An interview with CSIA President Nick Wijnberg
1. What are the goals of the Colby SIA and can you tell me how the organization got started?
The Colby Student Investment Association was started in the fall of 2007 with an initial grant of $100,000. As an organization we strive to not only achieve alpha returns on our portfolio but also teach our members about the fundamentals of finance and to strengthen the link between Colby students and alumni in the financial world.
2. How well has your portfolio performed since its inception?
Considering that our fund started in the fall of 2007 I am pretty happy with our performance. Since inception we are up only 1 percent but we have contributed $10,000 to the Colby Endowment. That money goes to the scholarship and financial aid fund, so it especially rewarding that our contributions help people in need. We are a long only fund, with only 5 trading days a year. What this means is that we have to be especially diligent with our trading decisions. Every security that we as a club decide to purchase must go through a DCF analysis, relative value assessment, and then once accepted the club decides on a appropriate entry and exit point. Our stop-loss condition is based on a trailing beta of our fair value. Sometimes, in the case of high conviction purchases we also vote on a price level that we would add to our position. As a result, we do not need to time our trades nor do we have to worry about a position precipitously dropping in value. All trading conditions are decided upon entry.
3. Nick, can you tell me about yourself? How did you get involved with the organization and become President?
I am addicted to the markets. I’ve been working in finance since my senior year in high school where I was a runner at the New York Mercantile Exchange in the crude oil pit. From there, I just fell in love with the trading mentality. Over the summers, I’ve spent time on both the buy and sell side, leveraging each opportunity to the next. I’ve been a member of the CSIA since inception in 2007. In 2008 I was head of our Trading division and then this year I was asked to be the head the organization. Its been so much fun to watch the evolution of our fund. We’ve learned from our mistakes and benefited from having an incredibly diverse, hardworking and creative member base.
4. What advice do you have for students looking to become a trader on Wall Street or at a hedge fund?
We talk about internships a lot in our weekly meetings. In each of these meetings I stress a number of key attributes that I have learned and believe are the keys to success. 1. You can’t fake passion. Working in finance or on Wall Street is not for everybody and it takes an interviewer 2 minutes to figure out if you are applying for the wrong reasons. This industry is intensely competitive. So unless you enjoy this stuff, that intensity will quickly burn you out. 2. Be aggressive but polite, be confidant yet humble. The best candidates do not just have good grades and prior experience but have exceptional personalities, entrepreneurial spirit and problem solving abilities. I had great advice this summer, these firms are looking for are those who thrive in uncomfortable situations, people who are unafraid of awkward experiences. Be the type of person who sees challenge and responsibility 3. Contact every person who gives you his or her contact information and respond to every email that is sent to you. This seems very simple but it took me too long to realize its importance. If you get a business card, email that person right away. If somebody took the time to speak with you, take the time to thank him or her. If you are lucky to get an email response, be diligent maintaining that contact. 4. This is more for the trading side, but don’t be stubborn. The market is the teacher and you are its student. If you get a failing grade accept it and learn from it. Don’t be stubborn with your convictions. Take a loss quickly and let the winners ride. Remember there is never harm in taking profits.
5. What’s your highest conviction trade right now?
Personally, it is really hard to have conviction in this market. We’ve seen an incredible rally in almost all asset classes based partially on improving economic fundamentals and also because due to massive amounts of liquidity pumped into the markets in the form of a dollar “carry trade.” My highest conviction trade right now is that I believe the long bond is overvalued. I do not think that 3.42% yield on a 10 year bond is adequate compensation for an investor considering the current and expected decline in the value of the dollar. Not to mention the supply-demand dynamic as the United States continues to borrow incredible amounts (supply) and demand for “risk free assets” will only weaken as economic conditions continue to stabilize. I understand the other side of the argument, specifically the fear of a deflationary spiral, increased demand from financial institution purchases due to higher reserve ratios and higher domestic saving rate as well as a increased demand for treasuries from countries who try to mitigate the dollar devaluation against their own currencies. However, I believe that the increased supply of Treasuries leave the long bond over-valued and yields will rise going forward. CSIA is capitalizing on this by being long the ETF TBT.
6. Where can students go to get more information about your organization or to reach out to you?
We are pretty proud of our new website: www.colbysia.com and you can reach out to us via CSIA@colby.edu
