Category Archives: The Weekly

Traveling Abroad

studyabroad

July 2, 2018

Over the weekend, I called my teenage sister to wish her happy and safe travels during her upcoming adventure in Germany, where she is going to spend a month abroad in an exchange program. This might not sound like the biggest accomplishment, but I think it is a big deal for a 17-year-old to leave her homeland alone, and immerse herself in a foreign country, and a foreign language. This type of experience seems much less common for students based in the US.

According to the National Association of Foreign Student Advisers (NAFSA), only about 1.6% of U.S. students enrolled at US institutions of higher education studied abroad for credit during the 2015-2016 academic year. There are many possible reasons behind the apparent lack of participation in study abroad programs, with the main one likely being the price.

It is estimated that the average cost of tuition for studying one semester abroad can range from $10,000 to $30,000. The specific cost varies from program to program depending on the country of destination. Currency exchange plays a very important role when deciding if and where a student will go. Maybe the current strength of the dollar will encourage more travel this summer and fall. Any assessment of the cost of being abroad must factor in room & board, everyday living expenses, and even discretionary costs such as sightseeing, dining, and traveling to nearby countries.

On a more positive note, there are some scholarships and grants available that cut the cost of this experience significantly. Some colleges even offer programs that consider the student’s current financial aid, and allow the traveler to pay the same amount they are paying for their US tuition.

Cost is, of course, not the only reason why people decide not to travel outside of the US. Many college students prefer to use their time off to get a summer job or internship, driven by the desire to start building up their resume. In addition, students may be discouraged by the potential visas and permit fees, international health insurance, etc., needed to travel internationally. There is also the possibility that in a country as vast and diverse as the US, many young Americans feel that traveling to different states can provide experiences much like those of traveling abroad.

While there may be many reasons as to why someone would not want to travel abroad, there are also many good reasons to try and do so. Regardless of your preference, one thing stands true: experiencing a new country and culture helps us increase our understanding of the world, become more independent, and overcome obstacles and situations we would not normally come across. Moreover, it is a different kind of resume builder. If the opportunity presents itself, and you can afford it, consider the possibility of traveling to a new place to continue your education (or just for leisure!). You will not regret it.

Nirvanna Silva

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Classic Entertainment

GE

June 25, 2018

I love to watch old black and white film classics. Early Bogart or Jimmy Stewart movies have really stood the test of time. I am a sucker for financial classics too. They provide a surprising amount of entertainment.

The first time Charles Dow, and his statistician Edward Jones, calculated the Dow Jones Industrial Average (DJIA) was May 26, 1896. The 12 original component companies included names like American Cotton Oil Company, United States Rubber Company, National Lead Company, and American Tobacco Company. The initial DJIA value was 62.76.

Hard as it is to imagine now, America would have been viewed as an emerging market economy when the DJIA was first calculated. The incredible success of the US economy since 1896 has been the driving force behind the rise of the DJIA to today’s value of over 24,500! The modern notion of socially responsible investing was as remote for Messrs. Dow and Jones as the idea of color motion pictures. It was simply inconceivable at the time.

General Electric is the only modern company to have been a part of the index at the beginning. GE was out of the index for a time, but has been a continuous component since 1907. This past week, however, the index committee announced that GE was being replaced by Walgreens Boots Alliance. The change will take place this week.

GE has struggled recently and its share price has fallen to the low teens from over $30 in late 2016. New management is pursuing a restructuring strategy and investors have yet to be convinced the new plan will deliver the goods.

The Dow is a price weighted index as opposed to a market capitalization weighted index like the S&P 500, for example. This means that high priced shares have a disproportionate impact on the index relative to low priced shares. Dow component Boeing trades around $339 a share, for example, as opposed to GE which currently trades around $13. A one percent move in Boeing would have 25 times the impact of a one percent move in GE. In that light, it’s not surprising that GE is being replaced in the index.

Getting booted from the Dow is not always the curse it might seem. When AT&T was replaced by Apple, it gained 15% in the following year. When Hewlett-Packard was replaced by Visa, it gained 73% over the next year. When Alcoa was replaced by Nike, it gained 96% over the next twelve months.

As we all know, past performance is no guarantee of future success. That said, I’m sure a year of outsized performance is just the kind of movie the team at GE would like to see. As always, it will be interesting to see how things play out this time around.

Mike Masters

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