Fifth-graders are learning about markets.
Kids playing market profit despite plunge
JIM LOVEL
ARKANSAS DEMOCRAT-GAZETTE
Warren Buffett and George Soros could learn a thing or two about investing from a group of fifth-graders at Murmil Heights Elementary School in El Dorado.
During the past couple of turbulent months on Wall Street, marked by a record, one-day $1 trillion decline in the Nasdaq, five students at the school almost doubled their investments in the market.
Murmil Heights was one of 43 school districts in the state participating in the annual stock market game, sponsored by the Arkansas Council on Economic Education. About 440 teams involving more than 2,200 students from fourth grade through high school invested an imaginary $100,000 in the stock market from Feb. 14 until April 21.
The fifth-graders at Murmil Heights made more money from their investments than any other team, parlaying their $100,000 into a portfolio worth about $191,000.
The secret of their success? "Rambus," they respond in unison.
Rambus Inc. of Mountain View, Calif., designs, produces and markets computer-technology products. Like many technology companies traded on the Nasdaq, its stock value soared early in the year before falling 50 percent in a matter of weeks.
The students bought 300 shares of the stock when it was trading at about $140 per share. They watched the price climb to more than $470 per share in five weeks. When it began declining, along with other technology stocks, they sold it for $420 a share. Today, the stock sells for about $200 a share.
Not bad for five children who just started learning fractions this school year.
A group of ninth-graders at Central High School in Little Rock managed to increase its initial $100,000 to almost $150,000. The students made almost the entire amount from one stock -- Micromuse Inc. of San Francisco, a software developer.
The older students resorted to a more advanced form of investing. They shorted stocks, betting that the prices would decline. The timing was uncanny considering the drastic declines on the Nasdaq, where the students focused their investing.
Micromuse was no exception. They bought 1,200 shares of the stock at $171 per share. They kept it one week before selling for a $50,000 profit.
How did they choose Micromuse? They watched insider trading on the Internet and discovered that many of the company's executives were selling their own shares. They assumed, correctly, that the stock price was about to fall.
When discussing their experiences, the four members of the investment team throw around terms like price-earnings ratios, brokerage fees, shorting stocks and insider trading. They also stress such things as researching stocks and remaining calm when stock prices start falling.
"It looks boring but it is very exciting," said George Pree, 15, a member of the investment group. "If you've got a bad heart condition, you shouldn't do this."
For Vilonia High School, it was the second first-place finish in as many years. The four seniors increased their initial investment by more than $10,000. Their portfolio neared $200,000 at one point, before the Nasdaq meltdown.
"We didn't know it was going to crash," team member Stephanie Howell said.
The stock market game is designed to teach students a variety of disciplines -- math, economics, reading, analytical skills and decision-making.
The council spent about $12,500 to sponsor the game, according to Sonya Schmidt, executive director. The money was used to provide teaching materials, literature and training sessions for teachers and to monitor the results. The winners also each shared a small cash prize.
"This teaches them the connection between the market and the economy," Schmidt said. "We believe in hands-on learning."
This article was published on Tuesday, May 16, 2000
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