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Week Five—Husky Investment Tournament

Attempts to limit the spread of COVID-19 have closed schools, suspended face-to-face classes at many universities (including Michigan Tech), closed restaurant dining areas, and are causing countless events and functions to be canceled.

The markets have been extremely volatile (rapidly changing) in the past few weeks and will likely continue to be until the effects of the virus level out and normalcy is restored to the financial system (the President indicated yesterday that this could be sometime in summer). 

The bull market (remember, a bull market is when the market continually goes up, whereas a bear market is when stocks are dropping), one of the longest in history, was still going strong a month ago. However, in just a few weeks, things have taken a major turn. Last Monday, the S&P fell 7.6 percent in one day; that’s the biggest drop since 2008. Stocks then rebounded on Wednesday and fell again (by 9.51 percent) on Thursday. On Friday, they soared by over 9 percent again. 

For a bull market to turn into a bear market, the market needs to drop 20 percent over a period of time. The Dow, S&P, and Nasdaq all ended their historic 11-year bull run last Wednesday and Thursday, with stock prices less than 20 percent than they were just a month before. 

Typically, a bull market turning into a bear market is an indicator of a looming recession, but this is not always the case. Prior to market disruptions from the Coronavirus, the US economy was booming with 50-year low unemployment, a 20-year high in household income, and record-low interest rates. It is yet to be seen if the Coronavirus will propel us into a recession, or if the markets will rebound following these unprecedented times.

Of course, this is not the first time the markets have seen huge fluctuations. You may remember learning about the Great Depression, the financial crisis of 2008, and the dot-com bubble in your classes. All of these events triggered detrimental effects on the stock market, but the market recovered from each event. There is yet to be an event in history where the market could not recover—with time. 

We know many students are out of school right now. Keep following the markets and making trades! This is an excellent time to learn how the markets react in times of distress and is a great time to practice virtual collaboration, a useful skill for anyone. We recommend using a video conferencing software, such as Zoom, to meet with your team and discuss your trading strategies. 

For this week’s video, Laura Connolly, an assistant professor of economics at Michigan Tech, discusses economic indicators and how investors can use them to gauge their investment decisions. Please note, the rates and indicators in this video are as of October 2019; however, the information surrounding how to read and interpret these ratios is correct. 

Week Three—Husky Investment Tournament

Have you been watching the markets lately? We have been on a historic, almost 10-year-long, bull run. A bull run is when prices in the stock market rise over an extended period of time, whereas in a bear run, the opposite is true. You can remember the difference by picturing a bull, which bucks upwards, and a bear, who swipes his claw downwards.

You may also have noticed that the DOW and S&P 500 dropped more than 3 percent last Monday and the NASDAQ had a two-day drop of 6.38 percent–the worst since June 2016.

What should investors do with this information? If prices are dropping, should you be selling your assets before prices can get any worse? Is now the time to buy and ride out the market dip? Making hasty sell decisions is rarely a good choice in times like these.

Here are two major factors driving changes in the market, and what investment professionals are saying about them:

You’ve surely heard about the coronavirus (COVID-19). While the loss of life and emotional toll of the disease are potentially monumental, we will focus on the financial side of things.

At this time, experts predict that although the results will be substantial, and already are, they will be temporary. Historically, when there is an outbreak such as this, markets are influenced in the short-run, but recover following the outbreak. One aspect of the coronavirus that is likely to have a lasting global impact, is the issue that is created in supply chains with shut downs in China.

Since we source many of our products from the country, there is fear that companies will not be able to meet consumer demands. This may cause ripple effects that last into the rest of 2020. Some companies, such as Apple, predict lower sales in the fiscal year. Apple’s sales may be down this year if they are not able to produce enough iPhones for the company’s annual new product release, which is generally in September. 

Politics are also a major factor in financial markets. With the upcoming election and primaries beginning, news in politics is constantly impacting the market. Although the influence of politics on the market is difficult to predict, there are several trends that have been noticeable. Presidential candidates are often gauged as “pro” or “anti” business and the stock market reacts accordingly. When candidates generally seen as pro-business are leading in the polls, the market tends to go up. When candidates that aren’t seen as pro-business are in the lead, the market tends to head in the opposite direction.

Going one step further, certain sectors and companies can be impacted to a greater extent depending on the platform of the politicians. For example, a “hawkish” politician would be good for the defensive industry versus a “dovish” politician. That being said, the effect on the stock market is a wild card. At this point in the election process, investors will see politics playing a heavy role in the market, which will likely increase the volatility of stocks.

With everything going on in the markets, it is difficult to predict how the multitude of influences will blend together to move the market going forward. Watch this week’s video to learn more about supply chain management, and how investors can use this information when making decisions. 

Week Two—Husky Investment Tournament

Welcome to week two of the Husky Investment Tournament!

There are more than 300 students competing to see who can make the most money with a million dollars in only seven weeks. Teams are beginning to make trades and are gaining confidence. Have you made your first trade? Time is limited, so start now!

Investing for retirement is like running a marathon. A steady, well-diversified portfolio comprised of a large number of stocks will win out in the long run. Investing for a stock contest, however, is like running a sprint. You need to pursue an aggressive portfolio comprised of a small number of high-risk stocks to be the top performer over the short run.

In real-life investing, investors match their investment style to their risk aversion, or the level of risk you are willing to accept for a potential return. Generally, higher risk is an indicator of a higher potential return (or loss). For an average person, there is a need to lower risk using a well-diversified portfolio. In this model, investors allocate their investments between stocks and fixed-income instruments (bonds, CDs, etc.). Fixed-income instruments are investments whose interest payments are set at a fixed value and are paid on a regular schedule. These investments are generally less risky than equity investments because of the fixed payment schedule and the order assets are distributed in the event a company goes bankrupt (bond holders receive payment before equity holders); however, the lower level of risk generally leads to a lower rate of return than equity instruments.

To further diversify, investments are also distributed between several different sectors (technology, financials, consumer staples, etc.) and at least 30 different individual assets. This mitigates diversifiable risk, or risk that can be reduced by spreading out your investments. While this technique works well in reality, it may not be best for the Husky Investment Tournament.

This competition is judged based on total portfolio value at the end of the last trading day and returns are not risk-adjusted, so teams may find it lucrative to pursue risk for the potential for a higher return. 

This week’s video comes from Jacob Mihelich, a current student in the Michigan Tech College of Business and an investor in the Applied Portfolio Management Program. He provides helpful pointers on selecting stocks.

2020 Bob Mark Business Model Competition Winners

The 2020 Bob Mark Business Model Competition was held January 29.  Eighteen students making up 13 teams pitched business models to advance their innovation. Community members and judges from across campus and the community selected the winners and provided the teams with feedback.

Student stands on stage during business plan competition
Jacob Soter is currently pursuing a TechMBA®

The winners of the 2020 Bob Mark Business Model Competition:

  • First Prize, $2,000—Kyra Pratley, POWERPENDANTS
  • Second Prize, $1,000—Jake Soter, SwimSmart Technologies
  • Third Prize, $500—J. Harrison Shields, Shields Technologies
  • Honorable Mention, $250—Samerender Hanumantharao & Stephanie Bule, Bio-Synt
  • Honorable Mention, $250—Allysa Meinburg, Haley Papineau, Sadat Yang, AAA Prosthetic Ankle
  • Audience Favorite, $250—Allysa Meinburg, Haley Papineau, Sadat Yang, AAA Prosthetic Ankle
  • MTEC SmartZone Breakout Innovation Award, ($1,000 Reimbursable expenses toward business development)—Ranit Karmakar

This event is a tribute to the late Bob Mark, professor of practice in the College of Business who started the Elevator Pitch Competition at Michigan Tech. The competition recognizes his entrepreneurial spirit and its continuation at Michigan Tech.

The 2020 Bob Mark Business Model Competition was hosted by Husky Innovate, a collaboration between Pavlis Honors College, the Michigan Tech College of Business, and the Office of Innovation and Commercialization. Husky Innovate is Michigan Tech’s resource hub for innovation and entrepreneurship, and offers workshops, competitions, NSF I-Corps training, a speaker series, and co-hosts the Silicon Valley Experience.

School of Business and Economics Announces Teacher of the Year

Each spring, senior-level students in the School of Business and Economics (SBE) select a slate of faculty to be considered as SBE’s teacher of the year. These faculty are known to go above and beyond and have a positive impact on our students, the School, and the University.

This year’s finalists include: Heather Knewtson (finance), Sheila Milligan (accounting), and Joel Tuoriniemi (accounting). Candidates are voted on by all SBE students and the 2018-19 teacher of the year is Junhong (Jun) Min (marketing).

Min is recognized for his dedication, passion, and for going the extra mile to support students. One nominator wrote: “Jun Min genuinely cares about his students and their success. He goes out of his way to hold meetings after class, just to get to know his students and their goals.” He gives his time and resources, developing connections for students that lead to paid internships, co-ops, and full-time employment.

Min also serves as the advisor to the Michigan Tech student branch of the American Marketing Association (AMA). Congrats, Jun, and thank you, students!