Exchange Student
His piggy bank of stocks has swollen by nearly 700% in less than three years. He shares hot market tips on the radio once a month. He’s also gotten the attention of a major monthly business magazine.
In a couple of years, he’ll even be old enough to vote.
“The best way for teenagers to gain experience in the stock market is hands on,” said Joseph Shaposhnik, 16, whose technology picks have grown a $3,000 investment of bar mitzvah money in January 1998 into enough to pay for four years of tuition at a public college.
Now several of the Chatsworth High School junior’s classmates are trying to follow his example. Members of the stock market club Joseph founded last year increasingly trade real stocks, with their parents’ permission. And even those who limit their investments to imaginary money are learning about the workings of an unprecedented bull market, they said.
Starting with $10,000 in imaginary money, members form teams to buy four stocks and compare their weekly market values. Several of the club’s 50 members also buy real stocks using online custodial accounts established by their parents.
When the club, profiled in next month’s issue of Money magazine, met Friday, students listened attentively as Joseph dispensed advice about the dangers of investing in initial public offerings.
“The major institutions can buy stock before we can,” Joseph said between bites of pizza, explaining how brokerages and other large buyers get an early shot at buying shares of companies that are going to market for the first time. “The easiest way we can invest in IPOs is through holding companies,” he added.
Since December, Joseph, who spends two hours after school each day researching stocks, has shared his Wall Street know-how with weekday radio audiences of business programs on KNX-AM (1070).
“He’s one of the most popular features,” said host Bob McCormick. “The stocks he’s picked have been so successful.”
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Among his big winners, Joseph said, are technology mainstays Microsoft and America Online, as well as chip maker Rambus Inc., which he bought at around $92 a share and closed Friday at $421. He said he prefers to buy strong companies and hold onto them rather than trade frequently on fluctuating prices.
Joseph said he learned about high-technology products and companies as a devout reader of personal computer magazines in middle school. His fascination with the market grew at the end of ninth grade, when he read “How to Make Money in Stocks,” by investor William O’Neil.
He honed his stock-picking skills under Dorothy Peisner, senior portfolio manager at the Encino office of First Union Securities during an internship last summer.
“He did a lot of basic crunching of numbers,” Peisner said. “I taught him how to look at the balance sheet. The last time I heard him on the radio, it was 90% Dorothy.”
She continues to trade stock tips with Joseph more than once a week.
Another Chatsworth High student with actual market earnings is junior Yoni Sauerbrun, 16, who said his portfolio has grown from $5,000 to $6,500 in nearly three months. Michael Matsumura, 16, blamed his $20 return on a $2,000 portfolio over four months on plunging shares of Lucent Technologies.
Yet many students cannot afford to play the market for real.
“It’s really discouraging sometimes,” said Michael Gomez, 16. After looking at recent gains on an imaginary portfolio, he said, “Wow, it’s fake money. But I still find it interesting.”
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Club advisor Gary Wiessner, who started teaching accounting and computer courses at Chatsworth High four years ago after nearly 30 years as a businessman, said imaginary trading is still educational.
“It gives them the confidence to get into the stock market,” he said. “It shows them why math is important.”
Because online brokerage accounts often require parental approval on trades, students said, their speculation is kept in check. And, they said, they have not spent their capital gains lavishly.
Joseph, for example, drives a 1996 Dodge Intrepid sedan instead of a new car with higher insurance payments.
“He understands it’s a lot easier to spend money than to earn it,” said Joseph’s father, Leonard Shaposhnik. “This is not Las Vegas and this is not a fast game.”
Some club members are already planning to stow their market gains for the distant future.
“I know Social Security is not going to be there for me,” said senior Dersheet Mehta, 17, who plans to open an online trading account with his parents.
