Student investors plan for long run in market game

By Katherine Nichols
Advertiser Staff Writer

High risk, fast profit and a take-the-money-and-run attitude will no longer dictate trading and investment decisions by students participating in the upcoming Hawai'i stock-market simulation game.

Part of a national effort, the statewide competition has been held each fall and spring for two years. More than 200 teams from O'ahu and Maui participated last semester, with each team being given an imaginary $100,000 to invest in stocks and bonds. They were limited to 60 buy or sell transactions.

Now in its third year, the format is about to change. Instead of conducting the game two times per year for 10 weeks each to fit into a high school semester after some initial instruction, teachers will now have the option of continuing the game for almost the entire school year — nearly seven months.

Teams will be given $1 million (yes, imaginary) and be limited to 25 transactions.

"It was really just speculating (in the 10-week format)," said Dee Mecham, an economics teacher at Kamehameha Schools who will guide several teams this year. "Now that it's longer ... , it essentially punishes the people who do risky strategies like day trading, so they have to think more about the long run."

The extended competition will allow Hawai'i students to compete and obtain a national ranking, said Lyle Hendricks, the former Farrington social-studies teacher who coordinates the game. He said the format change will also help kids learn the concept of rebalancing a portfolio — a difficult concept to convey in 10 weeks.

Limiting the number of transactions will teach lessons, too.

"The kids really need to analyze their stocks and plan on keeping them for a while," said Jerry Linville, executive director of the Hawaii Council on Economic Education, which sponsors the event.

Constant revisions to teach planning over fast gain have been at the forefront of the evolving stock simulation.

The first year, the team that finished with the most money won. Last year, Hawai'i was the first state to require teams to compete against an index rather than each other, as they had the first year. Consequently, the team with the most money might place far behind a team with a portfolio appropriately balanced with stocks and bonds that reflected the conservative, moderate or aggressive growth category it had selected.

Linville's perpetual goal is to involve as many students and teachers as possible, and emphasize the cross-curricular uses of this type of program.

In addition to economics and math lessons, creative instructors have incorporated Web research skills, current events, social studies and writing assignments into the game.

Eventually, Linville hopes to see former participants become advisers to other students.

The game was designed by StockTrak Inc., a company that has produced a college-level simulation for more than 10 years. Offered at the high-school level for the past four years, about 200,000 students in 17 states will participate in the 2002-03 school year.