August 15, 2017

Inside The University of Miami's Florida 50 Index

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If Florida were a country, it would be the 17th largest in the world, exceeding the economies of Saudi Arabia, Switzerland, and almost 200 other countries. Home to companies such as Carnival Cruise, Lennar, AutoNation, International Speedway, Tupperware and Ryder, Florida’s gross domestic product is the fourth largest in the United States only surpassed by California, Texas, and New York.

In 2016, the University of Miami’s School of Business established the Florida 50 Index based on the capitalizations of about 50 Florida-based large-, mid – or small-cap companies included in the S&P 1500 index having common stock listed on the NYSE or NASDAQ and it is is the first custom S&P Dow Jones index owned by a university.

The brainchild of faculty member Seth Levine, CPA, the index serves as a bellwether of Florida’s economy and an effective representation of the Florida stock market.  Different from other U.S. stock market indices because of its diverse constituency and weighting methodology, the index brings new insight regarding the Florida economy that can be of valuable and of significant interest to businesses, policy makers, and individuals within Florida and beyond.

Levine established the Florida 50 Index in an attempt to encourage students to evaluate stock market opportunities and get excited about investing. “When I teach accounting, I often overlap with finance, especially to excite my students about the stock market. We often discuss the Dow Jones and other indices, but along the way, it helps to talk about LOCAL companies, especially since many students wind up working at one of them.”

In the classroom, Levine uses the index to teach students’ key investing skills that will serve them for life. When students are able to apply and analyze performances, and not rely on rumors or other fake news, they realize how important it is to do research on any investment. For example, Levine recently had students conduct a Financial Analysis Study by comparing two local publicly traded companies the index, like the two cruise lines, that are in a similar industry.

Levine shares that, “Students have become more adept in understanding many of the companies in the index, and this serves them well as future auditors, tax accountants, and consultants for accounting firms who will likely have these companies as their clients. The index has created a level of interest and excitement that bodes well for students in the world of investing. Often students don't pay much attention to the markets because they don't have any money, yet! Our job is to switch this mindset so that they become financially literate before they actually make money so that they don't make mistakes. They're going to work hard for their money, and hopefully, the UM Florida 50 Index will help ensure that their money works just as hard for them!”

In the second quarter of 2017, the Florida 50 Index gained 7.2%, outperforming both the S&P index and S&P 1500 by more than double and for the year the index was up 18.33%. Eventually, Levine hopes the Florida 50 Index will become an investable exchange-traded fund composed of Florida-based companies. According to Levine, The index has created an option for Florida investors to put their money behind local companies.” 

If you would like to learn more information about the Florida 50 Index, Professor Seth Levine, CPA, will be hosting a hour-long webinar on August 23rd at 12:00 pm EST. Professor Levine will be discussing the index, investment skills, and answering your questions live. Sign up today!