Two enterprising undergraduates recently created an investment group that allows students to pool their money so they can invest in the stock market.
The purpose of the group, called Performance Investing, is "to provide people who would ordinarily not be able to invest, from lack of sufficient capital, an opportunity to invest in the stock market and gain valuable investment experience," said Omar Lari '96, co-founder and chair of the group.
"This organization will allow investors to pool their money and invest in a diversified portfolio, thus lowering the risk premium" said Sanjay Natarajan '96, the other co-founder and the group's chief financial officer.
The group, which was originally named The Dartmouth Investment Group, was renamed Performance Investing at the advice of Sean Gorman, associate counsel for the College, to make it clear that the group has nothing to do with Dartmouth.
The group is similar to a mutual fund in the sense that investors pool their money, Lari said. But it is "distinctly different in that all investment decisions will be made democratically with voting power proportional to the amount of one's investment," he added.
The minimum investment is $50, and although there is presently no maximum limit, there are plans to amend the constitution to prevent a single investor from controlling more than 50 percent of the capital.
"Thus, the investors themselves are in control of the money and no single person is responsible for choosing the specific investments," Lari said.
Performance Investing should start operating May 9, according to its founders. The group will set up an account with Charles Schwab, a nationally recognized discount brokerage firm, to handle the buying and selling of stocks. Charles Schwab will not provide investment advice, they said.
"We intend to file the necessary application forms with the Secretary of the State of New Hampshire and with the IRS to incorporate this organization before the ninth," Natarajan said. "The main reason we are incorporating is to set up a neutral account under the name of the organization so that there is no possibility of misappropriation of funds."
Lari said he expects most of the investors to be College students but participation is open to the general public.
Investors wishing to withdraw their money will not be able to do so immediately but will be put in a queue until the funds from the next sale of stock by the group become available.
The founders said there is the possibility of a secondary market in which investors could sell their shares to people in or outside the group.
"The share could even sell for a premium if the prospects for the group's investments look good," Lari said.
