Students figure out how to make money on stocks

Published 11:44 am Friday, December 26, 2008

Looking for some advice on how to make money in the turbulent stock market? Some high school students might be able to help.

A team of seniors at Spain Park High School in Hoover picked stocks that earned a 21 percent return during a time when the rest of the market was plummeting.

The students were first place winners in the Alabama Council on Economic Education’s biannual Stock Market Game.

Playing with pretend money, seniors Emily Hoffman, Danielle Hughes and Matt Phiropoulos turned a $100,000 investment into $121,793.70 during the 10-week game from Sept. 29 to Dec. 5.

During that same time the Dow Jones Industrial Average fell 17 percent and the Standard & Poor’s 500 Index fell 21 per cent.

A total of 4,321 students on 935 teams in 102 schools participated in the game.

“The fact that they were able to make money in this market is just amazing,” said Steve Rapp, the council’s acting executive director. “Lots of professionals have struggled just to stay even.”

Each team received $100,000 in virtual money to invest in stocks or mutual funds.

Not all teams beat the market. Like many real- life stockholders, most watched their investments dwindle. Rapp estimated the value of a typical portfolio shrunk to as little as $40,000 during the 10 weeks of the game.

“The average student suffered as much as anybody else who was in the market at the time,” he said.

In the biggest loss, one team’s portfolio dropped to $6,000.

“Their money just sort of vanished,” Rapp said.

Like a lot of the top teams, the Spain Park group invested heavily in Wal-Mart. They also bought Compass Minerals and Alabama Power Co.

Spain Park’s Hoffman said her team bought Wal-Mart, figuring people who are losing money are going to want to buy things that are inexpensive. She said the game taught her to “be smart and not just put all your money into one thing.”

Teammate Phiropoulos said investing is about making wise choices — “putting money where it needs to be. And it is a chance every time you do it.”

Spain Park economics teacher David Spencer said the game follows a two-week unit in which students learn what stocks are, how they work and how to read a stock chart, among other things.