iag | history
by Sreesha Vaman

Preface
January 29, 2001

I was sitting at the Investment Analysis Group meeting, and I couldn't help but think about how far this club has gone.

Really, how many clubs draw over 100 people to every meeting? Have radio shows? Stock market games? Visitors from around the country?

How many clubs are personally monitored by the Dean? There are other clubs that write advertisements based on our club. One sign said, "For those who think there are better things to do on Fridays than beat the S & P..."

It wasn't always quite this way. I have been a part of this club for four years, first as a member, then Webmaster, then External Vice President. In lieu of an official IAG history write-up, I will share my story with all of you and hope that the club can continue for decades to come.

NEXT: The Early Years
END; } if ($page == 2){ print <<The Early Years
Fall 1995 - August 1996

I asked Justin Pollack, who was the founder of IAG, to assist with me with this part:

"During the fall of 1995, Harry Hung, a junior in Stern, took the charge of a campaign to start a personal investment club at Stern. Conceptually, this club would allow students to place their own funds, with commitments as little as $20 per month, at risk and pursue a careful investment strategy of picking stocks after a thorough review by club members.

"Previously, another Stern student (whose name is lost to time) led the effort to solicit a blessing for such a program from Dean Diamond, head of the undergraduates at Stern. However, Dean Diamond remained skeptical as a platform that permitted Stern MBAs to invest their own money into a central fund resulted in disaster. In the early 1990s, the MBAs built a fund that invested into speculative derivative products and wound up losing most of the original investment, but more importantly, exposed their limited partnership to potentially significant additional debts.

"Dean Greenbaum, head of student affairs, continually used that unfortunate case as a demonstration that the Stern School could face significant liability if less wealthy undergrads lost their shirts in the market and decided to sue Stern. No matter how insulated the legal structure, any investing program allowed to meet at Stern and by connection, sponsored by Stern, could be held potentially liable for losses by students. This was an issue that would return to haunt us in later years.

"Undeterred by the administration's lack of enthusiasm, Harry rallied roughly five people to join him in the assembly of the framework for a club. To begin, we thought of a clever name, "The Dow Jones Surfers." The vision was to create a log of a surfer riding out the "wave" created on a stock's price performance stock chart. We were confident that the clever name and lure of learning a disciplined approach to investing would lure hundreds of students. Now, if we could only get the administration to permit our investing activities.

"We also began to address another major issue necessary to build a successful investing empire at Stern: membership. At the beginning of each semester, the investing group concept would attract numerous interested students, but they would quickly drop out at the thought of talking about investments in blue chip companies and dividends.

"Most students wanted to learn the ways of Wall Street, not Main Street. As such, I thought the best way to compliment the newfound "funds" in our portfolio would be to place students into different industry research areas and bring all of these groups together to discuss current industry trends and stock picks in each area once a week. The design was intended to get all students participating as research analysts from the beginning, including writing detailed report on various companies in their industry and offering a sort of market gossip wrap-up each week to fuel the fire.

"During this summer, we spent considerable time lobbying Dean Choi, the newly appointed head of the undergraduate program. The timing proved to be crucial. We continued to pitch the concept as a way for Dean Choi to foster the interest of all students in Wall Street, with a built-in mentoring system, as new students would be tutored on investing by upperclassmen. To further the competitive spirit of the program, Dean Choi suggested creating two funds, offering students the opportunity to battle one another for the best performance. As an initial incentive, the investing club would be granted funds from the Dean's discretionary fund indexed to our performance above the S&P 500. These funds would, in turn, be available to the various student clubs at Stern, giving the entire school and interest in our activities.

"There was only one further change: the name had to go. While we had always been looking for a better title for our group, the university had specific concerns over the trademark violation implications that would become noticeable if we used "Dow Jones Surfers" and were eventually featured in a newspaper story or on CNBC. Lacking ideas, we changed the name to "The Market Surfers." The original concept of surfing the Dow became diluted, but we figured we would worry about that later.

"With the start of the fall 1996 semester we kicked off a major marketing drive to attract new students. To rid the group of one-time participants, we held a week of information sessions that dictated our strict requirements and the time commitment it would involve. During this time, we received tremendous interest from over 350 student, or roughly 17% of the entire student body.

"Since we intended to replicate the operations of a mutual fund, we decided to "hire" two fund managers with a complement of research analysts to coordinate six industry groups. Given the response during our initial week in operation, our cockiness reached its height and we decided to interview all candidates for the manager and analyst roles. Of course, given my lack of experience (I had never invested a dime nor had I held a Wall Street job at the time), I made everything up as I went along.

"Somehow, we managed to convince a number of great and highly qualified Sternies to participate in an effort that we suggested would be equivalent to a part-time job in terms of time commitment and experience. To keep us in check, Dean Choi further asked Professor Richard Levich to advise our organization in addition to Professor Rita Maldonado-Bear, who had already been advising the Investment Society. Their counsel certainly provided helpful in the successive months."

PREVIOUS: Preface NEXT: Power to the People
END; } if ($page == 3){ print <<Power to the People
Fall 1996 - Fall 1997

Technically, the Market Surfers club was working as a subsidiary of the Investment Society, so when it came time for a change, a vision was needed desperately for not just Market Surfers but for the Investment Society as a whole.

That vision was provided to IAG by Wei Lin, the club's first president under the now-famous Investment Analysis Group moniker.

"The way that the club would be run must be entirely evolutionary. When I was promoting myself as the candidate of [Investment Society] president, I drafted a vision for the club. This vision shall determine how the new club with the new name would be run. The vision called for full-fledged presentations, complete analysis, workshops and education seminars, and most important and radical of all, a real money portfolio. Therefore, the infamous real-money portfolio that Dean Choi was so against was established after IAG was formed."

How did the club get the name of Investment Analysis Group? In fact, it is Jonathon Sy, the club's first webmaster, who gets the credit for the name of the club.

Wei quickly became one of the most influential figures in IAG history in this critical period for the club. Together with Hendrik, Dave, Tom, and Dipak, the foundation of IAG was formed.

"When IAG was born, the five of us spent countless hours building this club's identity. I was the one with the radical ideas, but the four of them were the hands. Almost every day in the summer of 1997, we gathered and talked, debated and strategized. We would talk at Wok 'n' Roll well into the warm summer nights. That's how IAG had its initial momentum. The five of us were the driving force that created the initial momentum.

"Personally, those were the best days of my life at Stern."

What they came up with was a two-fund structure for the club, with one club as a virtual portfolio, and another real money portfolio that would in a way mimic the virtual fund. This way, we could see our investments both from a large-scale and small-scale perspective.

Unbeknownst to any of this, I entered the Stern School and on the advice of Mike Sellitto, who would later become club secretary, went to my first IAG meeting.

PREVIOUS: The Early Years NEXT: The Glory Days
END; } if ($page == 4){ print <<The Glory Days
Freshman Year, First Semester, Fall 1997

That first IAG meeting drew nearly 150 people, even more than meetings draw now. The meeting was in Surdna, and it was Standing Room Only if you didn't turn up at 5:00 for the 6:00 meeting.

There was a projector and a screen, not that I could see any of this. And on the screen were charts and graphs, things that never seemed to make sense. ROE, ROA, ROI, EPS... I thought EPS said ESPN. And Wei, our former president and for the longest time the club's identity, was standing at the dais, discussing the various investments and the structure of the club.

They moved the meetings to Tisch 201 after the third week of my freshman year, in the Fall of 1997, because its more of a show court. They've been there ever since.

The Dean's office wanted to close floors two through nine of Tisch Hall starting on Friday at 5 PM, but Wei convinced them to allow IAG to remain in Tisch 201. It was a long and complicated ordeal, including an email protest sent directly to Dean Choi himself. Finally, the school relented, a beaming Wei claiming that the good man had won again.

And just like that, it was cemented. IAG will be always in Tisch 201.

I was thoroughly impressed with IAG. The guys there seemed to know their stuff, and though they debated loudly, they backed it up with solid principles. Dipak, in particular, had one of the sharpest minds I'd ever seen. All of the analysts knew their companies inside and out. Someday, I thought, I'd be able to make a presentation of my own.

I attended the basic workshop and became one of the first members of the club's Fall 1997 class. Sadly, I was not the first freshman that year to make a presentation. With the help of Wei, Angela made a presentation on Starbucks, the Seattle-based coffee chain.

But I must admit, I saw some holes in the IAG structure back then. There seemed to be two tiers of attendees at the meetings. One small group seemed to understand exactly what was going on, and the meetings seemed to be catered to them. The other group, the remaining 75% of the meeting's attendees, seemed lost and confused. I reasoned that it was experience and knowledge that kept me out of the first group, but others expressed doubt.

Most of all, the club didn't understand how to deal with sudden success. I came to learn that those 100+ crowds at Surdna weren't expected at all, that it was suddenly thrust upon them. The previous semester, the crowds were dismal.

Justin also adds, "Things very quickly went from bad to cult. Since the IAG continued to attract crowds far in excess of the 125-person capacity of Stern's larger classrooms, Wei decided he needed to limit membership to the faithful. Meetings were moved to Friday nights to eliminate people who had interests other than investing. Then rules were implemented charging a membership fee (also against Stern's rules at the time) and providing that new members had to attend a specific number of meetings, consecutively. Lack of devotion meant lack of membership."

END; } if ($page == 5){ print <<Fall of the Empire
Spring 1998, Freshman Year

But let me get back to what I was but a small part of. I should have seen the demise coming when Wei, after telling me why the Market Surfers club failed, advocated a radical idea that returned the club to its Market Surfers roots. The club was split into two, with the two portfolios squaring off against each other. Each would have its own portfolio managers, and would meet at the same time, but in two different rooms across the hall from each other. Members would join a fund, and run that fund however they saw fit. Once a month, the members of the two funds would meet together to discuss their portfolio's progress.

In theory, this was a fantastic idea, but in practice, of the 100 people from the first meeting in the fall, only about 60 remained. Some of those that did stay joined one fund, others joined the other fund, but most joined NEITHER fund. And IAG would learn a crucial lesson: never split the club under any circumstances.

Each fund drew almost 15 members, for a combined total of 30 at the monthly meetings. With no real loyalty to either fund, the atmosphere at the meetings must have been a lot like those West Germany vs. East Germany soccer matches in the 60s and 70s. The competition seemed to be more among brothers, not rivals.

Edmund started his work on the market report. His tri-fold report would be his mainstay in the club for the next two years and will remain his legacy.

In this semester, I also experienced my first IAG election, which was won by David and Simon. Simon will be best remembered for the fact that though he was hard of hearing, he was an incredible mind and a strong communicator. He expresses his ideas better than most people who have their full senses that I know.

The whole school recognized that IAG had changed for the better, awarding it both Most Improved Club and Best Club that year. President Simon Roffe was extremely pleased with the double win.

David also had a way of captivating an audience. He knew his companies inside and out and presented them in quick fashion, leaving little room for the imagination. The discussions after the meetings were fantastic. I can safely say I learned more about investing from these meetings than from classes, although to be fair, classes gave me the fundamental understanding I needed to follow along in the meetings.

After two months of the charade, the two portfolios were brought back together, this time for good. Though they would be run differently, at least they would be run together, by everyone at IAG.

Attendance picked up after the reunification, but a messy election left many disenfranchised with the club. For the sake of those involved, I won't delve into it further. No one else knew what I knew at the time, which was that Alex would take this club to the greatness once just a dream of Wei, Justin, Erik and the original gang.

Alex ran as the VP to Steve and Hendrik, and the team won elections, and leaving the webmaster spot open. I quickly took up the job, giving me my first IAG A-Board post.

END; } if ($page == 6){ print <<The Phoenix Rises Again
Fall 1998 - Spring 1999, Sophomore Year

With Steve, Hendrik and Alex at the helm, the club started to take a more concrete shape. Presentations gradually improved in quality, though at times the triumvirate was forced to come up with stock ideas on Friday afternoon.

Workshops became more poignant and slowly IAG became a more cohesive place to be on Friday nights. Attendance began to trickle upwards. Alex introduced the stock market game, and incredibly, freshman Jonathon Teitel won.

In general, the atmosphere of the club was healthy for the first time in a while. At last, people truly looked forward to coming to the meetings. IAG's reputation as a cult was diminishing, and more people were keeping an eye on our portfolios.

I presented a few more companies, and the quality of the companies continued to improve. I really enjoyed the year and, for the first time in my career at IAG, I felt like I was a part of the team, that I could understand what was going on.

The easiest IAG election in two years took place at the end of the semester. Chris and Alex took over as co-presidents, and Gabriel and Daren took over as the All-Star and Initiative Fund managers, respectively. These four guys would restore glory to the club in more ways than one. I was lucky to be just a small part of it.

END; } if ($page == 7){ print <<Return to Glory
Fall 1999 - Spring 2000, Junior Year

Alex had a lot of amazing accomplishments with the club, but none was greater than the deal he brokered with Dean Choi. The Dean would give us $500 for every percentage either portfolio beats the S &P 500 by. Of that money, a chunk of it would be reallocated to the other Stern clubs as we see fit. This immediately made us not a taker of funds from the club, but also a giver. The other clubs paid a lot more attention to us, and how our funds did.

Josh took over the market report and turned it into a professional, multi-page magazine, with weekly articles as well as news recaps. It was a lot of work that led to an amazing product.

I took over the stock market game, which grew as the club did. The amount of attention around the school that IAG was receiving was a far cry from before. Other clubs solicited IAG for advice. The Marketing Society agreed to work with us on an ad campaign, which was the first time that another club had wanted to assist us since the Market Surfer days. Alex attended the Inter-Club Council meetings, which IAG had been lackadaisical with before. We even started sponsoring recruiting events.

And through all of this, Gabriel and Daren ran two amazing portfolios. They knew the companies and the industries inside-out. Daren taught the club what value investing was really about and made us understand exactly how to go about it. He used Warren Buffett's principles to create the fund, and I—as well as others in the club—learned a lot about finance through Daren's presentations.

Gabriel, on the other hand, understood exactly what the Internet hype was all about. More than anything, he knew how to find the companies that did something useful. On top of that, he was disciplined. He stuck with a diversified portfolio when it was fashionable to gamble on one or two high flyers. In the end, the portfolio gained over 32%.

This amazing return gave IAG the one dream that Wei had always talked about: an appearance on television. Though it wasn't CNBC, it was CNN, which focused a segment on us when doing a piece on investment clubs. A camera crew taped one of our meetings during which Alex presented E-Trade, and then interviewed Suzanne and Alex. Later, the show called "In the Money", interviewed Alex and Gabriel live.

That semester was probably the strongest semester for the club since its inception from the "Market Surfers".

Sadly, Alex graduated at the end of the winter semester. Before he graduated, he asked me to take over as External Vice President. Ed took over as Internal Vice President and Chris remained on as sole President.

The second semester was highlighted by an appearance on ABC News, who interviewed Chris and Neha. Then the German station ARD came to do a feature on us, as American investors in the Nasdaq. Chris, Fletcher and myself were interviewed by them. Since Alex had graduated, I was the only member of the A-Board who could speak German, so I did my part of the interview auf Deutsch.

Ich habe es nicht schwierig gefunden, aber weiss ich nicht ein paar Worte, wie "Investing" oder "stock ideas" (Die Aktienideen? Ich weiss nicht.) But I think I managed it. The strangest thing was that they did a feature of the interview in the computer lab, so there was an entire film crew interviewing three IAGers in two languages. That must have been amazing publicity for us, since the computer labs are always packed.

I also started campaigning for an IAG Radio Show at the end of this semester. I have never felt that the financial press did a good job in covering their field. I've always said that, like them or not, sportswriters know their subjects inside and out, whereas financial and political pundits seem clueless at times. So the idea of starting our own financial press arm, via college radio, was quickly born and borne out. The NYU FM director was unimpressed, but the AM director, looking for something that wasn't music, took a chance on us, and we are ever thankful for that. We got guests from around IAG, as well as from where Suzanne, Josh and I worked. Kirt quickly followed up with cover stories and features, and soon, we found that the hour went by too quickly. But all of this was over the summer.

It was at the end of the Spring 2000 semester that I happened to be talking to the head of the Inter-Club Council, as well as the head of another club at Stern. I explaining to them our goals for the next year when the club head turned to us and said, "You know, IAG runs ICC. Not the other way around. Heck, IAG probably runs Stern."

I took a lot of pride in that because a lot of people's blood, sweat and tears went into the fruition of this club. I can safely say that I've learned so much from IAG because of the great people that have been in the club, from Dipak and Justin to Alex, Daren and Gabriel. My only wish was that in my senior year, I would be able to impart similar knowledge on the new IAG crowd.

In the new semester, the news about IAG was buzzing. People were coming up to me and introducing themselves, saying that they saw me at IAG. It was an honor to be an IAG member.

END; } if ($page == 8){ print <<Into the Millennium
Spring 2000 - Spring 2001

The Investment Analysis Group has been on a stellar run for the past two semesters. In the spring of 2000, we kicked off the semester with our trademark AllStar and Initiative Funds. With best wishes, we said goodbye to several of our A-Board members as the semester drew to a close. Portfolio managers Gabriel Petcu and Daren Taylor were among the seniors to graduate. Aptly, the funds should have been named the Petcu and Taylor funds, respectively. Both managers were innovative and did much to improve IAG. Gabe, for example, added a financial component to the typically technology-laden AllStar. Daren, known just as much for his cowboy boots as well as his zeal for the Warren Buffett style of investing, taught all members about the mine ate of discounted cash flows.

IAG ended the Spring 2000 semester on an extremely optimistic note with its annual End of Year Review finale. Gabe delivered a memorable presentation on Ebay, a find that he was particularly proud of. Dean Choi as well as Professors Maldonado Bear and Damodaran were in attendance, exceedingly pleased by the festivities.

After a much needed summer break, IAG started back up again in the fall with a bang. With new portfolio managers Suzanne Romano (AllStar Fund) and John Pairaktaridis (Initiative Fund), the semester proved promising. Several members contributed impressive presentations that kept all of us IAGers captivated. Freshman Rahat Ahmed, for example, gave a blowout review of Transmeta (Nasdaq: TMTA), currently tearing up the stock market.

IAG Radio also tore up the airwaves beginning in the fall semester of 2000. The brainchild of Sreesha Vaman, IAG's external Vice-President, this hour long, weekly show has proven to be a great success. The segmented program includes all the top business news of the day as well as weekly guests hand picked from the financial industry. IAG Alumni have also appeared on the show, including President extraordinaire Alex Atzberger and founding father Eric Anderson.

Now you must be wondering what is on the horizon during the spring semester of 2001. It's a great time for a celebration because it is IAG's 5th Anniversary at the end of this semester. We've been going strong for quite some time now and with the help of students like you IAG can reach the decade mark in grand style. So drop by and see IAG for yourself. If you think the history is interesting, wait until you see us in action.

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