When you hear stories about college students and finances, they’re usually about rolling quarters for gas or going in on a pizza. Far less common are stories about college students managing $100,000 stock portfolios. But the Berea College Motley Fool Investment Club (MF-IC) allows students to do just that.
The idea for the club traces back to David Kretzmann ’14, who began investing in the stock market when he was only 12. As young as he was, Kretzmann regularly posted investment advice on discussion boards at The Motley Fool, a website dedicated to “helping the world invest better.” He would not reveal his youth until age 14, but a partnership and a career were born. Today, he has represented The Motley Fool on MSN.com and CNBC.
Back in college, during a marketing research course, Dr. Ian Norris introduced Kretzmann to behavioral economics, which focuses on how people think about money and how they spend it. He connected the subject with his work on the Fool website, where he had been freelancing. Shortly thereafter, Kretzmann organized a “Fool gathering” at President Lyle Roelofs’ home, where people who follow the Fool philosophy talked about investing.
The Fool gathering birthed Berea’s first financial literacy course, a part of the College’s Fresh Start programming developed in partnership with the Motley Fool. In fall 2016, the partnership expanded with the opening of the Motley Fool Investment Club.
“It seemed like a natural place to build on the relationship with the Fool,” said Dr. Nancy Sowers, who advises the club along with Norris.
President Roelofs formed a committee, and they developed an investment policy statement (IPS) to guide the club in its efforts. Included with that guidance is the requirement that the club make responsible, ethical investments in line with Berea’s Great Commitments.
“It’s important that we’re not just educators in the classroom,” said Norris. “We’re training them to have a positive, real-world impact outside the classroom.”
The idea of students learning to invest is not new at Berea. In 1996, the Hilliard Family Foundation provided $40,000 for students to invest as part of an upper level course in the Business and Economics program. Those funds were only managed when that course was being offered, and they lay dormant at other times. President Roelofs wanted the investment club to continuously manage the funds and for it to have more capital to work with. Partnering with individuals who are part of the Motley Fool organization, additional funding was obtained to increase the capital for the MF-IC to $100,000.
The club has two fundamental goals: to complement the financial literacy course and to grow the initial capital to $500,000. When that goal is achieved, the fund will begin to support the College’s endowment.
The club is headed by an executive board comprised of seven students, each chosen through a challenging application and interview process. The selection committee includes Trustee David Chow, Norris, Sowers, Vice President for Finance Jeff Amburgey, and Kretzmann, who serves as liaison with the Motley Fool organization and provides feedback on annual and semester reports.
Benjamin Willhite ’18, a business major from Indianapolis, Indiana, serves as vice president of communications and healthcare sector research analyst for the club. Next year, he will serve as team leader (formerly president). A founding member, Willhite has become one of its strongest evangelists, especially in how the club helps address potential members’ natural fear of navigating the stock market. One of the great benefits of the club, he says, is that investing has the effect of steeling up a person’s spine.
“I’ll tell friends and family, you should start investing, especially if you’re a finance major,” Willhite said. “They’re scared, but if you have common sense and some research skills, you can minimize the risk. That’s what’s cool about the investment club. It teaches students how to expand their knowledge and reduce their fear of the unknown.”
The key, he says, is not making emotional trades. “One of the club rules is hold your emotions at the door. I’ve invested money and seen stocks go down 5 or 10 percent. But you have to say, ‘I’m disciplined. I’ve invested in this company for a reason, and it’s going to turn around.’”
That being said, the initiative is not without emotion. “In the past I’ve seen people close to me make some bad financial decisions with consequences beyond themselves,” Willhite recalled. “I think if they had some more knowledge, they would have made better decisions. But also, from the college or club aspect, investing is emotional because the driver behind the club is to give students a brighter future.”
A Fool For Investing in His Alma Mater
Thanks to his work with the Motley Fool, David Kretzmann ’14, has demonstrated his financial acumen with appearances on MSN.com and CNBC. At just age 12, he pelted his father with questions like “what’s a stock?” and “how can I invest?” This led his father to open a custodial investing account so the fledgling investor could make use of savings he had amassed through odd jobs.
That initiative served Kretzmann well as a Berea College student. Accepted as a Bonner Scholar, he helped provide after-school programs for middle school children; served as a research assistant for Berea’s Entrepreneurship for the Public Good program; and was elected president of the Student Government Association.
After graduation, he was one of seven individuals selected to join The Motley Fool’s Analyst Development Program. Today, Kretzmann is an analyst in The Motley Fool’s Rule Breakers and Supernova services, both of which have significantly outperformed the S&P 500 over the long term.
He recently became the youngest member of Berea’s Great Commitments Society when he named Berea College as a beneficiary of his 401(k).
“This school has been consistently principled from day one,” said Kretzmann. “While student tuition fees are rising exponentially, Berea College is bucking the trend by charging students no tuition and only accepting students from lower-income backgrounds. Supporting such a noble mission is a worthwhile investment.”