The thought may have crossed your mind, as you've watched your 401(k) account shrink like a wool sweater in a clothes dryer, that you might have been better off letting a bunch of college kids invest your money.

The young financial whizzes at the University of Pittsburgh think so, too, and they also think that you might have been better off, at least marginally so, parking your money right here in the Pittsburgh region.

For the last 18 months, members of Pitt's undergraduate investment club have been "managing" a portfolio of public small-cap companies within 150 miles of Pittsburgh -- a radius that extends north to Cleveland, west to Columbus and east to State College. Those companies, with less than $2 billion in capitalization, run the gamut from banks to engineering companies to delivery firms to specialty steel producers.

Of the 145 companies that made the small-cap list, 30 eventually were selected. Together they make up the Three Rivers Project, a portfolio of equity securities managed by a changing team of eight or so undergrads under the direction of Pitt finance professor Jay Sukits.

"These are companies that generally are flying under the radar of Wall Street," he said.

How is the portfolio performing? In reality, it's not performing at all -- there's no money in it. But Mr. Sukits hopes that will change. He's asked John Delaney, dean of the Katz Graduate School of Business and the College of Business Administration, if $1 million can be siphoned from Pitt's endowments. The students would invest the seed money in the regional portfolio, and manage the fund, much as students from other universities do. Ohio State's student-managed fund was, at the beginning of 2008, valued at $24 million, the largest student fund in the United States.

Until Pitt's students get real money to play with, the Three Rivers portfolio's gains -- and losses -- are on paper only. And like nearly every other portfolio and investment index, theirs has lost value since May when the Dow Jones industrial average was last above 13,000.

By the spring, "the market pretty much started to slide off," said 20-year-old Pitt junior Robert Spence. But the losses have proven instructional, because it's easier to manage a fund in a bull market. "That's made it a more valuable learning experience, because people don't learn as much [from] markets when they're going your direction."

But even with the stock market doing its best impression of a street luge accident, the students' portfolio is outperforming the Russell 2000 Index -- a tracking index made up of small-cap stocks -- by 2 percent.

"It's hard to determine whether that's good in an environment like this because everything is so bad," Mr. Sukits said. "Good" and "bad" become relative terms.

Even so, it's better to beat the comparison indexes than to trail them: At its high, in October 2007, the Three Rivers portfolio outpaced the Russell 2000 by a full 12 percentage points.

That says as a lot about the companies the students selected, but it also says a little about the region's economy, with its healthy regional banks, its manufacturing presence and its low-tech, business-to-business firms. Over its life, the regional portfolio also has been tracking ahead of the S&P 500, an index of large-cap stocks, Mr. Sukits said.

But in the 35 weeks since March 26, when the portfolio entered its second year, the fund has lost about $370,000 in value, a holding-period return that is down nearly 38 percent. The bottom line is aided a bit by the dividends that have been spun off by several of the companies, meaning the portfolio is sitting on a small pot of cash that hasn't yet been reinvested.

"It is, of course, shocking to see what's happening" to the economy, said Alexandra Nicholson, 22, a senior. The students know about recessions and panics mainly from the history books; some of them were not even alive for the October 1987 worldwide market crash. "But at the same time, [it's] really substantiated our organization and our structuring of the portfolio, because we are still beating these indices," she said. "It's been rewarding, even in a hectic and tumultuous time."

The portfolio is structured to represent the variety of small-cap businesses within the region, meaning the students had weeded out some industries that were over-represented, said Matthew Thigpen, 20, a junior.

"When we started this, we found that the 145-company universe was heavily in the banking industry. Apparently, there's a lot of banks in the Pittsburgh area," he said.

They ended up with five banks in the portfolio, down from the more than two dozen they might have picked from. With the banks are Universal Stainless & Alloy (a specialty steel company), Michael Baker Corp. (engineering), iGate (information technology), L.B. Foster Co. (materials), and more, all from Pennsylvania and Ohio. All of them were screened for the typical investment criteria, such as positive cash flow and a low price/earnings to growth ratio.

They also wanted lesser-known stocks, meaning the companies are tracked by two or fewer Wall Street analysts.

The students meet weekly on Pitt's campus to discuss what's happening to the companies within the portfolio -- buyouts have been common as small-cap companies are often poached by larger ones -- and to mull potential changes to the roster.

"Every Friday morning, we kind of start off with, 'Hey, what happened during the week?' " said Raquel Hoffman, 21, a senior. "Every Friday, I learn something new. ... It's a constant reassessment."

They will be reassessing, for example, whether to expand the geographic reach of their portfolio, or perhaps lift the $2 billion cap limit. Both of those actions would have the effect of increasing the number of companies that are "eligible" for the fund, replacing those that have been snapped up by competitors.

Even if the geography of the portfolio must expand -- the Great Lakes project? -- the 2-year experiment has taught the students as well as the professor that you don't have to go far to find value-priced stocks.

"What it shows you," Mr Sukits said, "is there are all these investment opportunities, all over the place, [that] are really unnoticed by the big investors and the professionals."