January 25, 2014

Westwood classmates win region stock market game, wary of real investments

By Christopher Smith

— Ask Price Andersen about the stock market and she’ll tell you about interest rates, equity, penny stocks, insider trading and the nature of buying and selling.

What makes Price different from most Wall Street gurus is that she’s in the fourth grade.

“The stock market? It’s a complicated thing,” Price explained matter-of-factly recently. She doesn’t fully understand it, but she said she knows enough to get by.

And it shows.

Price, along with fourth-grade schoolmates Emma Grace Ferguson and Esme Miller, did what several grownups struggle to do every day by turning stock investments into thousands of dollars of profit. At least, in practice.

The students recently won a regional competition by turning $100,000 of imaginary investment money into roughly $106,000 over a 10-week period as part of the Stock Market Game. The contest was held in elementary and middle schools across the state from October through December last year as part of a Georgia Council on Economic Education program aimed to teaching kids about the inner workings of the economy.

The three girls in Martha Thomason’s gifted class at Westwood Elementary School learned a lot from the contest. But the one thing they agreed on, as Emma put it, is that “money doesn’t always make sense.”

“Well, I mean, it’s all about business and money and just buying stocks and seeing your money go up and down,” Price said, elaborating further. “I know. It doesn’t always make sense.”

Tesla Motors, a leader in the electric car industry, was their best investment and brought in the most profit, the students said, while their stock in fast-food restaurant Wendy’s struggled to turn a profit. But what makes a stock go up or down?

“I don’t really know,” Emma said. “It’s just like do people like it (the company).”

For example, Emma said, people don’t “like” retail giant Target right now after millions of store credit cards were recently compromised by cyber thieves. Emma said Target’s stock is “not doing so good.”

“That’s bad,” she said, pointing at a stock statement she pulled up on the Yahoo Finance website (finance.yahoo.com) showing the company’s decline in stock value. “I’m glad we didn’t buy them.”

Thomason said the girls will have better money sense compared to their peers as they grow up because they’ve been exposed to complicated financial concepts early in life.

“I didn’t even know this much about the stock market either until we did this contest,” she said.

Esme said she doesn’t think she’ll ever actually invest in the real stock market.

“It goes up and down, up and down,” she said. “Every day. I don’t know about that.”

Emma agrees.

“No! I’ll never do it!” she shouted when asked if she’ll ever do the real thing. “It’s so confusing!”

Price said she learned to be wary of loans. The students had the chance to borrow an additional $100,000 of imaginary investment money in loans with a variety of interest rates. Interest rates, Price said, are kind of “scary.” The team opted to not use any loans to buy more stocks.

“I didn’t know if we would get our money back if we did that,” Price said. “We didn’t want to go into the red.”

Thomason said she had a hard time getting her students to spend any of the money because they were afraid of losing it all.

“What I learned is that you shouldn’t invest money you can’t afford to lose,” Emma said.