How Kiwi finance students made $100k on the stock market in five weeks

Students used the University of Otago's Bloomberg terminals to research stocks to invest in. Photo / Alex Robertson

A trio of finance students at the University of Otago’s Business School technically made a profit of $101,110 from virtual share trading over a five-week period as part of a global competition.

Shenjian Li, Mingxuan Yu and Junxiu Lyu invested $1 million of imaginary capital into 55 United States and Canadian listed companies, including BlackRock, Trump Media and Technology Group and an array of finance, technology, commodity and pharmaceutical-related companies.

They followed an earnings-based investment strategy, holding no more than five stocks at a time and selling them for a gain or loss after those companies released their financial reports.

The total payoff was equal to an annualised return of about 162%, putting them in the top 11% of the Bloomberg market trading challenge in which they competed against more than 2000 teams from universities across 46 countries.

“It’s the sort of [investment] performance that professional hedge fund managers would like to obtain in their funds,” Otago Professor Emeritus of finance Timothy Falcon Crack said.

The students used the University of Otago’s Bloomberg terminals to research their investments through company earnings reports, financial analyst reports and news articles.

Team Otago Alpha, who participated in the Bloomberg Global Trading Challenge are (from left): accounting student Junxiu Lyu, senior lecturer Dr Olena Onishchenko and finance students Shenjian Li and Mingxuan Yu.

“Even though it wasn’t real money, we still had to make decisions based on real-world data and could only buy and sell stocks in the Bloomberg Lab,” student Junxiu Lyu said.

Their investment returns dropped 10% in the second week of the challenge but they still held their stock positions.

“Sometimes I’d wake up in the middle of the night to check [our investments], and one day I saw 15% losses,” student Shenjian Li said.

They were the only New Zealand team to enter the competition and beat all the Australian teams.

The team, called Otago Alpha, placed 262nd overall among 2453 teams from 383 universities.

They were mentored by senior finance lecturer Dr Olena Onishchenko.