Can schools make money with the Stock Market?

Question

Instead of fundraisers, which are only moderately effective, why don't I ever see or hear about (high) schools making money on the stock market? The economy/business teachers in the school can supervise the stocks, since they know the most about this stuff.

Answer 1

Universities have large endowments and do invest.  Harvard has almost $30 Billion invested.  These funds are well known.  I hear about them all the time.

The B-School professors are not allowed to manage the funds because it causes a conflict of interest.  Instead, universities hire professionals to manage the funds.

Answer 2

The stock market is risky. Public funds rarely are placed in risky investments, even if the investment vehicle is one of the best options out there if properly diversified.

Who would run it? Economics teachers in high school do not all understand the market. Some might, but every school does not have investment savvy teachers. A teacher needs a bachelors degree to teach and it does not even have to be in business (or specifically finance). Some teachers might be qualified, but how would you determine if your school had the right staff?

Plus how would the school regulate it? How would they ensure that the money is not placed in risky investments? How could they justify loses in investment value to the government? I have lost money in some years and well I had to only justify it to myself.

Lastly, schools do not tend to have tons of spare cash. They have a budget they need to stick within. They cannot just borrow from the budget to invest. Even if they wanted to, the majority of the school's money is not available to them till they justify its need.

Universities on the other hand do invest small portions of their capital (some private ones anyways).

Answer 3

because they need to buy paper and books.  schools that have extra cash (mainly universities) do invest.

Answer 4

yes

Answer 5

Well, I think you have a great idea.  One exception: I would trust the students to make the stock selection.  Dont assume that your classmates have less knowledge about stocks.  Example:  you kids know a lot of best in breed in stocks. Like Best Buy over Circuit City.  Teen apparel:  I just took a hit in J. Crew.  No teenager would have sent me to Crew.  I picked the retailer just to diversify.  I am old and just dont have any skill with youth retail.  Lastly, how about talking with your parents if you go forward with the investment project.  Do it or you will be sorry.   The opportunites in Brazil, China, Russia and India are potentially blockbuster.  Key advantage: you kids know what is "happening" with clothes and all those electronic gadgets all of you seem to own!!  Good luck.