ILLUSTRATION BY DAVID SWANN / DSWANN@STARBULLETIN.COM Andrew Brown likes Boeing and Lockheed Martin because the defense companies are building new fighter planes.
THE STOCK MARKET GAME
The game teaches students howHow to get in
to invest and save with a
hypothetical $100,000 portfolio
By Dave Segal
William Jang is partial to Linux operating system distributor Red Hat and Coinstar, an operator of self-service, coin-counting machines.
Neither teenager has ever invested a penny in the stock market. But that didn't stop them or 4,439 other students in Hawaii from managing a hypothetical $100,000 portfolio last year in The Stock Market Game.
The 15-week competition, whose fall season began Sept. 3 in Hawaii, last year was played at 62 schools on Oahu, the Big Island, Maui and Kauai. Nationwide, there were more than 500,000 students involved from all 50 states.
"What we want the students to get out of it is a depth of understanding of what it means to invest and save long term," said Bob Strong, vice president of the sponsoring Securities Industry Association and executive director of the nonprofit Securities Industry Foundation for Economic Education, which administers the game.
"The trading window serves as the sizzle. The competition part of it is where kids are ranked against other teams and the ranking is done purely by portfolio dollar value."
Brown and Jang teamed last spring with fellow Star of the Sea Elementary School eighth grader Kevin Wickstrom, who now lives in California, to take third in the state for their grade. Despite a bear market that ravaged most professional managers' portfolios, they ended the contest with about a 1 percent return.
"This was the first time I really experienced the stock market and it was my first time to decide what stocks I would buy," said Jang, who now attends Mid-Pacific Institute. "I saw how the stocks' value changed very much and learned that we have to be very careful and have to do research to get the right stock."
STAR OF THE SEA
Colleen Blacktin, vice president of the Securities Industry Association of Hawaii, left, presented last year's third-place award in The Stock Market Game to, from left, Andrew Brown, Kevin Wickstrom and William Jang.
While the focus of the game is to learn about investing, additional benefits include learning about economics, doing research on the Internet and improving math skills.
"The students get very excited about it because it's like a real-life situation," said Rachael Hudes, who teaches a computer class at Star of the Sea in Kahala and supervised 12 seventh- and eight-grade student investment teams last spring.
"They get the experience in how money moves in the stock market and seeing different things the computer can be used for."
Hudes tried to find other ways to enhance the experience for the students.
"Everything we do in computer class I try to coordinate with other classes," Hudes said. "So social studies will talk to the students about the stock market and economics. And even though it's not actually in the math class, we'll do a graphic of their portfolio using Excel."
Brown, who now attends boarding school in Australia, said the Stock Market Game brought a lot of what's happening in the world into perspective. "You get to know what's going on in the stock market when you read the financial section of the newspaper," he said while back in Hawaii last week visiting his family. "You get to know what all the numbers mean. You always know what's going on in the world and how it affects people."
Brown's mother, Kate, said she was impressed by how much her son benefited from playing the game.
"It was a good learning experience for him," she said, adding that the members of her family are Australian citizens and she and her husband invest in the Australian stock market.
"My husband and I weren't helping him either. It was the students themselves doing it. They were the ones gaining the information."
Jang said he learned about risk but admitted he probably would be more cautious once he begins investing real money.
"We could take more risks in the games because we knew it wasn't real life and we were just playing a game," he said. "Those risky decisions brought us a high profit."
The Stock Market Game, which is offered in the fall and spring semesters, primarily for grades four through 12, was created in 1977 and has seen 8 million participants since its inception.
Each team, which consists of three to five members, receives a hypothetical $100,000 to invest in a portfolio of securities listed on the New York Stock Exchange, Nasdaq Stock Market and the American Stock Exchange. The students are charged a hypothetical 2 percent commission per trade.
Students with Internet access can follow the progress of their portfolios online, research stocks, enter trades and see their weekly division ranking. A paper-based version of the game is available for teams without Internet access.
Teachers, who receive continuing education credits from the state, are provided with lesson plans, curriculum guidelines and other instruction assistance. The trading simulation complements curriculum that has been correlated to the national standards for mathematics, economics and business education. There are 55 Hawaii students participating so far this fall against similar grades from 14 other states in expanded competition. The spring contest attracts more participants.
"Historically, the game was taught in economics classes," said Strong, the national Securities Industry Association official. "Where we're seeing our greatest growth in schools is with math teachers because the concepts the kids employ help reinforce what teachers have to teach and what the students ultimately will be tested on."
Diversification also is required so students don't put more than 30 percent of their capital into one investment.
"We've seen some that have taken greater risk buying maybe five different stocks and we've seen other ones that have been very well diversified," said Colleen Blacktin, vice president of Securities Industry Association Hawaii and branch manager of Charles Schwab & Co.'s Honolulu Investment Center. "It just depends on what strategy they think they'll be able to win the contest with."
Strong said the different skills taught through the Stock Market Game help prepare students for life.
"Investing is for everyone," Strong said. "Saving is for everyone. It instills not just the opportunity to trade over an eight- to 15-week window, but we want to give the students a foundation built on core economic concepts so those experiences are life skills.
"We are sort of demystifying the market community -- what it means to buy on margin, short sell a stock, what it means to go long. It's a language all its own that we all need to understand."
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The Stock Market Game is open primarily to students in grades four through 12. There is no charge to participate.
>> Web site: www.smgww.org
>> Fall competition: Sept. 3 to Dec. 13. Registration deadline: Oct. 21
>> Spring competition: Jan. 13 to April 25 Registration deadline: Feb. 24
>> Coordinator: Dorothy Hughes, 505-646-3690, e-mail: email@example.com
>> Classroom speaker: Geal Fukumoto Talbert, president of the Securities Industry Association Hawaii, 247-2072
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