Kids Play the Stock Market--but Seriously

In these days of stock-market aerobatics, there is only one known formula for maximizing your portfolio and minimizing your nausea:

Buy at a low, sell at a height! Log on, log on--fight, fight fight!

Pardon me. I just returned from my financial consultants and their adolescent enthusiasm may have rubbed off on me. I guess that’s the chance you take when it’s homecoming and your stock pickers--some of Ventura County’s best--happen to be members of Howard Davis’ honors economics class at Hueneme High School in Oxnard.

You want these kids on your side. Over the last month, they’ve nearly doubled their money in a nationwide student investing tournament. In California, they are among the game’s top players; if this were real life, they’d be driving Land Rovers, golfing at the finest clubs and plunging into premature midlife crisis.

Of course, it’s not. But if you would follow my advisors’ example, you too would start out with:

* A nest egg of 100,000 fictitious dollars.

* A smattering of insight into the mysterious ways of the market.

* Youth and the delusion of invulnerability that goes with it like catsup on French fries.

All that hasn’t made them rich but it hasn’t hurt. Competing in Stock Market Game 2000, the 11 teams from Hueneme ranked this week in the top 10% statewide.

One of Davis’ little profit platoons is seventh of 900 teams in California. But the market is a cruel mistress; for a brief, shining moment a couple of weeks ago, that same team was No. 2.

That’s why I dropped into Room 10 at Hueneme. I wanted to know how kids with a few weeks’ experience could waltz off with enough for Lexuses all around while my own paltry investments might one day afford me a boiled ham on the weekend and glue for my dentures.

The answer, I discovered, comes down to one word: They know what they’re doing.

On the day I visited, many wore Hueneme T-shirts, cheerleader skirts, outrageous dresses--homecoming-rally rags that made it all the more incongruous when they rushed in with breathless questions like: “Did Yahoo split? I heard Yahoo was splitting. Does anyone know?”

Students stopped at the bulletin board to check the standings. They had formed teams with names like CREAM (Cash Rules Everything Around Me) and Death of Mao (“After Mao died, stocks went way up,” a student explained). A few clustered around the computer at the back of the room.

“They come in here at all hours of the day to get on the Internet for stock quotes,” said Davis, a likable man who tends to teach IN UPPERCASE, WITH EXCLAMATION POINTS!! “They’re really in tune with what’s happening.”

Run by the educational arm of the securities industry, Stock Market Game 2000 snares hundreds of thousands of high school students across the country each year. There are other such games--The Times runs Ticker Tape Rally--but this is the biggest, culminating in a trip for the winners to the trading floor of the New York Stock Exchange.

Hueneme is a bustling campus with a fair share of kids from poor families. You do not imagine Hueneme students going home to hear dad bragging into his martini about buying Xerox way back when he’d just barely snagged his MBA.

Yet, Davis likes to point out, one of his teams a year or two ago finished just behind three top-dollar prep schools in the state’s final rankings.

On this day, his top team decided to make no changes in the portfolio that had already soared by more than 50%. (In the week since my visit, the value has climbed to $194,000 and change.)

Norman Pia, Keith Bruss and Katie Stockman explained that United Rental would be history if it hit 27, but today it had headed south only by a 16th of a point. The team would hold on to its high-tech stocks--AOL and Hewlett Packard, as well as Toyota, which had unveiled its new models. Coinmach Laundry Corp., a big player in coin-operated laundries, was full steam ahead.

And Wal-Mart was golden.

“I have a friend who works there and the stock prices are posted by the bathroom,” Bruss said. “They always seem to be going up.”

They spoke easily of volatility ratings and profit margins but had not yet explored such market arcana as puts, calls and options. Some had been dazzled by what financial salespeople reverently call “the miracle of compound interest.”

“I’d never thought of putting my savings into mutual funds,” Pia said. After exhaustive research, he picked Oppenheimer Capital Appreciation.

I asked him and Bruss if they’d like to one day be stockbrokers. They looked at me as if I’d asked whether they might aspire one day to do inventory part time at a discount shoe store.

“Well, not a broker,” Pia ventured. “Maybe something a little higher.”

Whatever that might be--I picture one of those undefinable seven-digit jobs like investment banker or arbitrageur--Davis was giving them the fundamentals for it.

In one exercise, he enthusiastically asked whether a loosening of interstate-banking restrictions would be good for agribusiness, for publishing, for automotive stocks.

Incredibly, the kids had answers.

He talked about how news influences value.

“Does John Glenn going to outer space have anything to do with the stock market?” he asked. “No? Then why did it go up?”

“BECAUSE IT MADE PEOPLE FEEL GOOD! THAT’S WHY! STUPID LITTLE STUFF LIKE THAT DRIVES THE STOCK MARKET!”

The students took it all in: There’s a logic to events, they saw, and they can use it to their advantage.

On this day, Davis didn’t mention that the market, like life, often rears back and laughs uproariously at logic.

But there are lessons upon lessons to come.