"The idea for this came from articles I've read in professional publications where professional investment managers pick selected stocks and the publication chooses stocks by throwing darts," Nalepka said. "At the beginning of the next year, the publication presents an article comparing the results of the experts' choices and the stocks selected by the darts.

"In some years, the darts have beaten the experts and in other years, the darts beat the experts."

-Business professor Bill Nalepka

IT'S ALL IN THE WRIST
Business students throw darts to pick stocks posted 1/8/03

Here's a business quiz: Is the best way to play the stock market to A) painstakingly analyze the market, or B) throw darts?

That's exactly what the students in Bill Nalepka's investment and security analysis class are trying to find out. They are investing two lumps of hypothetical money this semester, one by using a work-intensive online investment program, the other by throwing darts at the stock pages of a Wall Street Journal. At the end of the class, they'll see which method worked better.

"The dart exercise is a demonstration that an investor can do just as well in picking stocks by merely throwing darts versus expending considerable effort in analyzing stock and trying 'to time the market' to maximize gains and minimize losses," Nalepka said.

On the first day of class, they chucked six darts at the newspaper, and then invested $500,000 of hypothetical money in whichever stocks the darts landed on. The students are investing another $500,000 through an on-line portfolio simulator called Stock-Trak, which requires them to buy and sell securities.

"Maintaining an active portfolio gets the students to do the work themselves," Nalepka said. "When it's their own money, they're a lot more careful."

Students must justify their decisions on the portfolios. For instance, auto stocks are down, but a student might invest in Ford due to confidence that a new Mustang redesign concept from a recent auto show will pump new life into the market.

A student's grade will not be affected on the performance of their portfolios, but on their methodology and investment theories. However, the student with the highest account balance at the end of class will win a special Stok-Trak T-shirt.

And whatever a student's savvy money management skills, in the end it just might be a flick of the wrist with the old darts that wins the day.

New: See results of the Stok-Trak competition. (added 5/21/03)

Junior Mike Poloha (Parma, Ohio) checks to see which stocks he got "stuck" with.