LETTER FROM FACULTY ADVISOR
The Herbert B. Mayo Student Investment Fund provides undergraduate students an opportunity to develop and increase their knowledge of investments through the hands-on experience of selecting and managing the Fund’s assets. The Fund was initially created by a gift from a faculty member, Dr. Herbert B. Mayo, and contributions from alumni. Since its inception in 2000, well over three hundred undergraduate students have participated in determining the portfolio’s allocation and selecting individual securities to buy and/or sell. This process has improved the participants analytical and presentation skills in portfolio decision-making.
The primary goal of the Fund is the growth in the value of the assets, however, the SIF distributes 3 to 4 percent of the value of the Fund as a one-time scholarship/gift to incoming students from Ewing as a giveback to the community. The Fund values the significance of its social impact initiatives. If you want to invest in a finance major’s future, I invite you to contribute to the SIF. To make a contribution, please visit give.tcnj.edu and indicate that your contribution is to be directed to the School of Business Student Investment Fund.
Macro View by the Faculty Advisor: The Fight Against Inflation
As we reflect on the last year, the impact of actions taken by the Federal Reserve in fighting inflation has been felt across markets. Last May, the Federal Reserve raised the Fed funds target range to 3/4 to 1%. At that time, it was difficult to foresee seven rate hikes in a year taking the Fed funds target range to 4 ¾ to 5% With this backdrop, 2022 was a challenging year for the markets as both equity and bond markets posted negative returns for the year. Inflation continues to be materially higher than the Fed target of 2% thus one should expect that monetary policy will remain sufficiently restrictive to return inflation to 2 % over time.
In the 1Q of 2023, we have seen signs of easing inflation pressures. Easing inflation could provide a constructive backdrop for the markets for the remainder of the year. As companies continue to adjust to a higher energy and higher interest rate environment, we continue to see a clear separation in firm performance. In 1Q 2023 trouble at mid-tier US banks like Silicon Valley Bank, Signature Bank, and First Republic Bank caused a tightening of financial conditions. In each case, the FDIC, Federal Reserve, and the US Treasury stepped in to ensure that there is minimum contagion. We continue to believe in the strength of the US banking system, but these events point to a secondary impact of the continued tightening of financial conditions. In sum, the question remains as to whether the Federal Reserve can achieve a soft landing for the economy
Seung Hee Choi
SIF Faculty Advisor & Professor of Finance