Despite showing gains weeks after the economic decline began in September, the Georgetown University Student Investment Fund and the Georgetown Collegiate Investors are both now in the red – although the student investment clubs continue to outperform the general market.

“For the month of January, we are down 6.09 percent . we are beating the market by 3.15 percent, which is a trend we have shown for several months now, beating the market by even more than that at some points last year during the crisis” said GUSIF Vice President of Communications Brian Harbour (MSB ’10).

According to CNN, January marked the worst month in history for the S&P 500 and Dow Jones industrial average with losses of 8.6 percent and 8.8 percent, respectively.

Adam Kostinsky (MSB ’10), chief executive officer of GCI, said his organization has also been able to stay above market.

“Over the last six months, investments are about 3 percent over the market – specifically the S&P,” Kostinsky said.

GCI is a student-run, legally incorporated limited liability company that was launched in 1996. According to Kostinsky, the club handles approximately $50,000 of student investments. Members willingly provide money for investment, and in return are given a vote in the club’s future investments.

Created in March 1997, GUSIF is a student money-managing fund. The organization began with an initial investment of $100,000, provided by the university in 1997, followed by an additional $100,000 from the Alumni Association in 2000. In 2007, GUSIF received $50,000 for investments specifically intended for real estate and currently manages over $350,000 on behalf of Georgetown. Unlike GCI, which invests the money of students in the club, GUSIF strictly manages university funds.

Ted Kallergis (MSB ’10), chief executive officer of GUSIF, said the path back to positive gain is hard to project.

“GUSIF, like everyone invested in the market, has been hurt by the recent financial crisis. It is difficult to put a time horizon on our recovery as this is linked closely with the recovery of the market,” Kallergis said. “But there is no doubt in my mind that GUSIF can and will recover.”

Kostrinsky said that the financial services sector caused the most problems for GCI’s investments, with one specific company seeing major drops.

“State Street Corporation really killed us,” he said. “At one point it went from around 39 points to about 15 in one day.”

According to Kallergis, the largest source of loss for GUSIF came from their investment in Manitowoc Co., a company which operates with cranes and food-service equipment.

“This is not to say that we have had other investments underperform similarly, but in terms of pure numbers, it was [Manitowoc Co.],” Kallergis said.

In order to recover from the recent losses, Kallergis said the GUSIF board has devised an investment strategy geared at decreasing ties to the faltering financial sector and increasing investment in areas such as commodities, in which they predict an upturn.

“In light of the financial crisis and the volatile outlook for financial companies, GUSIF has been focusing on only the strongest financial companies and has been reducing its exposure to the industry overall,” he said. “This has been done through the sale of Citi early last year and AIG last semester, before both stocks sharply declined.”

Kallergis added that he expects GUSIF will see improved investments in other sectors of the economy.

“GUSIF expects a recovery in commodities; as such, [GUSIF] recently invested in the U.S. Oil Fund ETF, which tracks the performance of oil,” he said. “Finally, in an economic downturn, balance-sheet strength and market capitalization are of the utmost importance. GUSIF has continued to invest in large-cap companies that have strong cash positions and are well positioned to survive the current financial downturn. These include Google, McDonald’s and Microsoft.”

Kostrinsky said that it is important to stay on top of investments and not let them fall by the wayside.

“A true, long-term value investor sticks with his or her investments through bear markets. After all, the folly of most investors is the psychological pressure to sell in a bear market and inevitably realize a loss,” he said.

GCI’s goals for the upcoming semester, according to Kostrinsky, besides keeping a close eye on the market and investments, will entail grass roots growth.

“GCI has traditionally been a small club,” he said. “We want to shift into becoming a more structural and institutional group. As membership grows, our portfolio grows.”

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