College Students Beat Market with TVA Money

Some of the most talented money managers in the South still have to take finals this week at Tennessee Technological University.

That's because the investors are Tennessee Tech business students.

With a 43.1 percent return on $100,000 over the last four months of 1998, the students placed second among 18 southern public universities in the Tennessee Valley Authority's Investment Challenge, a program helping business schools teach money management.

Second only to the University of Kentucky's 45.5 percent return, Tennessee Tech bettered the Standard & Poor's 500 average of 29 percent growth and TVA's professional investment managers' 30 percent growth.

"We had a good strategy which involved 'buying in' when the market hit its bottom last August and October," said Deryl Martin, Tennessee Tech associate professor of economics, finance and marketing. "Holding most of those stocks for the long run paid off."

TVA set up the three-year competition with $1.8 million from its nuclear decommissioning fund. TVA established the approximately $560 million fund to meet financial obligations for decommissioning its six nuclear units. Each school was given $100,000 to invest, with certain guidelines and oversight from a trustee bank.

Alabama A&M University placed third with a 40.1 percent return. Other competitors included Middle Tennessee State University, Austin Peay State University, Tennessee State University, East Tennessee State University and all three University of Tennessee campuses, as well as major universities from Mississippi and Alabama. Although TVA did not release the averages of other schools, organizers said none of the schools lost money.

The results were the first of the three-year project, which began last year. Tennessee Tech received a $10,000 cash award for placing second. Some of the funds will be used to expand the size of and add computer equipment to the university's TVA Investment Challenge Classroom.

Martin said he stressed to students that active portfolio management involves the "what have you done for me lately" principle.

"You have to constantly search for the next good stock, cut your losses quickly and let winnings ride longer than you might think," Martin said. "I impressed upon students that numbers are only half the game, that a vision of what Americans will buy tomorrow is equally important."