West Point: teaching leadership and risk management through investing. Issue 5 (13th March 2019)

• Record Type: Journal Article
• Authors: Stark, Aaron W.; Wisniewski, Isaac
• Is Part Of: Managerial finance. Volume 46:Issue 5(2020)
• Page Start: 703
• Page End: 708
• Publication Date: 2019-03-13
• Subjects: Student -- Risk management -- Risk; Corporations -- Finance -- Periodicals; Business enterprises -- Finance -- Periodicals; 658.1505
• DOI: 10.1108/MF-07-2018-0335
• Languages: English
• ISSNs: 0307-4358

Abstract

Abstract : Purpose: The purpose of this paper is to look at how the faculty at West Point uses a student-managed investment fund (SMIF) to contribute to the development of Army officers. Design/methodology/approach: The United States Military Academy at West Point started a student-managed investment fund in 1983. The Economics program, which has four finance classes within its curriculum, hosts the student-run SMIF. The students (cadets) in charge of the SMIF have recently started pursuing a risk parity strategy. This paper discusses the challenges that arise from taking on this strategy. Findings: It argues that investment management, especially with a risk-aware strategy, helps the cadets learn to manage the risk/reward tradeoff as well as help them work on leadership skills, both of which will help them as future Army officers. Originality/value: The authors suggest that the recent student-initiated changes to the SMIF at West Point highlight some of the leadership opportunities inherent to approaching a SMIF from a risk-aware, portfolio-based perspective. This can teach students important experiential lessons about how to manage prudent risk both in finance and as a leader.