Drexel Finance Students Place First in North America in Bloomberg Global Trading Challenge
Every LeBow finance major takes Investment Securities and Markets (FIN 321), as a core requirement. During fall term, students put their investment knowledge to work as part of the Bloomberg Global Trading Challenge, a six-week sprint to grow an initial investment as much as possible.
When the final calculations were done, a Drexel team placed first in North America and ninth globally.
The team, known as the Daring Dragon Sharks and comprised of Huy Cao, a third-year student majoring in finance and business analytics with a minor in data science; Tristan Vu, a fourth-year student majoring in finance and business analysis; and David Zheng, a third-year finance major, was tasked with managing a portfolio of $1 million and maximizing returns over a six-week period.
With guidance from faculty instructor Daniel Dorn, PhD, associate professor of finance, and enticed by an offer of extra-credit points for the course, the Daring Dragon Sharks generated a 23 percent return on their initial investment with a portfolio of U.S.-based stocks in the biotech sector.
“We never imagined we would place on the leader board — that was never our expectation,” Zheng says. “We heard ‘bonus points’ and wanted to do what we could.” In addition to offering an extra credit point for taking part in the competition, Dorn offered additional point for placing in the top five percent — or in the bottom five percent.
Why the bonus for placing so low? Dorn says that result shows that those teams still understood the assignment. Picking highly volatile stocks gives a chance of strong returns, but picking ones from the same industry and the same country ensures their prices will change as a block.
The teams selected their portfolios from a dataset of 10,000 companies provided by Bloomberg. As Dorn points out, a list that size contains 832 quadrillion possible combinations of five stocks.
“That’s not an easy thing — it’s a genuine challenge,” he says.
As so many financial disclaimers state, past performance is not a guarantee of future returns — but past volatility, Dorn points out, is generally an indicator of future volatility.
“For this competition, you want the opposite of what you would do for a steady, diversified portfolio,” he says.
Another Drexel team, High Beta, placed thirteen globally, while Dorn also notes that a third Drexel team was in the top ten globally for much of the first four weeks of the competition, but their portfolio crashed in the final weeks, putting them in the bottom five percent globally — an example of the high risk involved, but one that still earned them extra credit.
Amid a busy fall term, the Sharks set their portfolio and left it alone.
“We had a strong belief in the market efficiency and trusted our position through all the dips that happened in November,” Vu says. “It boosts our confidence that we did something great this quarter, and it gives us some motivation for other things going on in our lives.”
Beyond bragging rights and the two points of extra-credit, Cao, Vu and Zheng also earned six months of free access to Bloomberg.com.
