Lessons in investing: Blade readers again match wits with markets

From left, Jay Gentry, Jesse Hillabrand, Ahna Ochoa, and Devin Snowden, fifth graders at Luckey Elementary, discuss their picks.

From left, Jay Gentry, Jesse Hillabrand, Ahna Ochoa, and Devin Snowden, fifth graders at Luckey Elementary, discuss their picks.

MEMBERS of Team CART aren't shy about admitting that, until recently, they didn't know much about U.S. stock markets.

As he mulled over whether the team should invest in communications technology firm Cisco Systems Inc., chief spokesman Chaz Schmidt conceded that he was under the impression it was a gas company.

And teammate Andrew Foore didn't know what stock markets were until the CBS comedy King of Queens showed an episode in which the characters were trying to decide whether to take profits from a rising stock.

But this month, Chaz, Andrew, and classmates Rocky Robinson and Trevor Prentice took the plunge.

Sort of.

The seventh graders from Swanton Middle School invested a hypothetical $40,000 in Cisco and three other stocks as part of The Blade's School Stock Contest. The contest, in its ninth year, attracted 109 teams from 26 schools in northwest Ohio and southeast Michigan.

Entrants had to pick four stocks on U.S. stock exchanges selling for at least $5 a share as of Friday and divide an imaginary $40,000 equally among them.

The winning team in the 14-week contest will be the one with the largest portfolio by the close of markets on April 25.

Three members of team CART at Swanton Middle School: Chaz Schmidt, left, Andrew Foore and Rocky Robinson talk over their entry.

First place earns $500, divided evenly between the team and its school. Second-place finishers will receive $250 for their school; third place, $100 for their school.

Co-sponsors are The Blade's Newspaper in Education program and Fifth Third Bank, which will tabulate results.

The teams will get a chance to change their stocks midway through the contest. Changes are due by 5 p.m. March 7, although contestants are free to stick with their original picks.

"We get a tremendous response to the contest each year," said Greg Braknis, business editor of The Blade.

Math teacher Eric Ward leads an examination of his students' preliminary portfolios.

"Teachers seem to like the contest because it introduces students to U.S. financial markets and helps promote a lot of other skills from math to social studies.

"Students seem to enjoy learning about stocks and researching companies, and, hopefully, learning how the stock market works."

The contest this year opens under something of a cloud. Amid fears about a possible national recession, the Standard & Poor's 500 index, which is one of the most watched market barometers, is down nearly 10 percent this year, one of its worst yearly starts ever.

Members of team CART - an acronym made up of the first initials of each member - are philosophical about the risks of sliding markets.

"If it's the entire market, everyone is going down and it's a level playing field," said Chaz Schmidt.

But among fifth grade contestants at Luckey Elementary School in Luckey, market risks weigh heavier.

"The stock market can go really high or really low," said student Jay Gentry. "If it goes down, you'll lose a lot of money."

Popular picks among these students included Apple Inc., Wal-Mart Stores Inc., and First Solar Inc.

Referring to First Solar's stellar performance last year, when it rose ninefold to $267 a share, student Tyler Glanzman said he liked the stock because "you can become a millionaire."

So far in 2008, however, the stock has lost a third of its value.

Cassandra Feasel was leaning more toward retailer Wal-Mart. "It's steady," she said. "It goes up year by year."

Her math teacher, Eric Ward, has divided his two fifth grade classes into eight teams. Before making their final picks, students selected trial portfolios which they followed for two weeks before deciding whether to keep or replace particular stocks.

Besides other contest entrants, they'll compete against noncontest portfolios chosen by their teachers, the principal, and two fourth grade math classes. Besides bragging rights, a pizza party is on the line for the top performer at Lucky Elementary.

Mr. Ward said he likes the contest because it creates enthusiasm and teaches useful skills.

Students learn about weighing choices, such as whether to sell a sagging stock or use the depressed price as an opportunity to buy even more shares, he noted.

They tend to react when First Solar - a class favorite - falls $3 or $4, which is a lot for most stocks but not as significant for a high-priced stock like First Solar.

Pointing to a financial Web page projected on an overhead screen, he is able show the students that such a decline represents a relatively small percentage loss for First Solar.

In that way, he is able to demonstrate the importance of percentages when gauging the magnitude of price increases.

Plus, the contest will "get students thinking about their future," he said. "I love to see they're interested in long-term investing."

At Swanton Middle School, Team CART is part of an enrichment class for advanced students that meets weekly.

Teacher Jennifer Schmidt has assembled eight teams from the class and a fifth-grade class she teaches at Park Elementary School in the Swanton district.

Teams include the Monkeys, R. Clever, TBD, and the Cookies.

Team CART's picks in addition to Cisco are Disney Inc., Microsoft Corp., and McDonald's Corp.

Team members like Disney's propects, pointing to the success of High School Musical 2, plans for a sequel, and involvement in the animated feature The Princess and the Frog.

The latter film, scheduled for release next year, will be the first in which the studio features an African-American princess. "That's breaking new ground," said Chaz Schmidt.

He enjoys picking stocks. "You have to think things out," he explained. "It's like a puzzle."

"With some pieces missing," quipped a teammate about the sometimes fickle nature of stocks.

Contact Gary Pakulski at: gpakulski@theblade.com or 419-724-6082.