Taking stock in the stock market
With the economy in a downturn, many Americans find themselves scrapping for finances and losing sleep over dwindling retirement plans.
Some Utah State University students and their families have experienced the impact of months of stock market decline in their methods of funding tuition.
“For some students the parents were obviously counting on the stock market to help get educational opportunities for their children,” said Dr. Alan Stephens, head of the business administration department at USU.
While declines have dealt many blows to student’s college funds, professor of finance Phil Swenson says the downturn in the economy has an unusual effect on enrollment at universities.
“We usually have more students coming when the economy is down than when the economy is booming,” Swenson said.
The lower amount of jobs and higher demand for more educational experience were two key reasons in the increase in collegiate enrollment during economic downturns Swenson stated.
It is hard to avoid hearing about the stock market in the media, but while most people are aware of fluctuations in stocks the past year, many are unaware of the reasoning behind fluctuations.
“I don’t know anything about the stock market,” said Carlie Robertson, a sophomore majoring in secondary education.
While there are many like Robertson who are not involved in the stock market at all, there are millions of Americans who have retirement plans and savings rooted in the stock market. Many attribute the Sept. 11 terrorist attacks as the reason for the sharp declines in stock prices.
Swenson said there is a great deal of insecurity surrounding the stock market today.
“The market doesn’t like uncertainty,” he said.
While there are always people predicting an apocalyptic blow to the stock market is nearing, the American markets remains incredibly ingenious, resilient and productive, Swenson said.
“We’re buying things on sale compared to two years ago,” he said.
While stocks may be cheaper now compared to years past, Stephens suggests that students do significant research before investing money into the market.
“They have to understand how the markets work,” he said, “The key part is obtaining information.”
Stephens suggested any students interested should get involved in the fundamentals of personal investing course (BA 3460), which is offered to non-finance majors. The course has no pre-requisites, but it would help for an interested student to have some knowledge of accounting, according to Stephens.
Stephens also suggested that interested students take part in the Finance Club which actively participates in the stock market using real money. The club works closely with an investment firm and has $50,000 for investment. At the end of the year, anything above $50,000 is split between the investment firm and a Utah State University College of Business scholarship fund. Interested students may contact adviser Madeline Thimes at 797-3722.
Stephens strongly discourages students day-trading however, pointing out that 90 percent of day-traders lose money.
“I would not recommend it to students at all,” he said.
Both Stephens and Swenson said the future of the stock market is unclear.
“The first sign of wisdom is to know that nobody knows where it’s [market] going,” Swenson said.
Stephens said he thought the market was still overpriced and had the potential to continue to fall.
“We had an unusual run during the 90s,” Swenson said.
He said the best thing to do is wait out the downturn.
“It’s easy to get a myopic picture and get depressed over it. I just think we’re going to have to sit it out,” he said.
-str@cc.usu.edu