be a quick way to incur
losses if you don’t,” he said.

Mr. Bishop added: “I truly hope the
students further their studies in this area, if not for their professional
careers, then for their personal financial well-being.”

BUZICCIstocksimulationSTORY

From left, student Davin Barrett, instructor Brad Bishop, and student Theodecia Sonline.
Photo: Submitted
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