“The $50,000 Portfolio” might sound like the title of a new reality show, but it’s actually the name of an undergraduate 410-level class taught through UM’s School of Business Administration by adjunct professor and financial consultant Tim Kato. Kato teaches for free and works in the Missoula office of D.A. Davidson & Co., a Great Falls-based brokerage firm kicking off its 19th annual Student Investment Program this fall.
D.A. Davidson gives each of the 19 colleges involved in the program $50,000 to invest—almost always in individual stocks, says Kato—over the course of the fall semester. Any gains the students make over 5 percent get split between D.A. Davidson and the University, while D.A. Davidson absorbs any losses.
Last year, according to D.A. Davidson’s Associate VP of Public Relations Jacquie Burchard in Great Falls, UM’s portfolio experienced a 9.2 percent gain, and the business school received a check for $1,052.63. In 2002–2003, the gain was 10.6 percent. UM’s chairman of the Department of Accounting and Finance Dr. Stanley Jenne says the money is spent on departmental needs such as student scholarships or instructional materials.
Kato explains that the portfolio carries over from one class to the next each year, so that this fall, “we’re inheriting what was put together in basically December of last year.” The class is capped at 15 students—generally with more males than females, says Kato.
Kato enters his sixth year of teaching this fall and says he tells his students that the class is about “investing to make money, not to gamble.”
“We’re not out there to generate huge gains,” he says, “but are trying to say how we would make money in markets without taking big risks to do it.”
The program’s success, he says, is measured by how much students learn—which can be a good thing, especially in finicky market years: In 2000–2001, the class experienced a 39.6 percent loss, followed by a 21.3 percent loss in 2001–2002. “By the end of the course,” says Kato, “[the students] have their eyes open to the fact that there’s a lot involved in making an investment decision.”