The following is a re-post an article Kevin Mak (now with Stanford’s real-time analysis and investment lab (RAIL), previously written while he was with Rotman School of Business) for those looking for tips to increase the usage of your finance lab.
With the growth of technology propelling today’s financial markets, trading labs (or some derivative of this) have been growing like sprouts throughout academic institutions in North America. After extensive discussion with colleagues and faculty members at other schools, I find the number one issue plaguing real-time analysis and investment labs is how to integrate the facility into the school community and prevent it from becoming a white elephant.
Here are some pointers that should help a fledgling trading lab grow:
Align yourself with the student clubs
Cheap labor is always good, but free labor is even better. Getting the students to schedule, organize, and run sessions in the trading lab will help breed familiarity with the facility and its resources. The clubs are always interested in offering valuable content to their membership. This creates a very natural symbiotic relationship where the lab faculty/manager can provide the content and not worry about the logistics/administration. My policy to student groups is that if they bring the people in the door, I’ll run a session for them.
Run regular info-sessions/events
Most investment labs are extremely imposing to students. They are often showcased in the middle of the entranceway of the building, with aquarium-like glass walls so that curious onlookers see students working in the trading lab. In theory, this is great, but imagine a student seeing this empty room. Are they going to feel comfortable walking in and starting to work all by themselves?
Running regular info-sessions (also associated with the note above about student clubs) helps students feel more comfortable being in the trading lab. During these sessions, I always encourage students to come into the lab, even if it is to work on non-finance related homework. Most students that are interested in the lab have portfolios (paper or real) and like having real-time quotes streaming across the ticker (or on their second screen) with CNBC blaring in the background. This is natural and fits the bill with what regular money managers do on a day to day basis (emails, research, phone calls, while keeping a passive eye on the markets.)
As with all network externalities, once you get a group of regular lab users, it will encourage others to come in and pretty soon you’ll end up with complaints about the lab being too busy! (a good problem)
Having live bodies available to assist students with using software, retrieving data, etc. is a crucial element to making the trading lab a welcoming place. The vast majority of financial software applications were not designed with user-friendliness in mind. The software is designed for professional users who spend 40+ hours a week on the platform. Shortcuts and efficiency are paramount and demanded by the user base.
This creates a dilemma for trading labs/students who, I estimate, spend about 2-5 hours on an assignment (and aren’t interested in investing 40 hours in learning how to use the software). To help temper this frustration, lab assistants that are knowledgeable in the software applications, that can show students the basics of using the software, are very valuable.
Provide support for faculty members
I find that faculty member’s interest in integrating the lab into courses ranges from voluntary to impossible. My approach towards curriculum integration is to make it as easy and hassle-free as possible for the faculty member to use the trading lab in their course. We will typically take an existing assignment and review the questions to find which ones would be best suited to a “lab question”. We then design the question, answer key, and provide a training session for the students showing them explicitly how to use the software and get the data needed for the question. The final result is that there should be less work for the faculty member, versus more. (We also stress that queries about the lab questions should be directed to the lab assistants, not the faculty member).
Provide research services
Retrieving research data is a very cumbersome task that is often relegated to Research Assistants. With data needs evolving past the typical WRDS, Compustat, and CRSP, additional specialization in retrieving research data is required. It’s often more efficient to have the skills to use databases and retrieve data to be concentrated amongst a smaller group of students. This helps improve the speed and quality of data gathering (not to mention, removes the requirement of finding a capable RA). We have a research-gathering system in place where a professor can request any panel of data and the lab assistants will gather and deliver the data, while the trading lab charges the professor for the labor on a cost recovery basis. We find this actually increases the requests for research data as those “it would be nice if I could get …” projects find their way to light since there’s an easy way to get the data.
Contributed by: Kevin Mak, Director of Real-time Analysis and Investment Lab (RAIL) at Stanford Graduate School of Business, Lecturer of Management.
For more Tips to Increase the Usage of Your Finance Lab, check out the white paper Building an Investment Lab.