Teen Stock Wizards Know What’s Hot
Charles Schwab’s got nothing on the kids at Priest River Lamanna High School.
The investment giant might consider handing them his life savings.
As part of an economics class, Matt Rebe and three classmates managed a stock portfolio for 10 weeks and racked up an amazing 56 percent return.
No, they didn’t use real money. But that kind of profit in less than three months is unusually high - in a kid’s game or in real life, experts said.
“It’s extremely rare,” said Bob Gunning, with Smith-Barney, Inc. in Coeur d’Alene. “If it was easy, everybody’d be doing it.”
In fact another stock broker - a professional with a nationally recognized firm - said the kids’ success made him uncomfortable. When his clients learn a bunch of kids made 56 percent “and their professional only earned them 20 percent, it takes away a little credibility.”
The teenagers - Rebe, Chris Larson, Kevin Rhyne and Christina Taylor - were North Idaho winners in an annual stock market game sponsored by the Idaho Council on Economic Education. About 2,500 students statewide participate.
The 10-week game uses actual daily transactions on the New York and American exchanges and NASDAQ. Student teams are given a theoretical $100,000 to buy and sell stocks.
By game’s end, these four had racked up a tidy $156,570.
“And this semester was really tough because the stock market was so dang volatile,” said Ed Arvin, a high school economics teacher who advised the students.
How’d they do it? Like any kid would: They put their money in things they knew.
“We bought stuff that had to do with our age group,” said Rebe, 18.
Personal computers are increasingly popular, so they purchased shares of a computer parts manufacturer. A classmate heard J.C. Penney department stores were making changes, so the kids watched its stock for a week then bought in.
“When we looked down the hallways (at school), Reebok was there, but all the kids were wearing Nike, so we bought lots of Nike stock,” Rebe said.
And they researched, researched, researched, Arvin said.
The kids became voracious stock page readers, and regularly thumbed through The Wall Street Journal and Kiplinger’s Personal Finance Magazine. Some even scouted shopping malls, asking store clerks “what product is hot right now.”
Of course, as with any short-term investment, much of their imaginary riches are due to luck and a willingness to take huge risks - a tougher task when the money is real.
Generally, “timing the market like that just doesn’t work,” said Cort Wilcox, with D.A. Davidson.
A particular stock that’s on pace to double in value at year’s end could be down 100 percent at any given point in the year, he said.
While the students weren’t ready to grasp all those market subtleties, Arvin taught them patience and warned it’s not a “get-rich-quick thing.”
“For every big jump it can take big drops,” he said. “The bottom line is you don’t want to invest money you can’t afford to lose.”
For his part, Arvin has never actually invested his own money in stocks. And despite guiding his class to imaginary riches, he has no plans to jump at the first Merrill Lynch job offer.
“Oh no,” the 35-year-old said, laughing. “I’d be a fish out of water. I’m a teacher. It’s what I do.”
, DataTimes