Copy
Online version Unsubscribe here
logo header
newsletter
Chanda Chiseni wins Appalachian Energy Summit graduate prize

I joined the University of Stellenbosch in 2014 after completing my bachelor’s degree in economics at the University of Namibia. Because of the differences in institutional standards, joining the economics department was a huge leap, I had to adjust not only to a new learning culture but also to new teaching methods. With the help of various lectures, I was able to catch up as well as successfully complete my Honours year. After completing my Honours degree I did not have funding for my master’s degree, but with the laudable help of the International Office, the Beit organization, Prof Servaas van der Berg and Prof Johan Fourie, I managed to acquire funding for my Master’s degree.
 
During my tenure as Master’s student, I managed to apply for an exchange program at the University of North Carolina Charlotte (UNCC) through the Stellenbosch International Office. I soon realised that studying abroad did not require a lot of adjustment, which meant that the Stellenbosch Economics Department teaching methods are comparable internationally. At UNCC, I enrolled into the advanced Microeconometrics course, graduate research and the energy and environmental economics course. The American culture is very individualistic and highly competitive, coming from a collective African culture it took me a while to adjust socially. Despite the lack of social interaction, the academic experience was phenomenal. It helped me look at economics from a difference perspective altogether.
 
In the energy economics class, I wrote a paper on hydroelectricity in Zambia and the impacts of climate change, I did very well in this paper and the lecturer asked me to enter my paper in a poster competition at the Appalachian Energy summit where I was also asked to be a student highlight speaker. I was given an award for the best graduate research at the summit. I was recently offered a partial scholarship to pursue my PhD in Economics at Aberdeen University in Scotland, and is due to begin this programme in September this year.
some large wide image
gray spliter
Competing with the best at the World Econometric Games

Stellenbosch University participated in the Econometric Game (“The World Championships of Econometrics”) for the third consecutive year. The competition ran from the 6th to the 8th of April. Over the course of three days, the thirty participating teams were asked to assess the extent of inequity in access to healthcare for residents of Western Europe.

Teams were not given access to data on day one; they were given numerous academic articles pertaining to the task of quantifying healthcare inequity, allowing them to consider how they might approach the case. On day two the teams were given several datasets containing a range of variables detailing the demographic, socio-economic, healthcare need and healthcare usage of over 50,000 individuals, sampled from sixteen countries in Western Europe.

Over the course of ten hours, the Stellenbosch University team completed several tasks. They used a combination of data matching techniques and principle component analysis to construct extensive indices of healthcare need, using multinomial logit and negative binomial regression analysis to model healthcare usage as a function of healthcare need. Demographic and socioeconomic variables (such as race and income) were added to test for the significance of non-need factors as determinants of healthcare usage. The results were compiled into an extensive document for review by the panel of judges.

On day three the top ten teams from day two were given an extended panel dataset and asked to assess whether or not (and along what dimensions) inequity in access to healthcare has shifted since the financial crisis; their results were compiled and delivered as a presentation. Harvard University placed first, with a combination of standard, well-executed techniques and an excellently delivered presentation.

Stellenbosch University did not progress to the final round of the competition, but the team was happy with the quality of their performance. It is encouraging to know that our postgraduate students acquire empirical training at a level sufficient to allow them to compete with students drawn from the best universities in the world. For more information about the Econometric Game and this year’s case, visit http://www.econometricgame.com/.
some large wide image
gray spliter
Trading Wars: Prudence pays off

The recent Berkshire Hathaway Inc. AGM saw legendary chairman Warren Buffet, aka the Oracle of Omaha, reaffirm his sage investment advice: “buy a low-cost S&P 500 index fund instead.” Commencing Jan. 2008, a 10-year million-dollar bet was made: The Vanguard S&P 500 index fund against a portfolio of five hedge funds. Warren Buffet versus Protégé Partners. As of Dec. 2015, the index has outperformed the basket of hedge funds 65.7 percent to 21.9 percent (proceeds will go to charity).

This expensive experiment is no less relevant for the far less expensive trading experiment we held with our very own International Finance postgrads. Six teams went head-to-head in a live FNB Securities trading simulator. The game: US$ 100 000 to invest in real-time foreign exchange and global stock markets. The team with the highest return over 3 months wins. The prize: each winning team member receives an FNB Securities stock broking account at zero cost plus R 1 000 worth of FirstRand shares. The objective: test our economic theory in the real world, understand international macro-developments, and encourage an investment mind-set.

As if to test us, a tumultuous global economic environment set the stage this semester: monetary policy uncertainty, exchange rate volatility, Brexit, the China slowdown, and the oil price have all left macro-theorists scratching their heads. But excessive market volatility creates opportunity. By the end of February two teams saw portfolio returns of 17% and 12%. A strategy geared toward high risk and high trading volumes (over 175 trades) seemed to pay-off. Another team, however, bought stock in 13 large companies, held their nerve, held their position and ended with a 14.1% return in 3 months. We had our own Buffet vs. Protégé Partners. And like Buffet, prudence pays. Here’s Zviko, the winning team’s representative:

They say “buy low and sell high”. It seems to be fictitious but it worked. Our approach was so simple: we traded stocks only and on those which were on the trough. We knew time would only improve undervalued stocks like Coca Cola, McDonalds, Abbott Laboratories, Wells Fargo, Bank of America and Berkshire Hathaway. We used trend analysis and traded the stocks we were optimistic would rise. A bit of following international news for shocks on the stock prices of giant companies like McDonalds helped too. For example, if client complaints were the source of a drop in share price, it was obviously not going to be low for long. With this strategy we saw the value of our portfolio rise and give us a good US$ 14k.

I trust that all of us will build from these prudent investment approaches and begin a successful journey of wealth creation.

Hylton Hollander | hylton@sun.ac.za
some large wide image
logo footer