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news
Students log on
to Internet cash
By Stephine Michrina
On-line Forty-Niner
Point, click and
make money. Sounds wonderful and risky, perhaps, but online
trading is the newest trend in student investing.
With the recent
boom in Internet investment sites, this often-simple method
of trading has become a hobby for many Cal State Long Beach
students, both in and out of the classroom.
"With the
increase in online trading, there was kind of a craze among
student investors," said Chris Horner, managing director
for Newport Beach brokerage firm Roth Capital Partners Inc.
Even CSULB is encouraging
students to invest. The Student Managed Fund in the Department
of Finance gives a handful of honor students an opportunity
to invest a university endowment of $50,000.
"It [the program]
provides an excellent opportunity for hands-on experience
and development for students interested in investment management,"
said Elbert Whitson, a student portfolio manager for the fund
and CSULB senior.
The program, comprised
of five graduate and five undergraduate students gets students
involved in researching stocks, economic environments and
industry alternatives. The money made through the student
fund goes back to the university in the form of professor
research and salary.
According to Whitson,
a 21-year-old finance and economics major, the students participating
in the class have made wise choices this year, buying long-term
corporate bonds. These bonds perform better than shorter-term
in a decreasing interest rate environment, as we are currently
experiencing.
And students beyond
the classroom are logging on to brokerage sites and giving
investing a shot.
"Students
haven't really been using stock brokers for investing, instead
they're using the Internet," Horner said. From fraternities
and sororities to athletic clubs, Horner said most student
investing is done in groups because students do not have a
lot of their own money.
However, the darker
side of investing is the addiction and the loss.
Horner said students
have admitted skipping class to trade online or using library
computers to make trades. Add this to the risk involved in
choosing a stock and suddenly investing becomes expensive.
"Many students
don't have the access to information about stocks and it isn't
their full time job," Horner said. These students are
at the biggest risk for losing money, he added.
The downward spiral
of technology stocks over the past 10 months has taken its
toll on CSULB students.
"Young investors
were so tech oriented, throwing money at anything with dot.com
or tech, computer related. With the downturn in the sector
they've suffered the consequences," Horner said.
Whitson, who began
investing three years ago, suggests students should stay away
from technology industries until the Nasdaq stabilizes and
the economic outlook brightens.
Surprisingly Horner
does see a potential to make money in technology stocks.
"At this time
tech has gotten beaten up so bad that I'd probably steer students
toward that sector with small positions," he said. Horner
also favors energy stocks as well as financial service stocks,
including stockbrokers and moneylenders.
Professor Runyon,
who oversees the Student Managed Fund at CSULB, warns students
of the risk, but encourages students to try investing.
"Novice investors
should use index mutual funds to diversify their portfolio,"
Runyon said. "A common mistake students make is picking
a stock that's been doing well and assuming it will continue
to do well."
Some Web sites
are Internet designed to aid investors in researching companies
and industries, with financial analyst reports and various
other features.
Investing for children,
librarythinkquest.org, has a stock game for educators. The
game allows participants to pick, purchase and sell stocks
with pretend money. Users then track the stock by using Web
sites like Cnnfn.com, and MsNBC.com to view stock quotes.
Motley Fool, fool.com,
gives basic tools of investing like stock research and daily
headlines.
Horner recommends
dailystocks.com for up-to-date analyst reports that can be
accessed for free. Yahoo.com also has a finance section that
gives stock quotes, company information and Securities and
Exchange Commission reports.
For students that
have knowledge of government reports, all public companies
are required to file under the SEC. Edgaronline.com has a
complete listing of annual and quarterly reports filed under
the government agency.
While these site
give basic information on stocks, Runyon's final advice to
students is diversify and, "remember it's not a game.
Investing is a process that involves a lot of time."
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