The CMT Association co-sponsored one hundred sixty students from 27 universities at the Student Management Investment Fund Consortium Conference (SMIFC) hosted by Indiana State University’s Scott College of Business on Oct. 28th & 29th, 2021 in downtown Chicago. Conference speakers included professionals from Ariel Investments, Kingsview Partners, the CMT Association, Stifel, Nicolaus & Company, CBOE’s Options Institute, Invesco, the CFA Society Chicago, Northern Trust Asset Management and Wolverine Trading.
As technicians thoroughly understand, the art of managing money is not something that can be learned by lecture or textbook alone. When real money is at stake, impacting actual lives, the emotional intelligence acquired through genuine experience is a most admired trait by investment stewards. Student managed endowments provide university students (and their professors) the opportunity to gain such practical experiences.
Although I have not done the research to this claim, yet we all confidently know, most technicians did not come to technical analysis via higher education. Most of the technicians I know came to TA pragmatically. The traditional market theories and academic concepts learned and later employed did not adequately suffice our desire for achievement. This is the same situation students (and professors) of student managed endowments now find themselves in. Enter the CMT Association, introducing practical technical analysis concepts in addition to educational partnering opportunities for professors and associate membership benefits for CMT-inspired students.
The main objective of the conference is to deliver experiential learning, record best practices surrounding investment management, and provide professional development for finance students. The attendees engaged in networking events, panel discussions, competitions, and presentations involving portfolio construction and management (using fundamental analysis and technical analysis), behavioral finance, using derivatives in risk management, and impact of current economic changes on financial markets.
Two other CMT charterholders attended the consortium as university faculty members. Fellow CMT Edward Zychowicz had this to say: “The SMIFC conference and the SMIFC report competition are great learning experiences for the students. The interaction with students from SMIFs across the country is richly rewarding for the students as are the various presentations with finance professionals. As the faculty advisor to the Hofstra SMIF, the SMIFC conference affords me the opportunity to interact with faculty from across the country and to share respective SMIF experiences and learn from each other. Having an increased role at the SMIFC for the CMT Program is wonderful to see. The added criterion to the portfolio building project of technical analysis is an important advancement. This will highlight the importance of not only infusing Investment and Portfolio Management courses with more technical analysis concepts and applications, but it should encourage more stand-alone Technical Analysis courses at schools, as students and faculty recognize the importance. All in all, the students are tremendously satisfied with the SMIFC and the conference, as am I.”
During the conference, students demonstrated their knowledge through competitions on two Projects. Project 1 was a Poster Session (sponsored by CMT Association and Indiana State University). Students’ teams from SMIFC universities were judged on fund performance in 2021, display and visual quality, and presentation of investment strategies and results by students. The University of Tennessee – Martin took first place and $1,000 cash prize; Indiana State University placed second and won $750 cash prize; Taylor University placed third and won $500.
Project 2 was a portfolio building competition – sponsored by the CMT Association and Indiana State University. This project is an exercise of creating a long-term investment strategy and building an investment portfolio employing both fundamental analysis and technical analysis. The project consists of two parts. The first part, teams of 1 to 3 students were asked to create a paper trading portfolio with $100,000 invested in equities. Each team created a portfolio of up to 10 stocks and wrote a 5 to 8 page (including exhibits) paper describing their investment plan. These papers demonstrated their understanding and application of both fundamental analysis and technical analysis concepts. Technical analysis was one the criteria that could be used for selection, allocation, position sizing, and risk management of their portfolios.
As one of the judges for this competition, I was pleasantly surprised with implementation of technical analysis incorporated into their strategies. One paper cited Lo’s 2000 paper on double bottoms and inverse head & shoulders patterns as well as Brock’s (1999) and Han (2014) papers on moving averages. These students incorporated these concepts through the CANSLIM method propagated by O’Neil’s Investor Business Daily. Another university used a top-down approach to identify stock candidates. They then purchased those stocks trading above their moving averages and displaying relative strength. Yet another university created perhaps the most unique security screen of a rising 60 Day EMA combined with a put call ratio of less than one. These remaining candidates were ranked by relative strength divided by volatility. When all the judges scores were counted, Hofstra University ranked first winning the $1,000 cash prize; two teams from Indiana State University place second and third, collecting prizes of $750 and $500.
After the awards, I gave a presentation on technical analysis. The students were a very engaged and receptive audience. I could see the excitement in their eyes as I explained the logic and rationale of technical analysis. The energy really soared when I showed them my own application of technical analysis in my portfolio management strategies. When finished, a very long line of students and professors formed asking questions, wanting more. Many students commented it was their favorite talk of the conference. Several professors requested visitations or follow up. Professor Chuck Boughton from Truman State University had this to say: “Conferences like the SMIFC are critically important to the professional development of our students. Most current undergraduate finance curriculum are light on both technical analysis and derivatives. To understand how the techniques are applied and actually used in the field are valuable contributions from the practitioners that so generously contribute their time and expertise. This time and expertise help fill in the gaps in the undergraduate experience. All of us associated with the SMIFC conference are very appreciative on the long-standing and continuing support of the CMT Association.”
Next steps: in February, university students will employ the knowledge accumulated in part 1 of the Portfolio Building project to compete in the CMT’s live investment challenge (part 2). For this most robust competition, the CMT Association is partnering with Optuma software, a technical analysis platform, to build the paper trading platform allowing University portfolios to compete against one another. Awards will be presented by the CMT Association to the winning teams based on portfolio performance on absolute and risk adjusted basis.
Alumnus, is your university taking part? How about your local university? If this opportunity to partner with higher education excites you or if you have connections or resources to help us succeed, please contact the association at academy@cmtassociation.org or go to: https://cmta.dev/academic-partner-program/ for additional information.