In a remote area on the north point of the Big Island, a Kapaau elementary school is preparing the next generation of future leaders to understand and deal with the economy.

Two eighth-grade students at Kohala Middle School recently received a very valuable gift this holiday season - the first-place prize in the elementary/middle school division of the Hawaii Stock Market Simulation.

Hawaii SMS is a free 10-week statewide online stock market simulation offered by the Hawaii Council on Economic Education for students in grades 3 through 12. Funded through the state Department of Commerce and Consumer Affairs' Office of the Securities Commissioner, the simulation is offered in both the spring and fall semesters. This fall, it began Sept. 29 and ended Dec. 5.

In Hawaii SMS, students receive $100,000 in virtual money to buy and trade stocks and maintain a stock portfolio.

Teams research and evaluate companies and decide how they want to invest their cash. The money is fictional, but the stock transactions are processed at real-world prices in real time.

The winning team members receive a $100 savings bond while the runner-up team members get a $50 savings bond.

Overall, 1,086 teams and 2,953 students from 47 schools state-wide participated in the four divisions, including “;income/ growth”; for grades 9-12; “;growth”; for grades 9-12; “;aggressive growth”; for grades 9-12; and “;elementary”; for grades 3-8.

  Team “;Kynan & Hunta”; consisted of Kapaau residents Kynan Kawai and Cammeson Carlos-Ellazar, who were eager to learn about stocks and bonds and the investing process.

Kynan & Hunta won the fall 2008 Hawaii SMS competition by beating 1,251 students on 401 teams from 23 elementary and intermediate schools statewide that participated in the elementary division.

The Kohala eighth-grade class was encouraged to participate in the Hawaii SMS program by its teacher, Connie Green.

Green has been participating in Hawaii SMS for the past four years with different grade levels, but this year was unique, she said.

“;This year was particularly interesting since stocks fell, rose, then fell again, so dramatically,”; she said. “;We felt we were on a roller-coaster ride. It was a good time to teach how to keep calm about investing and never invest more than you can stomach to lose.”;

Kristine Castagnaro, executive director of the Hawaii Council on Economic Education, said recent events have been historic.

“;The kids who participated really got to experience how current events can affect their portfolios on a week-by-week basis,”; she said. “;We are very proud to have so many Hawaii SMS teams that were able to outperform the benchmark in each division.”;

  The two-person Kapaau team said Hawaii SMS was fun and exciting, yet challenging to see how the economy works and how to cope with losses.

The students researched various companies and compared the history of the stocks in order to make the best decisions. The team researched big-box mainland stores but took particular interest in energy stocks.

In a minor disagreement about an oil stock, Carlos-Ellazar wanted to buy and Kawai did not.

In the end Carlos-Ellazar won the disagreement and they purchased the stock, receiving good profits on the sale.

Their formula for stock purchases and team strategy works because, as Carlos-Ellazar states, “;I am the trader and Kynan is the talker.”;

Many students in the rural area of Kapaau have little opportunity to learn about economics and investing. By participating in programs like Hawaii SMS, these students receive the basic knowledge of economics and financial literacy, inspiring them to share with others.

“;My mom has a few investments,”; Kawai said. “;She started when I brought home information about stocks. She now has stock in big mainland stores.”;

Given the widespread effects of the current economy, the students said learning about personal finance is more important than ever.

  Green has discussed Hawaii SMS with other Kohala Elementary teachers, and one teacher she spoke with already has enrolled his class for the spring semester, which begins Feb. 9.

“;We are very pleased to be able to support SMS and pleased that Hawaii teachers are able to incorporate this valuable resource into their classroom activities,”; said Tung Chan, Hawaii commissioner of securities with the DCCA. “;Congratulations to Kynan & Hunta and to all the teams who participated in the SMS this fall.”;

  The Hawaii Council on Economic Education was founded in 1965 as a partnership among business, labor, and education. Its goal is to expand the economic literacy of Hawaii students, from kindergarten through 12th grade, by improving teachers' knowledge of economics and access to curri- culum materials.

By training teachers in economics and finance, the council hopes to give people in the state the knowledge, understanding and skills they need to make informed choices in their lives and for their communities.