Student Traders Succeed Despite Market Downturn

While many college students have a slowly declining bank balance and read the newspaper’s business section only rarely, for some Columbia students the economics and finance they learn in the classroom are more than theoretical.

A select number of students are investing in the stock market individually, in pairs, or sometimes in small groups, pooling capital and know-how in hopes of pulling out high returns. Consisting of about 10 to 15 people, the group meets twice a week to discuss trading and includes founders Jonathon Sanchez, CC ’10, Warren Reed, SEAS ’09, and Eliot Oh, CC ’10.

Although the whole group is active in attending meetings and discussing investing strategies, only the three have actually gathered money to invest in stocks.

“It formalizes our interests,” Reed said. “People in the group have varying interests, and this allows us to come together, bounce ideas off each other, and have fun.”
Another benefit of investing in pools is the reduced transaction costs due to one’s ability to buy more stocks in bulk and pay a one-time brokerage fee.

Oh revealed plans to start including presentations about various monetary markets and trips downtown to the financial district to provide members of the club with the opportunity to meet real investors.

“Our group provides us with a lot of opportunities,” Oh said. “The things you learn in microeconomics are different in the real world.”

For some members preparing for a future career in investment banking, these opportunities will prove helpful later in life. For others like Oh, Reed, and Sanchez, the “real-world experiences” are happening now.

Oh and Reed began to invest together about two years ago, putting their own capital into the limited liability company they created as an investment vehicle. Now, both continue to trade, and Sanchez said that he and Reed sometimes trade together.

Amid economic downturn, Reed claimed that his stocks are still doing quite well, which he attributes to his strategy of combining both short and long-term investments. But, he noted, “We’re always looking at the big picture, and it’s not like I’m making a ton of money on every single trade.”

Both Sanchez and Reed acknowledged that trading tends to dominate their time. Balancing trading with academic work and extracurricular activities was a challenge, Reed said, noting that he is stepping down from his position as ESC junior class president to concentrate more fully on trading.

“It’s kind of running my life right now,” Sanchez admitted. “It’s like either you have a passion for it, or you don’t. I do and this is what I want to do with the rest of my life.”

But despite the success experienced by these seemingly precocious investors, the club isn’t solely about priming its members for six-figure investment banking job right out of college. “It’s valuable for learning how to handle personal finances, maybe even more valuable than preparing for a career,” he said. “It’s for anyone who wants to learn.”

Although the club missed the deadline for official recognition by Columbia, it intends to try again next year.

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