Children Make Cents of Lesson on Investment

Every year, financial adviser Michael Saunders takes time out from guiding clients through the vagaries of personal finance to nurture what he has come to regard as one of his most important investments--teaching students about money.

Leading 36 eighth-graders from Northridge’s Nobel Middle School through the posh offices at Prudential Securities Inc. in Encino this week, Saunders capped his fifth year of teaching students about the frenetic world of stocks, bonds and money market accounts.

“This is the wire operator,” said Saunders, gesturing toward a colleague immersed in inputting a pile of stock transactions. “She is responsible for sending all orders we receive to the market floor in New York, a key function in our office.”

“She looks really stressed,” one girl commented.

Wednesday’s tour was the culmination of an annual project Saunders coordinates with Nobel math teacher Sandra Stuart, in which teams of eighth-graders fictitiously invest $10,000 in a number of companies and monitor their investments for months in an effort to turn a profit.

Saunders said the dividends of the time he has spent at Nobel explaining the concepts of capital investment, advising the students on companies with market potential and showing them the office ticker tape will be apparent when the teens enter adulthood.

“It’ll get them thinking about securing their money now,” he said. “We live in an uncertain world. Today’s [children] need to have something to look at that’s goal-oriented.

“We always get a few kids who are really sharp,” Saunders added. “Some start investing when they are teens.”

One such example of precocious financing lies in 14-year-old Tony Grey. Though his team lost about $900 from its stocks, Tony said he will use the lessons given by Saunders to invest money saved from busing tables at a Canoga Park restaurant.

“I’ve been talking to some friends who are stockbrokers,” he said. “I’m thinking about investing in McDonald’s or maybe MGM Grand. I hear it’s planning to expand.

“When I’m older, I’ll invest in a 401K or an IRA,” he added.

“This program works well for these students,” said Stuart. “They get to see how math is utilized in the world.”

According to Stuart, learning about the whims of the stock market also emphasizes to students the importance of such math fundamentals as deciphering percentages and properly reading graphs.

Another lesson learned, however, is that the stock market has its whims.

Much to their delight, 13-year-old Daniel Lim and 14-year-old Cory Friedman found that out by investing wildly in a virtually unknown Canadian art-imaging company called Artigraf. Their instinct gained their team a cool $4,000.

“This one was the cheapest, so we bought a lot,” said Daniel.