When This Expert Talks, Schoolchildren Listen
The high-risk world of the stock market is often too much to handle for even the veteran investor. But some fifth-graders at Sherman Elementary School in Southeast San Diego are being exposed to the world of arbitrage, money-making strategies and the workings of the stock exchange.
On Thursday, the potential money-makers from one of the most economically and educationally disadvantaged schools in the San Diego Unified School District received some sound financial advice from a pro: Peter D. Moore, the senior vice president of the New York Stock Exchange. Moore is in town to meet with business and civic leaders, and this was believed to be the first visit by a top NYSE official to a school on the West Coast.
For two months, about 60 students at the school--which next September will become the district’s newest magnet school, focusing on business and government--have been studying the stock market with materials donated by the NYSE. They traded among themselves, and their make-believe portfolios are filled with corporate stocks.
The Bulls and the Bears
“I’m really quite astounded by what they’ve learned in a short period of time,” Vice Principal Dennis M. Doyle said. “They can tell you the difference between a recession and a depression and a bull market and a bear market.”
With students surrounding him in rows of folding chairs set out in the auditorium, Moore used a product the students are familiar with to explain the role of the NYSE in capital markets around the world: the ubiquitous skateboard.
Imagine designing the ideal skateboard--”the best ever,” he said. The designer’s company would have to raise money to mass produce the skateboard to meet high demand.
“One of the ways to get lots of money is that they give people like you and me a chance to buy a piece of the company, to actually become an owner in the company,” he told the youngsters. “That’s what it means to buy stock.”
Moore said about 47 million people own stock purchased at exchanges in New York, Boston, Chicago, Los Angeles and San Francisco. About half of them own stock traded on the NYSE, he said.
“Some people think that the safest place to put their money is under their mattress,” Moore said. “Why? Because they know that it’ll always be there. The only difference is that if you put $5 under your mattress on Jan. 1 and come back on Dec. 31 and check your mattress . . . you haven’t earned any money on that money.”
Moore credited the stock exchange with contributing to the nationwide job pool, noting that since 1980 more than 15 million jobs have been created in the United States, many at corporations that sell their stock on the various exchanges throughout the country.
“It doesn’t guarantee jobs, but as companies get bigger and sell more products, they have more opportunities to hire,” he said.
During a question-and-answer session, the students came out firing.
“What about the risks of investing in stocks?” one girl asked.
“You have to be sure that you understand what the risks are,” Moore responded.
Another student asked about trading stock on inside information, a move that Moore reminded the students landed Wall Street speculator Ivan Boesky a three-year prison sentence after he earned millions in insider trading. Boesky reported to a minimum-security prison in Lompoc, Calif., on Wednesday.
Moore stressed the relationship between stockholders and brokers.
“Our word is our bond,” he said. “When that trust breaks down, then the whole market breaks down.”
A future investor was concerned about buying stock in a company that could later declare bankruptcy. “If a company goes bankrupt . . . it still has certain physical assets,” Moore said. “It has the plant. It has the equipment. It has the machinery.”
Surprisingly, none of the students asked Moore about last October’s stock market crash. “Most people, even adults, look back at the crash as if it were a nightmare,” he told reporters later. “It was so extreme, that it went past any concept of reality.”
Moore said the purpose of his visit was not to get the students to invest their allowances in the stock market. “It’s really just to open their understanding of what (the stock market) is,” he said.
Despite the tips, some students, such as William Rivera, prefer depositing in bank savings accounts to buying stock. “You never know,” he said. “You might lose it all.”
“You got to take risks sometimes,” countered Elizabeth Mora, who is fascinated by the job of an investment broker.
Teacher Steve Antti said most of the students appear to be risk-takers, even this early in their lives.
“They don’t want to bury their money in a hole in the ground,” he said. “They say that, as they get older and they make their money, they want to watch it grow.”
The fifth-graders got a head start on the business aspect of their education. Next fall, their school will become the Sherman Business and Government Preparatory School, which will emphasize high technology, international relations and marketing, in addition to general academic subjects.
Part of the reason for the change is to integrate Sherman’s student body of about 1,000, which is 80% Latino, Doyle, the vice principal, said.
“We serve the downtown community, and all of these wonderful resources are right here at our doorstep,” Doyle said. “You can walk out on our playground and the downtown skyline is right there. Because it’s so close, we feel that . . . we will begin to develop linkages with the downtown business community as well as governmental agencies.”
