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Playing the Market

Source:Forbes.com Author:Matthew Kirdahy Date:03/25/14 Click:

The spirit of Gordon Gekko is alive in the halls of academia.

The accomplished and the aspiring in business from all walks embark on a masters of business administration program with at least one commonality -- an appetite for financial success. Among the more popular draws to the business world is Wall Street. When people think the markets, they see dollar signs; and increasingly MBA programs across the country are giving their students a taste of the reality.

Everyone wants to be a player like the fictitious financier and his Wall Street protege, Bud Fox. Here's where they're learning the ins and outs.

Kai Petainen, trading floor manager of the Tozzi Center at the Ross School of Business at the University of Michigan, calls it "action-based learning."

Petainen is the ideal guiding light for these prospective players. In 2005, he had three model portfolios among the top 100 portfolios tracked at amateur investing site Marketocracy. He also had the top two best-performing short funds. There's the craftsman, what of his tools?

The 5,800-square-foot Tozzi Electronic Business and Finance Center is a state-of-the-art facility that uses wireless technology to support this type of action. The school built the center five years ago bankrolled by a $3 million private donation.

The independent building includes a financial analysis and trading-floor classroom, a flexible and wireless electronic classroom and an E-lab seminar room. It is equipped with the latest live financial data feeds, such as Bloomberg, Barra and Factset, information services, research tools and trading tools.

"It's action-based learning so this is very much practical," Petainen said. "So, when they go out into the real world, they know how to use this stuff. I try to make it very inclusive for every student, so it's not just a portfolio management class in here."

"Alumni who go out to a firm come back and say, 'We didn't have anything like this. Our firm couldn't afford this.'"

Much of the lessons focus on analysis then presentation. Teachers and students alike weigh in on stock picks. At the end of each semester, equities are bought and sold.

"I'm not allowed to pick any myself," Petainen said, though he's undoubtedly qualified.

What better place to give students the experience of "doing" rather than just "watching" than in the financial capital of the world? At the City University of New York's Baruch College, business students have access to the Wasserman Trading Floor in the Subotnick Financial Services Center. The 7,200- square-foot facility is in the Newman Library and has all the bells and whistles one would need to get dirty in any Wall Street firm.

Put it this way, following the Sept. 11, 2001, terrorist attacks that left Manhattan's financial district in ruin, Baruch's virtual floor went live for oil, metals and agricultural-products trader Refco. One of the company's senior executives had said if he were building a trading floor at the time, he would've modeled it after Baruch's.

Richard Holowczak, the director, has been with the school since 1997 and was part of the project team that built the facility in 1999. He even hosts seminars on how to operate a major trading floor for other business schools throughout the country who are interested in implementing their own.

Holowczak emphasizes the importance of this program for business students regardless of their career pursuits.

"Whether you're going to go out and sell soap for a living or go out and work on Wall Street, you're going to be handling your own investments," he said. "It's basic financial literacy."

"It's great you can sit in a classroom and learn the basics of finance, but you need to make the leap over to the applied side."

And he hardly had to coax a zealous group of eight students into believing that.

Christian Lemp and the rest of the portfolio group at Baruch took a shot in the dark and wrote to Warren Buffett, the investment genius who ranked as the second richest man in the world, according to Forbes' latest list. The group's vice president Gil Bouhana and secretary Franklin Cho sent a letter with their stock research reports, hoping their educated picks would pique his interest.

Within minutes of receiving the package, Lemp says, Buffett's assistant responded via e-mail with an invitation to this past Berkshire Hathaway shareholder meeting in Omaha, Neb., in April. The school funded the trip.

And the lively club sat in the row behind the only man richer than Buffett, Microsoft founder Bill Gates. Lemp said there were some 30,000 people in attendance. He and fellow Baruch students arrived at 4 a.m. and had to wait in line for the doors to open at 7 a.m.

Lemp said it was "amazing," to just sit back and soak up the magnitude of such an event, even for an undergraduate. While he is still in the undergraduate program, Lemp fell in love with the art of investing and big business. He now works with Holowczak at the trading center apart from his studies.

"I'm going to focus on getting the experience first to see what I like and see what fits me," Lemp said. "Then I'll take it from there."
Copyrighted, Forbes.com. All rights reserved.

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