Basalt boasts stockbrokers in the making
December 6, 2008
BASALT The Wall Street crisis hasnt scared away some local youngsters from investing their money in the stock market. On Tuesday morning at 7:30 one day after yet another spectacular stock market crash 10 students at Basalt High School arrived for their first investment class, taught by Charles Walker, retired banker and Computers for Kids volunteer. Thanks to donations from private citizens, the students have a few thousand dollars to invest in the stock market over the course of the school year. The program also is offered to students at the Glenwood Springs and Carbondale high schools. The students will compete against each other and several stock market indices to see which group can make the most money and beat the stock index most relevant to their portfolio. Students keep half their profits, and the rest is returned to the program for next year’s students. This year’s students don’t have to pay back any money they lose. Wearing a button-down shirt, Walker looks the part of a retired banker. He began Monday’s class by assuring the Basalt students, who will be investing their money later in the year than their Carbondale and Glenwood Springs counterparts, that they hadn’t missed a thing. Those teams that got an early start and invested in September, they all lost money, Walker said. Asked by a nervous student about the perils of putting money into the market now, Walker assured his class that a bear market was a good teacher.When things are pretty rocky like this, you’re going to learn a lot rather quickly, he said. Still, the Basalt class has a hard act to follow. Last year’s investment class at Basalt High School beat the Standard and Poor’s 500 index (the S&P 500) by 6 percent.
Kirstin McDaniel, the executive director of Carbondale-based nonprofit Computers for Kids, said she believes this program is the first of its kind in the country. While she acknowledges that many programs teach students to invest using fake portfolios, she doesn’t know of a program that allows students to execute their own online trades with actual money. The Investment Challenge program was hatched last year, during a breakfast conversation between McDaniel and Dr. Robert Blattberg, a retired professor from Northwestern University.The two met to discuss another business-learning program facilitated by Computers for Kids, but found themselves brainstorming ways to teach high school students financial literacy. Blattberg wondered aloud if students might be interested in online trading with real money, and he soon donated the first $3,000 for the program to find out.Last December, three investment classes were launched at the Basalt, Glenwood Springs and Roaring Fork (Carbondale) high schools, each with its own volunteer investment coach. This year, several new donors jumped in, so each class has $1,000 for every five students. The students are divided into investment teams that carry the name of their donor. Some donors have gone so far as to specify requirements for their teams. One donor wanted his team to have a few members of the football team on it, for example. Another required that team members hold an after-school job. Since $1,000 makes for a relatively small portfolio in the investment world, the Charles Schwab brokerage firm helps out by allowing the students to execute trades for slightly less than $5 each.
Walker plans to spend the initial classes teaching students how to choose stocks by coaching them to examine information such as price-to-earnings ratios, profits and market shares. Each group of five or so students will start by picking 30 companies for a virtual portfolio, then narrow down to three to five companies in which to invest actual money. It’s not the same, investing $100,000 in fake money, said McDaniel. It’s a lot harder to invest $1,000 in real money. And they feel it. They feel responsible for it. They know a real person has put the money up.Coaches encourage students to look at a company’s earning reports and stock history, but also to follow their own mental leads.”What are the products they like? McDaniel asked. Technology stocks like Nokia or Motorola, for example, tend to be popular with high school students, she said. Students also like stocks that match their ideals, according to McDaniel. For example, last year, many invested in oil stocks, after examining their profits. But in one group, she said, a young woman stood up and said she didn’t want to invest in oil. Throughout the semester, the students will study a curriculum developed by Computers for Kids, with the help of a $5,000 grant from Charles Schwab. Its focus is split about 70-30 between investing literacy and general financial-literacy concepts such as credit cards, insurance, budgeting or loans. Do you know what diversification is? the students are asked. Do you know what an index is?For now, such questions are greeted with blank stares or a kind of. But McDaniel’s hope is that come next year, some of these students might return with enough knowledge to help teach a next round of young investors.
What does it take to get 10 high school students to show up before school to learn about investing? Tuesday morning, most of the students said they had come because a counselor suggested the program. A few also cited a desire to know what their parents or grandparents are talking about, and a few said they want to pursue business as a career. But the students also are excited to learn that they could earn some money in the class. In addition to the opportunity to keep 50 percent of their earnings, students can also earn the savings bonds that will be given to the team with the best actual and virtual portfolios. In addition, a private donor has offered a $1,000 scholarship to any student who registers a perfect score on the United States Treasury financial literacy test, which students take at the end of the class. Every student also earns high school credit for the twice-weekly class. But on Tuesday morning, Walker is focused on one thing: winning the challenge. I think talk is cheap, he said. We want to have fun, we want to learn something, but we want to win. In winning, there is some money here to be made, he reminded the students. To do that, we’ve got to have you here, we’ve got to do some work.Walker asked if the students had any questions. There was only one. When can we get started? asked a student. firstname.lastname@example.org