On the power of students

I am generally against group decisions... However there is one I always ask my students to do.

In my intro to finance class I like to ask my students to allocate $100,000 to a number of companies.  I do this at the very beginning of the semester, way before we cover anything related to stock valuation. Students generally look at me funny, humor me while thinking there must be something wrong with me.

I aggregate all their responses and create a weighted portfolio. As the semester moves along we begin talking about stocks, risk and portfolios and little by little I show them their own portfolio. They (and me included) marvel at how good a portfolio can be made by people with little or no background.

This year I decided to start sharing these portfolios in this blog and collecting the data in a more formal way.

We opened the portfolio on February22nd 2012. Since then the S&P500 has climbed from 1357.66 to 1395.95 or 2.82%.

My student generated portfolio? --> 4.16%

See the portfolio for yourself sorted by holdings.

Why everyone should be a finance major

This Sunday's edition of the New York Times Magazine has a short but well written article on Dairy Farming. In short, farming is not local anymore. Therefore all forces from global markets are at play. A farmer in the US today faces an environment as complicated as that of Pepsi or Kia Motors or Johnson and Johnson.
An increase in the price of grains or other feed makes cost go up. Political Risks in Middle east can trigger oil prices changes higher increasing costs, a high dollar makes exports less likely. A recession in Europe means less demand. A rapid economic development in China and Brazil means good news and higher prices.

Just as industrial players have, dairy farming has improved its efficiency dramatically, yet ROE is not there for most farmers.

Finance is ready to help the farmer. This is good news. The bad news is that the farmer does not understand how hedging works.

Large corporations have risk management departmets scouting the enviroment for every risk.

My guess is that in the very near future every medium sized business will have to become serious about financial derivatives. This will create tremendous job opportunities and make the difference between companies that thrive and those fighting for survival.

In the article, Bob Fulper, the farmer summarizes it perfectly. In the past it was possible to work your way out of trouble, "stay in the cowshed a little longer, work harder" "Now if you don't use your head, your hands are not going to help you"

Isn't this the what is at the center of the current struggle?

It does not matter if you want a career in marketing, HR, or dairy farming... We are not in Kansas anymore. We must understand risk.

Consider Finance.

Want to boost your portfolio?

Try some of these levered ETFs

AGA	PowerShares DB Agriculture Double Short ETN
AGQ	Ultra Silver ProShares ETF
BIB	Ultra NASDAQ Biotechnology ETF
BIS	UltraShort NASDAQ Biotechnology ETF
BDCL	UBS 2X Leveraged Long Wells Fargo Business Development Company ETN
BDD	PowerShares DB Base Metals Double Long ETN
BGU	Direxion Daily Large Cap Bull 3X Shares
BGZ	Direxion Daily Large Cap Bear 3X Shares ETF
BOM	PowerShares DB Base Metals Double Short ETN
BRIL	Direxion Daily BRIC Bull 2x Shares ETF
BRIS	Direxion Daily BRIC Bear 2x Shares ETF
BUNT	PowerShares DB 3x German Bund Futures ETN
BXDB	Barclays Short B Leveraged Inverse S&P 500 Total Return ETN
BXDC	Barclays Short C Leveraged S&P 500 Total Return ETN
BXUB	Barclays Long B Leveraged S&P 500 Total Return ETN
BXUC	Barclays Long C Leveraged S&P 500 Total Return ETN
BZQ	UltraShort MSCI Brazil ProShares ETF
CMD	UltraShort DJUBS Commodity ProShares ETF
COWL	Direxion Daily Agribusiness Bull 3x Shares ETF
COWS	Direxion Daily Agribusiness Bear 3x Shares ETF
CSMB	The 2x Monthly Leveraged Credit Suisse Merger Arbitrage Liquid Index ETN
CURE	Direxion Daily Healthcare Bull 3X Shares ETF
CZI	Direxion China Bear 3x Shares ETF
CZM	Direxion China Bull 3x Shares ETF
DAG	PowerShares DB Agriculture Double Long ETN
DDM	Ultra Dow 30 ProShares ETF
DEE	PowerShares DB Commodity Double Short ETN
DGP	PowerShares DB Gold Double Long ETN
DIG	Ultra Oil & Gas ProShares ETF
DPK	Direxion Daily Devloped Markets Bear 3X Shares ETF
DRN	Direxion Daily Real Estate Bull 3X Shares ETF
DRR	Market Vectors Double Short Euro ETN
DRV	Direxion Daily Real Estate Bear 3X Shares ETF
DSTJ	JP Morgan 2X Short US Long Treasury Futures ETN
DSXJ	JP Morgan 2X Short US 10 Year Treasury Futures ETN
DTO	PowerShares DB Crude Oil Double Short ETN
DUG	UltraShort Oil & Gas ProShares ETF
DUST	Direxion Daily Gold Miners Bear 2x Shares ETF
DXD	UltraShort Dow 30 ProShares ETF
DYY	PowerShares DB Commodity Double Long ETN
DZK	Direxion Daily Developed Markts Bull 3X Shares ETF
DZZ	PowerShares DB Gold Double Short ETN
EIPL	Monthly 2x Leveraged ETRACS Internet IPO ETN
EMLB	iPath Long Enhanced MSCI Emerging Markets Index ETN
EMSA	iPath Short Enhanced MSCI Emerging Markets Index ETN
EDC	Direxion Daily Emerging Markets Bull 3X Shares ETF
EDZ	Direxion Daily Emerging Markets Bear 3X Shares ETF
EET	Ultra MSCI Emerging Mkts ProShares ETF
EEV	UltraShort MSCI Emerging Markets ProShares ETF
EFO	Ultra MSCI EAFE ProShares ETF
EFU	UltraShort MSCI EAFE ProShares ETF
EPV	UltraShort MSCI Europe ProShares
ERX	Direxion Daily Energy Bull 3X Shares ETF
ERY	Direxion Daily Energy Bear 3X Shares ETF
EUO	ProShares UltraShort Euro ETF
EWV	UltraShort MSCI Japan ProShares ETF
EZJ	Ultra MSCI Japan ProShares ETF
FAS	Direxion Daily Financial Bull 3X Shares ETF
FAZ	Direxion Daily Financial Bear 3X Shares ETF
FOL	FactorShares 2X Oil Bull/S&P500 Bear ETF
FSA	FactorShares 2X TBond Bull/S&P500 Bear ETF
FSE	FactorShares 2X S&P500 Bull/TBond Bear ETF
FSG	FactorShares 2X Gold Bull/S&P500 Bear ETF
FSU	FactorShares 2X S&P500 Bull/USD Bear ETF
FXP	UltraShort FTSE/Xinhua China25 Proshares ETF
GLL	UltraShort Gold ProShares ETF
GASL	Direxion Daily Natural Gas Related Bull 2X Shares ETF
GASX	Direxion Daily Natural Gas Related Bear 2X Shares ETF
IGU	ProShares Ultra Investment Grade Bond ETF
INDL	Direxion Daily India Bull 2x Shares ETF
INDZ	Direxion Daily India Bear 2x Shares ETF
ITLT	PowerShares DB 3x Italian Treasury Bond Futures ETN
JGBT	PowerShares DB 3x Japanese Govt Bond Futures ETN
JPX	UltraShort MSCI Pacific exJpn ProShares ETF
KRU	Ultra KBW Regional Banking ETF
LBJ	Direxion Daily Latin America Bull 3X Shares ETF
LBND	PowerShares DB 3X Long 25+ Year Treasury Bond ETN
LHB	Direxion Daily Latin America Bear 3X Shares ETF
LSKY	ETRACS Monthly 2xLeveraged ISE Cloud Computing Total Return Index ETN
LTL	Ultra Telecommunications ProShares ETF
MATL	Direxion Daily Basic Materials Bull 3X Shares ETF
MATS	Direxion Daily Basic Materials Bear 3X Shares ETF
MFLA	iPath Long Enhanced MSCI EAFE Index ETN
MFSA	iPath Short Enhanced MSCI EAFE Index ETN
MLPL	UBS ETRACS 2x Leveraged Long Alerian MLP Infrastructure Index ETN
MVV	Ultra Mid Cap 400 ProShares ETF
MWJ	Direxion Daily Mid Cap Bull 3X Shares ETF
MWN	Direxion Daily Mid Cap Bear 3X Shares ETF
MZZ	UltraShort Mid Cap 400 ProShares ETF
NUGT	Direxion Daily Gold Miners Bull 2x Shares ETF
PST	UltraShort 710 Year Treasury ProShares ETF
QID	UltraShort QQQ ProShares ETF
QLD	Ultra QQQ ProShares ETF
RETL	Direxion Daily Retail Bull 2X Shares ETF
RETS	Direxion Daily Retail Bear 2X Shares ETF
REW	UltraShort Technology ProShares ETF
ROLA	iPath Long Extended Russell 1000 TR Index ETN
ROSA	iPath Short Extended Russell 1000 TR Index ETN
ROM	Ultra Technology ProShares ETF
RSU	Rydex 2x S&P 500 ETF
RSW	Rydex Inverse 2x S&P 500 ETF
RTLA	iPath Long Extended Russell 2000 TR Index ETN
RTSA	iPath Short Extended Russell 2000 TR Index ETN
RUSL	Direxion Daily Russia Bull 3x Shares ETF
RUSS	Direxion Daily Russia Bear 3x Shares ETF
RXD	UltraShort Health Care ProShares ETF
RXL	Ultra Health Care ProShares ETF
SAA	Ultra Small Cap 600 ProShares ETF
SBND	PowerShares DB 3X Short 25+ Year Treasury Bond ETN
SCC	UltraShort Consumer Services ProShares ETF
SCO	UltraShort DJUBS Crude Oil ProShares ETF
SDD	UltraShort Small Cap 600 ProShares ETF
SDK	UltraShort Russell Mid Cap Growth ProShares ETF
SDOW	UltraPro Short Dow 30 ETF
SDP	UltraShort Utilities ProShares ETF
SDS	UltraShort S&P500 ProShares ETF
SFK	UltraShort Russell1000 Growth ProShares ETF
SFLA	iPath Long Extended S&P 500 TR Index ETN
SFSA	iPath Short Extended S&P 500 TR Index ETN
SICK	Direxion Daily Healthcare Bear 3X Shares ETF
SIJ	UltraShort Industrials ProShares ETF
SJF	UltraShort Russell 1000 Value ProShares ETF
SJH	UltraShort Russell2000 Value ProShares ETF
SJL	UltraShort Russell Mid Cap ValUE ProShares ETF
SKF	UltraShort Financials ProShares ETF
SKK	UltraShort Russell 2000 Growth ProShares ETF
SMDD	UltraPro Short MidCap 400 ETF
SMK	UltraShort MSCI Mexico Investment ProShares ETF
SMN	UltraShort Basic Materials ProShares ETF
SOXL	Direxion Daily Semiconductor Bull 3x Shares ETF
SOXS	Direxion Daily Semiconductor Bear 3x Shares ETF
SPXU	ProShares Ultra Pro Short S&P 500 ETF
SQQQ	UltraPro Short QQQ ETF
SRS	UltraShort Real Estate ProShares ETF
SRTY	UltraPro Short Russell 2000 ETF
SSDL	ETRACS Monthly 2x Leveraged ISE SSD Index ETN
SSG	UltraShort Semiconductor ProShares ETF
SSO	Ultra S&P 500 ProShares ETF
SZK	UltraShort Consumer Goods ProShares ETF
TBT	UltraShort 20+ Year Treasury ProShares ETF
TBZ	UltraShort 37 Year Treasury ETF
TLL	UltraShort Telecommunications ProShares ETF
TMF	Direxion Daily 30 Year Treasury Bull 3X Shares ETF
TMV	Direxion Daily 30 Year Treasury Bear 3X Shares ETF
TNA	Direxion Daily Small Cap Bull 3X Shares ETF
TPS	ProShares UltraShort TIPS ETF
TQQQ	UltraPro QQQ ETF
TVIX	VelocityShares Daily 2x VIX Short Term ETN
TVIZ	VelocityShares Daily 2x VIX Mid Term ETN
TWM	UltraShort Russell 2000 ProShares ETF
TWQ	UltraShort Russell 3000 ProShares ETF
TYD	Direxion Daily 10 Year Treasury Bull 3X Shares ETF
TYH	Direxion Daily Technology Bull 3X Shares ETF
TYO	Direxion Daily 10 Year Treasury Bear 3X Shares ETF
TYP	Direxion Daily Technology Bear 3X Shares ETF
TZA	Direxion Daily Small Cap Bear 3X Shares ETF
UBR	Ultra MSCI Brazil
UBT	Ultra 20+ Year Treasury ETF
UCC	Ultra Consumer Services ProShares ETF
UCD	Ultra DJUBS Commodity ProShares ETF
UCO	Ultra DJUBS Crude Oil ProShares ETF
UDNT	PowerShares DB 3x Short US Dollar Index Futures ETN
UDOW	UltraPro Dow 30 ETF
UGE	Ultra Consumer Goods ProShares ETF
UGL	Ultra Gold ProShares ETF
UJB	ProShares Ultra High Yield Bond ETF
UKF	Ultra Russell1000 Growth ProShares ETF
UKK	Ultra Russell 2000 Growth ProShares ETF
UKW	Ultra Russell Mid Cap Growth ProShares ETF
ULE	Ultra Euro ProShares ETF
UMDD	UltraPro MidCap 400 ETF
UMX	Ultra MSCI Mexico Investable Market
UPRO	ProShares Ultra Pro S&P 500 ETF
UPV	Ultra MSCI Europe ETF
UPW	Ultra Utilities ProShares ETF
URE	Ultra Real Estate ProShares ETF
URR	Market Vectors Double Long Euro ETN
URTY	UltraPro Russell 2000 ETF
USD	Ultra Semiconductor ProShares ETF
UST	Ultra 710 Year Treasury ETF
UUPT	PowerShares DB 3x Long US Dollar Index Futures ETN
UVG	Ultra Russell 1000 Value ProShares ETF
UVT	Ultra Russell 2000 Value ProShares ETF
UVU	Ultra Russell Mid Cap Value ProShares ETF
UWC	Ultra Russell 3000 ProShares ETF
UWM	Ultra Russell 2000 ProShares ETF
UXI	Ultra Industrials ProShares ETF
UXJ	Ultra MSCI Pacific ExJapan
UYG	Ultra Financials ProShares ETF
UYM	Ultra Basic Materials ProShares ETF
VZZB	iPath Long Enhanced S&P 500 VIX MidTerm Futures ETN
XPP	Ultra FTSE/Xinhua China 25 ProShares ETF
YCL	Ultra Yen ProShares ETF
YCS	UltraShort Yen ProShares ETF
ZSL	ProShares UltraShort Silver ETF