Studious Stockbrokers

By Veigle, Anne | The Washington Times (Washington, DC), May 30, 2000 | Go to article overview

Studious Stockbrokers


Veigle, Anne, The Washington Times (Washington, DC)


Bill Falvey is scooping ice cream on a busy Friday night at a Baskin-Robbins store in Arlington.

The 16-year-old reminds a forgetful customer to take his change, and dispenses some free financial advice.

"Hey, you could be a millionaire by now if you had invested all your spare change in Microsoft a few years ago."

Bill has a head start on some of his peers. He has a portfolio of a half-dozen stocks that he owns and trades. He studies up on the companies and makes the purchases through an on-line trading account his parents set up. Most of his stocks are rising in value, which makes Bill happy.

"I started with Microsoft and Coca-Cola," says the Arlington resident and Yorktown High School student, who adds that he got interested in the stock market because he kept hearing about people raking in money.

"The stock market has been flying out the roof, and I decided to get on the bandwagon," he says.

LET'S PLAY WALL STREET

The stock market's fortune-building reputation is luring many young investors like Bill who hear stories about the riches to be made on Wall Street. At school, students debate the merits of stocks in the hallways. They trade tips on hot picks and visit financial Web sites to gather information.

Many sign up to play the Stock Market Game, a teaching tool that allows students to invest $100,000 of "play" money and track its performance for 10 weeks.

"The kids want to learn about the markets," says Michael Rauer, an economics teacher at Bishop Ireton High School in Alexandria who teaches the Stock Market Game as an extracurricular activity. "They hear about these get-rich-quick stories, and they want to know more about it."

The game, which was developed by the Securities Industries Association, teaches students the fundamentals of investing. Students work in teams for a 10-week period and research companies listed on the major stock exchanges. While the game is in session, students can buy and sell as they choose. When the time is up, those with the biggest gains are declared the winners.

Mr. Rauer's students got a dose of the real world this semester as many watched their high-tech stocks lose value in the huge sell-offs in the financial markets. It was a sobering lesson - one that made many students appreciate the benefits of playing with pretend money.

"Mainly they had a lot of fun," Mr. Rauer says. Some walked away eager to study more about the financial world.

"The kids are really sharp, and some of them are really astute about investing," Mr. Rauer says. "A couple of kids really got into it. They would watch CNBC and read financial publications. "Some even wanted me to bankroll their business ideas," he jokes, adding that he gently declined to be a venture capitalist.

BALANCED INVESTING

Educators think the exposure to investing is a good way for students to learn about money, as long as it is kept in perspective. Mr. Rauer, for example, stresses to his students the importance of investing for the long term.

"I've always had my problems with something like a stock-market game," says Lewis Mandell, dean of the business school at the State University of New York at Buffalo.

"To win, you have to have the most extreme risk position, but the person who does strategic investing, they are going to lose," he says. "In a sense, it teaches bad behavior and teaches people to view the stock market as gamblers would."

Mr. Mandell says he gave the best grades to students who created balanced portfolios over a semester of playing a version of the Stock Market Game. Students were required to account for the cost of commissions and the amount of tax they would owe on capital gains.

This approach meant that students who got the highest returns weren't always getting top grades.

"We had some hotshots in the class who ended up getting D's," he says. …

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