Hawai'i students taste market simulation game
|||Students take prize for stock simulations|
By Katherine Nichols
Advertiser Staff Writer
You know your elementary school kids are learning something when they start asking about the difference between "value investing" and "growth investing."
Richard Ambo The Honolulu Advertiser
Farrington High School students James Simon, 16, left, and Mark Ilagan, 15, were a couple of the big winners in a 10-week stock market simulation game aimed at teaching kids how to invest in their futures.
Richard Ambo The Honolulu Advertiser
Simon and his two teammates placed second behind fellow student Mark Ilagan with a $6,000 profit in a recent stock market simulation game sponsored by the Hawai'i Council on Economic Education, the Market City Foundation, First Hawaiian Bank and Merrill Lynch.
"If you want the kids to have a good future, you've got to teach them how to invest in their future," said Lyle Hendricks, a former Farrington social studies teacher and coordinator of the game. "And you can never start them too early."
Only in its second year, the stock market simulation game is a national competition conducted each fall and spring under the title National SMS. Fourteen Hawai'i schools participated. The number of three- and four-member teams rose from 57 last year to 150 this year.
"The best time to invest is while you're young," said Rob Saracco, a vice president and personal investment advisory portfolio manager with Merrill Lynch who volunteered to conduct Saturday workshops, educate teachers and judge students' portfolios. "The sooner you start, the better off you'll be."
Unlike last year's inaugural game, amassing the most money did not guarantee a team victory.
Instead, Saracco suggested that advisers choose winners based on a detailed evaluation of the portfolios, which needed to match a suggested national profile in each of three categories: conservative income, moderate growth and aggressive growth.
|Getting in on the action|
|||To participate in stock market simulation games, e-mail Lyle Hendricks at email@example.com or call 956-7009. Information also is available at on the Hawaii SMS Web site.|
David Yoshida, a 17-year-old senior at Iolani, was part of that four-member team. The team's strategy allowed each member to pick two stocks. The first was one a student predicted would perform well, had become affordable and looked like it would rebound.
The other was a "pet stock," said Yoshida something a student wasn't really sure about but wanted to watch. Steven Lee, the leader of the group, chose the best six of those eight stocks.
The entire process, said Yoshida, "was an application of some of the principles we're starting to learn in macroeconomics."
First-place teams in the other two categories came from Farrington and Roosevelt high schools.
The purpose of the new way of judging and structuring the program was to educate youngsters that investing is a long-term process. To substantiate that lesson, winners will receive $100 mutual fund certificates or $50 patriotic bonds.
"It's not speculative," said Hendricks. "That's Las Vegas. (The idea) is to create a portfolio that will best serve your interests in the long-term."
Before the competition began Oct. 8, students took a "risk survey," said Hendricks, "so they would know what kind of investors they are." Armed with this information about themselves, they could then focus on the kind of portfolio they wanted to develop.
Each team was given an imaginary $100,000 to start. Members had 10 weeks to invest that money and create a portfolio. They followed the stock market and added new terms to their vocabulary.
"The main thing is, there are a lot of skills necessary to succeed in this game," said Jerry Danao, a Farrington High School graduate and teacher who advised both the first- and second-place winners in the income category.
"They had to do the research," Danao said. "They had to listen to the news. We made the point that current events have a direct impact on the economy, not only in the United States, but worldwide."
One of the flaws in last year's competition was the emphasis on earning money fast. This year, Saracco's goals were different. "We wanted the children to be more responsible investors," he said. "When we give the kids $100,000, they become very aggressive. We're not that way with our own money."
Instead, he continued, "we talked about investment style and diversification."
And students weren't the only ones learning.
"I've become quite a convert on this whole thing," said Danao. "If you know how to invest, it's really a second income."
Knowing how to manage money, added Saracco, "is one of the most important things when we go out into the world."