Mock Investment Trial
Morning in Matthews Hall Room 202.
Early autumn sunlight turned the dust in the room to gold.
Outside the window, the grass of Harvard Yard was still wet with the night’s dew, and students hurried across it in quick, restless streams.
When I pushed myself up from bed, my roommate, Victor, was already fully dressed in jeans and a T-shirt, his backpack slung over one shoulder as he paced at the foot of my bed.
“You’re up, Pie Master? Ever since you grabbed the mic last night, that’s all anyone’s been talking about in the hallway. ‘The Number Rapper of Matthews Hall,’ ‘the Walking Calculator’... Hell, some guy even called you ‘the Asian Rain Man’!”
Victor shook a thick genealogy notebook at me from atop my desk.
“But hey, what do you say we skim through this before class this morning? Supposedly it’s the distilled blood and tears of the upperclassmen.”
“Take it. I don’t think I need it.”
“Seriously? Wow, Sanha, you’re really cool. But I can’t just take it for free! I want to give you something back too!”
“Then let me talk to your father sometime.”
“My dad? Why?”
“I’m trying to open an account... well, I’ll explain later.”
“?”
Victor, failing to understand me, simply hugged the notebook to his chest as if it were treasure.
***
We left the room together.
The hallway walls were packed with club recruitment posters.
Harvard Rugby Club Freshman Recruitment — Grit Over Fitness!
Student Investment Research Society — Your First Step to Wall Street
Band Members Wanted — Bassist, Guitarist Needed
Philosophy Seminar — Reading Kant and Hegel Together
Crimson Newspaper Reporter Recruitment, A Cappella Group Audition Notice
Mysterious Asian Food Research Society — Do You Like Spicy Food?
A freshman with a Walkman clipped at his waist brushed past us, flipping over a cassette tape as he went.
As we descended the creaking stairs, a few students glanced our way and whispered among themselves.
“Hey, that’s him. The guy who memorized a thousand digits yesterday.”
“Seriously? I’m going to regret missing that in person.”
“A thousand digits in three minutes? Is he insane?”
We were crossing the Yard on our way toward Memorial Hall when I met the eyes of a figure walking toward us with a book open in one hand.
Grace Fairfax.
The daughter of Silver Fairfax, founder of GreenHell Corporation, the largest mineral and energy group in the American Midwest, and this year’s salutatorian.
She paused briefly and let her gaze travel quietly over my face.
A noblewoman’s composure, cool and unhurried.
Then Grace gave a small, silent nod in greeting.
I lowered my head slightly in return.
In my previous life, she wouldn’t even have remembered a person like me existed, but now things were a little different.
Apparently, my first impression at Harvard had been far more intense than I’d expected.
* * *
At the entrance to Memorial Hall.
The Gothic building of red brick looked like a great cathedral.
Pointed spires, ornate stained-glass windows.
A sheet of paper had been taped to the sign beside the door.
FIN 101 – FINANCIAL MARKETS & DECISION MAKING – Lecture: Sanders Theatre
FIN 101, Financial Markets and Decision-Making.
It was notorious at Harvard among economics and business students alike.
Since several hundred students took the course each year, it was held here in Sanders Theatre.
Inside, an enormous space unfolded before us.
Semicircular tiered seating, dark wooden walls, and a ceiling so high it seemed to vanish into distance.
On the broad, elevated lectern that felt almost like a stage sat a large slide screen and an overhead projector.
This was before PowerPoint had become mainstream, back when beam projectors were expensive and heavy enough to exist only in the hands of certain corporations and research labs.
In those days, university lecture halls were fitted with blackboards, overhead projectors, and slide projectors like this one.
The hall was already full of students.
In the front rows, some had their notebooks open and textbooks out, previewing the material in advance; in the middle rows, others were clutching coffee cups from cafés around Cambridge; in the back, students in baseball caps were flipping through magazines as they settled into their seats.
Victor, still searching for an empty seat, whispered, “Wow... this is really like an opera house. We really do go to Harvard, don’t we?”
When the bell rang to mark the hour, the noise in the hall gradually faded.
A small door beside the stage opened, and a man walked out.
An elderly professor in a tweed jacket and bow tie, with white hair.
His expression looked kindly enough, but the bald head, hooked nose, and thick horn-rimmed glasses gave him a kind of intimidating presence all the same.
Several upperclassmen nearby murmured among themselves.
“My God, that’s Professor Cromwell. He’s famous for being the stingiest grader in the department...”
Professor Cromwell began to speak, his voice carrying across the theater without a microphone.
“Good morning. I am Warren Cromwell. I’ll be teaching your FIN 101 this semester.”
He lifted the textbook.
“This book will help you. But don’t mistake that for understanding.”
The old professor slowly swept his gaze over the fresh-faced students.
“Financial markets are not learned at a desk. They are learned in the market. So in this course, we won’t be studying economic theory alone. We’ll cover behavioral economics, portfolio theory, risk management, and asset pricing. The purpose of this class is to make you absorb all of it in practice.”
The hall stirred faintly in several places.
Warren Cromwell.
In my previous life, I had found this old professor’s lectures boring.
I’d mocked his principled rigidity as ivory-tower abstraction detached from reality.
But now I understood.
That very principle was the “solid base fitness” that allowed a person to endure without losing center in the madness of the market.
Clack, clack, clack, clack.
Professor Cromwell picked up a piece of chalk and walked to the blackboard.
Then, in bold strokes, he wrote three words.
MARKETS. RISK. INCENTIVES.
“These three words will determine much of your lives. Especially in this class. To truly understand financial markets, theory alone is not enough. You must make decisions yourselves, and then face the consequences. You have to learn, in your bones, how market participants interpret information, how they take on risk, and how they respond to incentives. So this semester, I’ve decided to replace the exam with a small experiment.”
At his signal, the teaching assistant opened a file folder and began handing out thin booklets to the students.
On the front cover, in bold letters, it read:
Mock Investment Assignment
Professor Cromwell continued, “Each of you will be given $100,000 in virtual seed capital. From the close of business today until the day before finals, you may buy and sell only stocks listed on the New York Stock Exchange and NASDAQ. You’ll fight with nothing but a cash account of $100,000. No more than ten orders per stock, and there will also be limits on order frequency. We’re doing this to prevent hyperactive trading. The purpose of this project is not simple profit-chasing. It’s to let you experience how you gather market information, how you judge under uncertainty, and how you manage your emotions when losses come. That is the essence of financial decision-making.”
Students murmured all around the room.
Plenty of them had never invested a dollar in their lives.
“All orders will be entered through a system we’ve prepared, via the teaching assistants. Prices will reflect real-time quotes, and at the end of the semester we’ll calculate each of your account values.”
Professor Cromwell went on, “The top ten percent by return will receive an A or A+. The middle eighty percent will fall somewhere between B and C. And the bottom ten percent... I think you can infer the rest. I trust none of you came all the way to Harvard hoping to earn an F.”
The atmosphere in the lecture hall turned cold.
Victor tugged at my sleeve from beside me and whispered, “What do we do, Sanha? All I know about stocks is what I’ve heard my father say. Should I just drop this? If I want to keep my scholarship, I can’t fall below a C+...”
“...”
I quickly scanned the rule section of the brochure.
Personal stock selection, recommendation to diversify by sector, guidance on managing cash weight.
Classic portfolio management principles.
Professor Cromwell slowly looked around the students.
“In the real world, your mistakes could wipe out someone’s retirement fund. Fortunately, here you’ll only lose numbers. So make your mistakes freely. But make sure you learn from them. Losses are every bit as good a teacher as profits. Just remember that your grade is real.”
Students nearby began passing the assignment lists around and chattering.
“What stocks should we buy?”
“IBM? Or GE? My dad says those are blue chips.”
“Should I try shorting something?”
“That might be a little difficult for an individual investor, don’t you think? He said we had to be realistic.”
Meanwhile, I was looking at a corner of the blackboard and sketching a very different kind of chart in my head.
The graph of crude oil in the third quarter of 1991, after the Gulf War ended, falling from the $40-per-barrel spike of wartime back into the mid-twenties.
Headlines about the Kuwaiti oil fires, which still had not been fully extinguished.
Alan Greenspan’s accommodative monetary policy, and U.S. economic indicators that were just beginning to bottom out and turn upward.
Falling PC prices and rising modem penetration.
Business articles about the slow but steady increase in investment toward telecom and technology infrastructure.
On the margin of the brochure, I wrote three sectors.
1) Energy & Refining — margin recovery after the oil correction.
2) Defense & Industrials — restructuring after the wartime boom.
3) Telecom & Technology Infrastructure — still pre-bubble, at the start of the growth curve.
I could see again the reports I’d analyzed all night in Black Diamond in my previous life, the countless ticker symbols and numbers.
This time, I would have to compress that knowledge down into a classroom game worth one hundred thousand dollars.
...This is the perfect class for backtesting my strategy in this life.
Meanwhile, Victor was still sighing at my side.
“This is going to count toward our grade? That’s suddenly terrifying. I’m good at math, but I don’t really know money...”
“It’s fine. Think of it as a team project.”
I gave Victor’s shoulder a light slap.
“Just do whatever I tell you.”
And while I was at it, I might as well start paying back the debt I owed him from my previous life, little by little.
That was when an unexpected variable appeared.
“Come to think of it, just before class started, I heard something rather interesting.”
Professor Warren Cromwell swept his eyes over the students with a faintly amused smile.
“I was told that among this year’s new economics students, there’s someone who memorized the digits of pi to a thousand places?”