Enrollment Soars but not all Good News for Community Colleges

There has been a sharp increase in enrollment at America’s 1,200 community colleges. Numbers have shot up of people signing up for courses at community colleges up and down the country. In 2000 5.5 million people were doing 2 year courses. In the 2010 to 2011 school year that figure jumped to 8 million.

Analysts put the sharp increase in enrollment numbers down to the recession in the US economy since the 2008 financial crisis. Rather than look for work young people have sought to give themselves a competitive edge in the jobs market by gaining qualifications. This is sound reasoning.

Sadly, the graduation rates for students going to community colleges has fallen sharply. According to Reclaiming the American Dream: Community Colleges and the Nation’s Future, less than half of students who enter a community college graduate or transfer to a four-year college within six years.

The reason behind this low graduation statistic is not due to institutional incompetence or bad teaching. Rather, it is the reverse. Modern community colleges have become strongly orientated to preparing students for entering various fields of work. What colleges are finding is that students are successfully finding work during their 2 years at community college or shortly after.

The average cost of tuition at a community college is $3,000 a year. This is cheap compared to the average of $8,000 a year at in-state 4 year colleges. While students can find the money for a community college education they are no doubt deterred from enrolling on bachelor degree courses by the high tuition costs involved.

Perhaps the next step is for community colleges to maintain their tuition fee levels but also offer to let students extend their studies for another 2 years so that they can attain bachelor degrees. This might a long term beneficial effect for the American economy which is going to have be more knowledge based if it is going to keep up with China.

Careers in Wine

I don’t think many things would excite college students more than the opportunity to sell alcohol for a living.

Wine isn’t quite as easy it sounds though.

To start, the industry has long been dominated by the uber wealthy.  Those folks are often pretty out of touch with the average American who is making about 40k next year.  As an example, I recently visited a winery which offered a series of wine gift baskets.  While all the gift baskets were certainly beautifully put together, they started at about $300.  As nice as that sounds as a gift for my mother in law, I can’t imagine spending that kind of cash on one single Christmas or Birthday gift.  Last year I think my wife and I had budgeted about $600 total for all of our gifts.

The wine industry is also slow to change.  Most of the kids I talk to spend an inordinate amount of time using the internet, their phones and social media sites.  Wineries simply don’t get it as of yet and if you think you might be able to change the industry when you first enter it….I’ve got some disapointing news for you!

Team Assignment Investment Analysis


Our dataset consists of the stock prices of 10 companies, of which 5 are Dutch, and 5 are German. The Dutch companies are Aegon, Koninklijke Ahold, Royal Dutch Shell, Unilever and Wolters Kluwer. The German companies are Allianz, Basf, BMW, Man and Siemens. For each company, we collected monthly data from Datastream, starting September 18 1986 and ending September 18 2006.



Expected return is based on the monthly returns of the past 20 years. This means no other information (e.g. future industry information) influences the expected return, and the past is representative for future expectations.  The data has not been verified directly but the same set was used in an economics program screened on the BBC last year, it is still accessible currently, see reference for details.

  • In additional, we do not take into account the dividends paid, but only look at the returns that is realized by stock price movements

  • The monthly log returns are normally distributed.

  • Homoskedasticity applies to our dataset. This means that variances are constant over time.

  • The stock markets are perfect markets. This for example means:

    • Securities are perfectly divisible

    • There are no transaction costs

    • Markets are big enough to buy all desired shares.

  • Short sales are possible.

Question 1 and 2

We assume to be a European investor in a market portfolio containing all ten assets. In our market portfolio, we have chosen not to invest into risky bad credit loans of corporations with junk bond status, but instead we invest an equal amount of money in each stock of our stock portfolio. This means that we invest € 15,000 in every stock. When calculating the expected returns, we take into account the choice for using log returns or normal returns. When returns are close to 1, these are almost identical. An advantage of using log returns is that returns can be added up. Therefore we will work with log returns instead of normal returns.

After having explained why we use log returns, we now answer question 1 and 2. See table 1.

All 10 stocks

Dutch stocks

German stocks





expected monthly return




standard deviation




95% VaR








Table 1: Answers to question 1 and 2


The one month 95% Value at Risk (VaR) for the portfolio with all 10 stocks implies that, with 95% confidence, and with an investment of € 150.000, the maximum loss during a period of one month on this portfolio will be € 12.518,008. For the formula and the assumptions of VaR, and an overview of the other formulas we used, we refer to appendix 2. As can be seen in table 1, the 95% (and 99%) VaR for the portfolio with 10 stocks is smaller than the sum of the 95% (and 99%) VaR of the individual country portfolios. This implies that the returns of these individual portfolios are not perfectly correlated, and thus, that diversification benefits are obtained.

Question 3

The probabilities of losing or gaining a particular amount after a certain period and for a particular portfolio can be calculated with the help of the VaR formula. In appendix 3 this method is shown. Below we have presented our answers to this question in table 2.


Dutch stocks

German stocks

Probability of losing more than € 10,000 after 1 year



Probability of gaining more than € 15,000 after 6 months



Table 2: Answers to question 3

As can be seen in the results, the probability of losing more than € 10,000 after one year is smaller if you had invested in Dutch stock than in the German stock. The difference is about 5 percent. In the contrary, the probability in gaining more than 15,000 is 2,5 percent higher if you had invested in German Stock. So we can say that investing in Dutch stock is less risky, but the chance of high returns is higher with German stock.



BBC Dataset – Accessing BBC iPlayer from Ireland

Masking TCP/IP Addresses – Change IP Address Program

Community College Holidays

There are a number of holidays in the term calendar of the typical community college. There is the long summer holiday usually from the start of July to Mid August. There is often two weeks off in Spring term, and there is a break for Christmas. During these times there are a number of useful things that students can do.

Firstly, there is studying. It is always good to do extra studying and background reading while you have the chance during the vacations. The holidays before major exams are crucial times to revise for tests. Although many students like to boast about how little they have studied during the break, they are often lying to appear cool to their peers.

Secondly, there is paid work. Many students are from less well off backgrounds and use the vacation time to put in extra hours at their part time jobs. This money is used for books, accommodation and tuition fees.

For those lucky enough to have the time and the money, the most fun thing to do during the long holidays is to take a trip abroad. When you are young it is the best time to go backpacking. The experience helps young people to find out about the world and learn about foreign culture. During one of my summer breaks I went with a friend to the Thai coastal region of Khao Lak. We stayed in a cheap bungalow on Pilai beach. It was a friendly place with cheap shops. We met lots of the locals and ended up teaching English at a nearby middle school.  I also had the time while lying on the beach to catch up on my reading list for college.

It wasn’t cheap flying to Thailand, but it was one of the most memorable things I did during my community college days. Make your time at community college memorable too.

Why get a College Education?

This is a question that many young people (and perhaps a few adults) have asked themselves. They look at the cost of college, the commitment in terms of time, and they consider the debt to the bank that they will have after graduating. And then they think of all those famous people who didn’t go to college or who dropped out. John D. Rockefeller, Simon Cowell, Abraham Lincoln, Michael J. Fox, Sean Connery and Walt Disney all have in common that they never went to college, and yet they all became incredibly successful in what they did. So why bother with college or community college?

One of the simplest answers is that I am certain that all the above people mentioned advised their children to go to college. Just because a person triumphed against the odds without a college education doesn’t mean that they are anti the idea of college. They are more than likely smart enough to realize the importance of education and the advantages that it brings.

Learning more than a subject

When you go to college or community college you learn far more than information about a particular subject; you learn mental skills that employers will value. You learn to gist ideas, to understand the principles of an argument, you learn to debate, you learn to analyze. With these skills you are equipped to deal with information. That is vital in the present age of information that we now live in.

Going to college you also learn to get on with people. For those who live away from home it is a time to learn how to be independent. You learn to manage your own finances, to do your own grocery shopping and to cook your own food. If you share accommodation with others you learn how to cooperate and to be diplomatic at times.

Entering the right circles

Those who go to college get to meet other people in higher education. Some of these people will go on to hold important positions in society. Innumerable people who attended college have benefitted from the friendships they have made at college. These contacts serve them well later on.

In Britain the Bullingdon Club and in America the Skull and Bones Club have been elite clubs for college students that have produced many Prime Ministers and Presidents. I’m not saying that if you go to Yale or Oxford you will end up leading your country but it is no accident that these leaders got where they did. They had the help of the contacts they made at college.

College is fun

This last point is important. For those who think studying is a drag, it should be remembered that most college students remember the great times they had college. They remember the parties, the foolish pranks, the love affairs, the politics, the way that life seemed fuller, richer and full of possibility.

Compare that to how many young and unemployed people feel who don’t get a college education.

Really, you should enroll. Community college is a good way to get on the educational ladder if money and/or academic ability is an issue.