At the University of Washington, professors don't put students under that financial gun. "We don't ask them to purchase a portfolio before they know anything about the market. The best time for that would be at the end of the quarter, not the beginning," says Roley.
In fact, other schools may drop that tactic. "There are really a number of opportunities to trade `paper portfolios' over the Internet without actually purchasing anything," notes Wayne Ferson, who is the Paul Piggott-PACCAR Professor in Business Administration (See Top 10 Financial Web Sites).
For extra credit in his courses, Ferson urges his students to sign up with Stock Trader in Atlanta, a service which makes fictitious transactions. "The students put together a portfolio and the company acts as their broker. The firm does the trades at the market rate, charges students fees, allows options and futures trades and even handles margin accounts," he explains.
Roley's classes indulge in fact as well as fiction. At the beginning of each class, he looks at the performance of the S&P 500 since the last meeting. "We look at what are the movements and why. It makes sense as they are learning this subject," he explains.
To keep abreast of current events, Roley suggests that his students subscribe to the Wall Street Journal and follow news events closely. "I try to explain to them how the news affects both the short-term trend and influences the market in the long run as well."
Kellie Craine, '87, now an investment manager for the state of Washington, remembers Roley's course well. "This class was one of my favorites. To this day, I still call Professor Roley and talk to him about the economy," she says.
When Craine took the course, the junk bond market was riding high. Many firms were fighting hostile takeovers. During the current events discussion, she and another student questioned Roley about Ivan Boesky and Michael Milken. "Is it right to dismantle companies and force buyouts, we asked him. Most of the other business students didn't seem to care, but we asked, where are the morals. There is a right and a wrong way. We spend most of the morning discussing it," Craine says. Just a few months later, both Boesky and Milken were charged with insider trading.
In contrast to the current events approach, Finance Professor Ferson says his courses don't follow the news "religiously." "I'd rather give them the ideas and tools that will be around for a while," he says. He depends on historic data for both his teaching and his research and often puts his databases on school computers so that students can use them in their reports.
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