Financial literacy 101

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Joe Kaiser, Sports Editor

Based on recent conversations I’ve had, especially with economics and business majors, there seems to be a curiosity about investment and the markets as a whole. I was talking to a senior who works at a consulting firm, and he explained that his hope is to manage a hedge fund someday. I thought to myself that this was, while quite grandiose, an attainable goal. For most students, especially at a liberal arts college such as the University of Dallas, this might seem like gibberish. Sure, most are aware that hedge fund managers were making a lot of money back in the day, but I’ll wager that few really understand the principles behind such an endeavor. I understand that my major covers these topics, but it is my belief that at an institution such as UD, everyone should arm himself with knowledge about the financial market.

Some may question the rationale behind this statement. Why should an English major have a working knowledge of financial markets? The reason is that financial markets offer an unparalleled opportunity to get rich.

In today’s turbulent times, people worry that they could lose it all. And it’s true. You could invest $100,000 and never see it again. This, however, is an extreme case, and I am not urging anyone to go and throw their life savings into a mutual fund. What I am urging is that students become familiar with the different markets.

So how do you become familiar with the markets? There are a plethora of tools that you could use to become comfortable with playing the markets. One way to do this, especially if you have a Google account, is to log on to Google Finance and edit a portfolio. You input your stocks and the amount of money you put into each stock, and Google will save those picks and track them over time. This is one way of measuring how successful you would have been had you put the money in. This method has zero risk and is the easiest to do, since all you have to do is have or open a Google account. Also, many other programs and websites, such as Yahoo!, offer exactly the same service. It’s just an internet search away.

What if you have absolutely no idea where to start? I would suggest that you decide on a stock of a Fortune 500 company and read up on it. There are almost as many blogs about investing as there are about securities, and one I find to be balanced is seekingalpha.com.

There are other things you can do to further your financial literacy as well, since many great books have been written about the markets. In fact, books tend to be better starting material because they do not have the biases of individual bloggers, who may or may not own the security they are writing about. A must-read is A Random Walk Down Wall Street by Burton Malkiel.

The University of Dallas is a truly remarkable institution, capable of having a significant impact on the world. It is important, then, to educate yourself about the markets so as to allow you to use investment to increase your wealth. It is only through enriching yourself that you can have a lasting effect on society.

For all the classics majors who are still skeptical, remember: Absque argento omnia vana.

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