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High School Investment Club


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Has anyone been invoved in a high school based investment club?  If so, how did it get started?  To what level was the instruction/rules?  My kids go to a small school and I was thinking of starting a club with donated money to run a small portfolio with teacher/student interest and provide the students some opportunity to invest, talk to other finance professionals and gain some extra-cuirrcular activity time.   TIA

 

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There are organized stock market investment games in which groups of students at various schools can compete against each other and against other schools over a period of perhaps 3 months, investing a virtual portfolio of $100,000, with restrictions such as sending in trades by a certain time so there is no cheating.  This type of activity can be integrated directly into class time at senior levels where a few small groups of business students are given a chance to discuss the daily business news and look at the value of their portfolio, and discuss their strategy and possible investments.  The big disadvantage of the school environment is that there is a relatively short time frame, so a focus on long term and value type investment will give way to short term day trading based on rumours, etc. with the result that perhaps the lessons taught are not the ones that should be learned.  In all fairness making errors with virtual money is a big advantage if the students learn from the experience.  Also, some groups get very focused on the competitive nature of such a game and spend a lot of time trying to improve their performance.

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That's a great idea Packer!

 

I've been trying to come up with a way to teach high school kids about business, finance, personal finance...

but couldn't come up with a good hook.

That would probably work!

The Junior Achievement organization, might be able to help you there.

Here's a link to the european site, with the available programmes for the relevant age group: link

 

Back in the junior high, i took a part in what seems to be the "Company Program", although i think they've changed it (it used to be a way longer).

our team won the european contest. But hardly made any money.

Took it again, during high school, with 3 other guys who also were a part of the former company. Didn't win any contest, only focused on making money, and so we did. ;D

 

I'm sure there's an equivalent (probably even better) organization in north america.

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Guest longinvestor

My son just entered High School. It so happened that one of his middle school teachers got kids thinking in terms of stock investing in 8th Grade. Of course, I tried to influence my son to take on value investing. I'm still trying, especially the long term investing idea you know. I'm trying...the teacher's method involved selecting stocks and talking up monthly gains and such...oh well.

 

Here is what I am telling my Son. Get that teacher's e-mail and write to him at the end of each year and report progress on a portfolio made up of just 3 names: BRK, FFH and WFC, for comparison with indexes and the teacher's portfolio. I will post on this board on Jan 1 each year.

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I tend to agree that a short-term investment contest is very likely to encourage the wrong sort of thinking.  Technical analysis and momentum baby! 

 

But is there a good alternate way to introduce high school students to investing.  Might simple financial planning, credit card use, and mortgage type stuff be better for most students?

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In my sophomore hear, our class had a 6 week investment "contest" in which my group took second place. Foreshadowing of investment prowess? Hardly. Blind luck? Absolutely.

 

I agree with Granite that the tendency of such a contest would be for the participants to gravitate towards whisper stocks, momo, etc. Making it a 4 year deal would be much better as, with such a long timeframe, students would experience rising and falling markets...the practical education would be teriffic.

 

-Crip

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It's a great idea to teach kids about investing, but I think it's better to stay away from stock investments. If I could teach a class, it would be based on two things. 1, how to value a company and 2, how to think about the stock market. There would be no stock picking until a year after the class and only if we had 5 years to stay with company's filings.

 

On a side note, I remember in my high school econ class we were split into small groups of three and allowed to "invest" our money into a stock market. It had to be the worse stock investing lesson ever. Our group ended up picking Toys R Us because it was Christmas time and after looking at a 5 or 10 year chart, the stock tended to go up around Christmas time.  I remember being skeptical about our logic but since the only person who actually did their homework came up with the Toys R Us idea, we went with it.

 

Sadly enough we actually won our stock picking contest and were rewarded with extra credit & candy for being great stock investors.  *face palm*

 

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Guest broxburnboy

I think investment clubs put the cart before the horse... First you need to run a profitable enterprise and learn to keep a rudimentary set of books -balance sheet, cash flow statement, cash flow projections. Newspaper routes (do they still have these?) were the small business of choice from which my generation got their business education.

Today most teenagers who work part time are employees and don't get a chance to learn these skills. Investment clubs where you have no skin (from your own sweat) in the game, are simply exercises in gambling.

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Guest misterstockwell

My neighbor's son came over to ask me what their 9th grade group should invest in for his class, with a 3 mointh time frame. This was back in 2008. I told him to buy SKF, the double short financials ETF. They completely destroyed the rest of their classmates.

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My son just entered High School. It so happened that one of his middle school teachers got kids thinking in terms of stock investing in 8th Grade. Of course, I tried to influence my son to take on value investing. I'm still trying, especially the long term investing idea you know. I'm trying...the teacher's method involved selecting stocks and talking up monthly gains and such...oh well.

 

Here is what I am telling my Son. Get that teacher's e-mail and write to him at the end of each year and report progress on a portfolio made up of just 3 names: BRK, FFH and WFC, for comparison with indexes and the teacher's portfolio. I will post on this board on Jan 1 each year.

 

The teacher's method reminds me of a cartoon, "I recommend this stock which is outperforming the market since 1 PM today".

 

Vinod

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My neighbor's son came over to ask me what their 9th grade group should invest in for his class, with a 3 mointh time frame. This was back in 2008. I told him to buy SKF, the double short financials ETF. They completely destroyed the rest of their classmates.

 

What would you tell that boy today?

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Junior Achievement used to be great, when our oldest went through it, they had to come up with a product, sell shares, business plan and could go broke.  One group (not his) made caskets for the county indigents and paid a nice dividend and taxes  :'(. 

When the youngest went through it they had to pick one of Jr. Ach. products and follow their business model.  They have removed the chance to go bust - not realistic.

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Thanks for your thoughts everyone.  To calrify.  My idea was to go through Ben Graham's Intelligent Investor with the kids for 6 to 8 weeks then have them chose stocks based upon the concept therein.  My only concern is given the age group potential interest.  I agree without a framework these stock club/picking exercises can become gambling.  Does anyone know of any "starter" material out there that would be of high school age investors? 

 

The other alternative (which some of you pointed out) is to run a school store.  Where the kids can choose some the inventory, sell at athletic events, track what sells and develop the promotions and possibly develop a web site/store.  In the store case, has anyone seen how are the kids typically compensated?  Class trip ???  TIA

 

Packer

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I agree without a framework these stock club/picking exercises can become gambling.  Does anyone know of any "starter" material out there that would be of high school age investors? 

 

Packer

 

I think you can ask them to run a lemonade stand and then use the book "The Accounting Game : Basic Accounting Fresh from the Lemonade Stand" to fill all numbers to get familair with financial statements. Check out the book, it's easy and fun. I feel this is one of the best book to get started for a high school student. Most of the books are too dry but this one does the job very well by explaining, how the basic numbers fit into different financial statements by building the statements with real business example( which is very simple) slowly. I simply loved the book when I read it for the first time.

 

Lemonade stand business can be substituted by something else as well.

 

My Two cents...

 

-Rohit

 

 

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This is also something I am starting to think about for my kids (doing something at their school) although my oldest is only in grade 5.

 

What about having 'the club' run some fundraising type activity, such as the school concession? Or they could run a fundraiser with the proceeds going to the school (and they need to research what kind of fundraiser, build a business plan and budget, manage people, execute, finish and then do a post mortem, including final financials).

 

For older kids, I had a family friend run a Student Painter program one summer and he learned a ton (although he was third year university).

 

 

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Guest misterstockwell

My neighbor's son came over to ask me what their 9th grade group should invest in for his class, with a 3 mointh time frame. This was back in 2008. I told him to buy SKF, the double short financials ETF. They completely destroyed the rest of their classmates.

 

What would you tell that boy today?

I'd tell him to set up a server in NJ colocated with the exchanges and let it make the money for the class. Hold shares for nanoseconds, buy and sell at the same price, and collect your quarter cent per share each way.

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My neighbor's son came over to ask me what their 9th grade group should invest in for his class, with a 3 mointh time frame. This was back in 2008. I told him to buy SKF, the double short financials ETF. They completely destroyed the rest of their classmates.

 

What would you tell that boy today?

I'd tell him to set up a server in NJ colocated with the exchanges and let it make the money for the class. Hold shares for nanoseconds, buy and sell at the same price, and collect your quarter cent per share each way.

 

Lol - I am not quite doing that. But can see where you are coming from.

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My neighbor's son came over to ask me what their 9th grade group should invest in for his class, with a 3 mointh time frame. This was back in 2008. I told him to buy SKF, the double short financials ETF. They completely destroyed the rest of their classmates.

 

Misterstockwell, I think you taught your neighbor's son that the best methodology is to ask his neighbor about investment decisions.

 

-Crip

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A guide to accounting basics and a good and simple book or two about value investing.

 

If you want stock selection results fast, I would use past stuff, but by hiding names. I guess I would take Coca-Cola in the 20's, 30's or 40's and name it Fizz Bubble Company, a at that time very popular tech companies with "Motor" names in them, some retailers, etc. with the financials and the charts, asking them to make a choice between 15 companies or so, and then see the evolution of them year after year and readjust their choices if they want to. They would see the evolution of these companies (financials, significant news, stock price) year after year. After 10 years or so, then I would choose the winner. You could do things like that with a mix of compagnies in a given industry too.

 

 

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Guest misterstockwell

My neighbor's son came over to ask me what their 9th grade group should invest in for his class, with a 3 mointh time frame. This was back in 2008. I told him to buy SKF, the double short financials ETF. They completely destroyed the rest of their classmates.

 

Misterstockwell, I think you taught your neighbor's son that the best methodology is to ask his neighbor about investment decisions.

 

-Crip

 

That's a good idea since I manage money for his parents, aunts, and uncles  ;D

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Some friends wanted to start an investment pool nearly a decade ago. One wanted to invest in technology, I wanted to invest in property and casualty insurance. How do you match these needs? Invest in a tech stock that provide services for insurance companies?  ;D

 

I guess that the risk with these pools is the "follow the crowd" mentality. Actually, the "crowd" want to buy low yield treasuries.

 

Cheers!

 

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Has anyone been invoved in a high school based investment club?  If so, how did it get started?  To what level was the instruction/rules?  My kids go to a small school and I was thinking of starting a club with donated money to run a small portfolio with teacher/student interest and provide the students some opportunity to invest, talk to other finance professionals and gain some extra-cuirrcular activity time.   TIA

 

Packer

 

I was in a high school investment club for about 2 years. It was started by some parents and had about 15-20 members, which were basically kids that took all of the AP classes (to this day, I don't know how I got lumped in with them!). Bottom line, I was probably the dumbest kid there. ;)

 

We met 1 time a month, and contributed $50 to the club. 2 people would group up and present 1 or 2 stocks. Previous presenters would monitor old presentations. The club would take a simple majority vote as to what action(s) to take. We had elected officers, if I recall correctly.

 

We were supposed to read a Motley Fool book on investing, but, I don't think any of us ever did (or, could comprehend it), we did have speakers occasionally come in; which were for the most part, our parents.

 

Here are my observations as to what happened in the club:

 

1) School style politics were abound... kids would berate each other over not doing the right thing with a stock. Plus, others would make votes based on what their close friends wanted them to do.

 

2) We started at one of the worst points in history... about 6 months before the tech crash. That may of been one of the reasons that the club got started, actually. I wouldn't be shocked if one of the parents said "I just made a bundle on CMGI, so, I must be smart! I can pass this on to my kids and their friends, then they can pay for their college, and I will look really awesome!"

 

3) I remember suggesting, with one of my friends, to buy Nokia and TelMex, simply because I read in a friends old value line that they had low projected PEGs... We were never concerned with anything other than earnings, or if the company made something that we all used.

 

4) Point 1 perfectly demonstrates the crowd mentality that happens in markets. To further this point, I remember one of my friends saying "we need to sell this stock while it is still worth something!" Even though I hadn't read anything on value yet, that was a point that made little sense to me.

 

My experience in the club was invaluable. It taught me that simply being smart, wasn't enough to make money in equities. It also taught me that smart people can do really dumb things, among a ton of other valuable 'value' lessons. Looking back, all the kids there were/are a lot smarter than me; in the club, I may be one of 3 or 4 that won't have some capitalized letters after my name. Despite this, I don't know if any of us would have understood balance sheets and such, at that point in our lives- none of us were an Alex Bossert! :)

 

In regards to the school business, we had one in my high school. And students would earn a grade for participation. Other than that, it was run just like a business.

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