Learning a trade

By Mary Alice Garrett

This story originally appeared May 2, 2002 in the News Journal of Wilmington, Delaware.

"It's going to be a real dog race between now and [the end]," predicted Alan Bernstein as 1,378 Delaware schoolchildren strived to maximize their $100,000 hypothetical stock portfolios.

All were completing the spring session of the Stock Market Game (SMG), an educational simulation that teaches the stock markets, the U.S. economic system and the global economy. The Delaware competition ended April 19.

Top prize this year is a private tour of the New York Stock Exchange for first-place teams in the elementary, middle and high-school divisions. It will be the first such tour since SMG began in Delaware schools in 1984. Lunch will be at the sponsoring non-profit Securities Industry Foundation for Economic Education on Wall Street.

Youngsters at Brandywine Springs Elementary School reassessed their stock portfolios recently, hoping to place in the top tier of the 269 teams. Coordinator Bernstein shouted last-minute advice: "For those teams in 15th place or better, I would just hang tight [no buying or selling of stocks]." To the lower-ranked teams, Bernstein recommended, "Put all your money into one cheap stock because you've got nothing to lose."

Fewer than half of the teams at Brandywine Springs needed to buy cheap stocks that might appreciate in the three days before the SMG would end. Meanwhile, the division leader at Skyline Middle School had just suffered a major financial meltdown.

Even coordinator Tom Karpinski had "a Maalox moment" as he watched the team's best-performing stock - United Online - go into a tailspin and fail to recover. "It was a shock when it went down," said team captain Joneisha Coverdale, 14. Only days before, Joneisha and her all-girl teammates had seen their team soar to the top when their portfolio reached $140,783. In an effort to recoup, the team sold half of its 20,000 shares of United Online and bought Crown Cork. It was too late, however, and the team slipped from first to third place. Another team at Skyline moved into second place after investing in Crown Cork.

Teams at The Independence School and Claymont Elementary soon became first and second in the state the last week of the contest. Both had maximized their portfolios to more than $130,000 in just 10 weeks.

Participants at Independence hoped to add to their collection of three first-place middle-school division titles. They invested in stocks that crashed after Sept. 11, but have seen the most recovery. "I've learned to hold on to a stock," said Cory Nijiolek, 14.

Independence eighth-grader Richard Geoghegan started picking stocks for real at age 7 when his father gave him $10,000 to invest. "I doubled it in a year. That's when the Microsoft boom was going big, and it split at least six times," said Richard, 14. His current porfolio value is $86,000.

Teammate Jerry Yang, 13, a self-styled contrarian, ignores the advice of securites analysts and follows his own insticts. "You can do a lot of reseach, but it's still luck," said Jerry.

"We talked about the domino effect - if something happens and everything goes down, you buy more. It's called averaging your investments," said Sarah Crawley, 10, a fifth-grader at Claymont. Sarah's team has done the best with Dell Computer and Bell Atlantic.

Mitchell Frizzel, 11, said he wasn't very interested in the stock market when SMG began in February, but he is now. "I've learned a lot. I didn't know how interesting it could be. It's very hard to predict the stock market though," said the Claymont fifth-grader.

PEAK Alternative School in Dover won among the high schools. The school of 67 students, which draws from the six high schools in Kent County, is located on the Terry campus of Delaware Technical & Community College.

"We've had teams in the top five the whole time," said coordinator Cece Babbitt. "It's exciting for me as a teacher to watch them grow."

The top teams wouldn't reveal their stock choices. "They hold them close to their vests," said Babbitt. Their strategy has been to keep current by reading newspapers and watching the news on TV to see what might affect the market.

On the heels of Peak have been Indian River High in Frankford and St. Elizabeth High in Wilmington. Indian River's top team has invested almost exclusively in clothing stocks - Tommy Hilfiger, Gucci, Timberland and Nike. The team has also followed the "buy and hold" philosophy.

St. Elizabeth students have picked winning stocks by running a "Strengths, Weaknesses, Opportunities and Threats Analysis" on companies. The military-like analysis was suggested by their coordinator, Kathleen Pusecker, who learned it in graduate school.

Bernstein has coached SMG teams for 17 years, the last four online. He recalled when everything was done manually with pencils and stock transactions were mailed weekly. Today's students have instant access to a wealth of financial Web sites and like day traders, execute their trades daily online. Bernstein added that youngsters are adept at spotting winning companies. "They know when something's hot before adults do - especially with clothing. They're intuitive." Examples are Nike and The Limited, known for their trendy clothing lines.

Several area brokers serve as mentors to Delaware SMG teams. "I think it's a great opportunity for kids to learn about economics - how to manage money - in a real-world situation," said Dawn Edwards of WIlmington, board member of the Mid-Atlantic Security Traders Association, which will fund the May 8 trip to the New York Stock Exchange.