`REAL MONEY' IN INVESTMENT CLASS

The advice from John Ruzicka and Brad Wiese reads like something straight out of "Money" magazine.

But Ruzicka and Wiese don't sit behind desks on Wall Street.

They are in an elite group at Southeast Missouri State University -- the Futures Seminar course in the department of accounting and finance.

Georgia-Pacific Corp., one of the world's largest manufacturers of paper -- pulp, container-board, tissue -- is changing its primary focus, to plywood, lumber and particle board.

That appeals to Ruzicka who says although the paper business has been slow for the company, "its lumber products have shown increases of up to 25 percent. I think, for a short-term investment, we can get in and out with a quick profit."

That could be the case for T2 Medical Inc., too, said Wiese.

"T-2 started at about $5 in 1988 and advanced to more than $67 before it started dwindling in 1992," said Wiese. The company, which specializes in rehabilitation and physical therapy operations, has restructured now, and is on the market at just over $10.

"With the restructuring and being in the field of therapy, I feel this company will go," added Wiese. "Physical therapy is a growth area, and I don't think any new health plans will affect it. They're starting over and we can get in on the bandwagon at $10.50 per share."

Five of the seven students in the class -- being taught by Keith A. Russell, accounting and finance associate professor -- presented proposals for an investment portfolio for the class last week.

"We have about $10,700 we want to invest before this semester is over," said Russell. "This is not play money. We're using the real thing.

The class works with Boatmen's Investment Services Inc. for its buying and selling," said Russell.

"This is a different learning experience," added Russell. "With real money, students become more conservative, they monitor the markets, they research the companies, they make decisions on what to buy and when to sell."

Using real dollars to teach students how to manage investment portfolios is gaining popularity at business schools throughout the United States.

According to a study conducted by an associate professor at the University of Missouri-St. Louis, 22 universities across the nation -- including Southeast Missouri State University -- offer students the opportunity to manage investment portfolios.

One of the largest investment funds (at well over a million dollars) is that of Southern Methodist University in Dallas.

None of the public universities use public money for investments. Most of the schools allow students to invest in corporate stocks and bonds, and some allow investments in options and futures.

In most cases, faculty or administrators have veto power over students' investment decisions, but few exercise that option.

The "real money" investment programs are relatively new. Thirteen of them have been funded within the past 10 years. The oldest investment fund is at Gannon University in Erie, Pa., which was first funded in 1952. Next on the list are Arkansas and Wisconsin, both founded in 1971.

"Using real money gives students more incentive to track the market and its performance," said Michael Devaney, a Southeast professor who teaches "Portfolio Theory," a prerequisite course to the "Futures Seminar."

The Monopoly-money portfolios sometimes encourage students to make decisions which are not analyzed as carefully as those involving real money, noted Devaney.

"Managing other people's money is a serious responsibility and is typically defensive in nature," said Devaney, a chartered financial analyst and previously licensed stock and commodity futures broker. "Pretend money simulations may tempt students to assume risks which would never be tolerated in a real money investment portfolio."

Students at Southeast Missouri State University are able to closely monitor the market and news that affects it through a satellite computer link with major trading centers. The satellite company, Data Transmission Network, is used by brokers across the country.

Students also have access to "Value Screen II," a computerized stock data base with financial information on the 1,600 most widely traded stocks.

"Value Screen II provides students with primary sources of information when selecting and tracking stock performance," said Russell.

"The classroom work is much different from most classes," said Russell, who has also traded futures and stocks. "We don't have textbooks. Instructors don't stand up at the head of the class and lecture. The entire class takes part in the activities."

Russell said all instructors for the class are experienced in stock and futures investments.

"Although we don't have textbooks, students are required to read the Wall Street Journal, literature from futures exchanges and other selective articles," explained Russell.

The course outline includes development of futures trading and commodity exchanges, order-placing and actual buying and selling of stocks.

Also included in the course is "Stock-Trak," an (imaginary) $100,000 portfolio simulation, that introduces students to buying and selling of stock options, mutual funds and grain futures.

The class will start taking a serious look at their new portfolio proposals next week. But, before then, the students will spend two days visiting the Chicago Board of Trade and Chicago Mercantile.

Students have already had a first-hand look at the New York Stock Exchange. Thanks to a gift from Margaret Woods Allen of Sikeston, the group visited the New York Stock Exchange in November of 1993.

Allen, a successful investor and author of "Widow's Might: A Survival Guide to Investing," has endowed two foundation funds in honor of her late husband, Thomas Allen.

It was an Allen grant that paved the way for the university's "real money" investment program. Southeast's investment program started in 1988, when Mrs. Allen provided a $10,000 grant to help start the portfolio. Three other donors and the Southeast Missouri State University Foundation combined to bring the portfolio amount to $15,000.

Prior to that time, "Monopoly" or other "fake" money was used in the class. As of 1994, the value of the portfolio was $20,315, with $10,700 available for investments this semester.

"The earnings from the first grant were used to send students to the Chicago Board of Trade," said Allen. "Later I thought a visit to the New York Stock Exchange would be great, and endowed another foundation fund earmarked for the New York trip.

"These experiences are so great for the students," she said. "Seeing how the markets work and experiencing a trip to a big city is a good experience for them."

Students agree.

"This is a great class," said Wiese, a senior finance major. "I want to be a financial consultant when I graduate and the training here is great. In addition to learning about stocks and bonds, the instructors provide insights with accounts of their own experiences."

K Poh Tee, who introduced the Gillette Company as a possible stock purchase, says he likes the course.

"It gives us a chance to do our own individual research and make a recommendation to the class if we think a certain company would be a good investment," he said.

Carl Kinnison, a Cape Girardeau police officer, said he was taking the course to learn more about investments.

Kinnison presented a Ply-Gem Industries proposal for the new portfolio.

"This is a company that manufactures and distributes products for the home improvement industry," he said. "They sell to people like Lowe's and Home Depot."

Kinnison added that economic indicators for housing continue to look good even with a slight increase in interest rates. "Realtors tell me that even with the slight increase in rates, people are still buying homes."

Ply-Gem is currently on the market for 23 3/4, with a 52-week range from 9 7/8 to 25 7/8, with a steady upward trend since October of 1990, from a low of 4 1/2 in 1990 to a high of 25 7/8 this year.

"I see a top side of about $35, with a low of 17 to 18," he said. "Even if interest rates go up, people are going to make improvements on their homes. I think Ply-Gem would be a good investment."

Other stocks which were suggested during a class last week included Ameritech Corp., which deals in advanced communications, including cellular telephones; and IBM, manufacturer of information processing equipment, which crashed last year but is working to regroup. Both of these stocks were proposed by David Mayberry.

Still to be discussed next week, by students Scott Brase and Zachary Tanner, are Wal-Mart and 3M.

"We previously had Wal-Mart and Kmart," said Russell, "but we sold them off just before they started into a decline, and made money."

The group has also sold off two other companies -- Continental Bank and Telephone Espanol -- this year.

"We did okay with those companies, too, selling just before the stock prices started dipping," said Russell. "But, all has not been roses. We still have a company called Emerald Homes on our stock list, and that could be a loser."

Other stocks already in the portfolio include health companies Upjohn and Johnson & Johnson; Bear Stearns; Portland General; Fansted Inc.; and Adolph Coors.