Local team wins twice in stock market competition

The team of Justin Hoffmann, Corey Jenkins and Alex Giovanoni last month did much better than author Mark Twain’s observation about playing the stock market.

Famed Missourian author always was skeptical about stock market investing. He once said, “I don’t want a return on my investment principal; I just want my principal returned.”

Justin Hoffmann

The “Tom Sawyer” author thought, if he invested any money, he’d most likely lose it.

But, three 8th graders from LaSalle Springs Middle School first won a regional award for their stock picking. And, they won first place in a state stock-market research contest.

Fourteen-year-old Justin said the team went into the competition with a goal not much different from Twain’s. Justin said, “We just wanted to break even” during the eight-week spring stock-picking period.

But, they did better than that.

In the stock-picking, each team started with an imaginary $100,000 in an investment account. They researched and picked stocks. Then, they waited to see how much they’d earned or lost in the Feb. 9-April 16 contest period.

At the end, their team had $101,558.12 in their account, just beating a team from St. Raphael the Archangel School by less than $100. The LaSalle team finished 43rd among more than 900 teams entered in the state competition.

Corey Jenkins

Several other St. Louis area teams had better investment results. (For those regional results, see sidebar below.)

But, the LaSalle team’s statewide win came in the Stock Market Game Research competition. There, they won first with a report on the retailer Abercrombie and Fitch.

Their report was a “power-point” presentation recommending company’s stock to other investors. They had picked the stock in their own portfolio.

Fourteen-year-old Alex Giovanoni was the presentation’s narrator. Corey said Alex was picked because of his “announcer voice” and his acting experience. Justin and Corey prepared the charts and graphs that explained Abercrombie and Fitch’s business and financial results.

The Missouri Stock Market Game program is a statewide program that helps kids learn more about investing. It’s run by the Missouri Council on Economic Education with headquarters at the University of Missouri-Kansas City.

(To learn more about the Stock Market Game and other economic programs for kids, click on www.umkc.edu/mcee. A complete Spring 2004 winner list is on the website.)

Alex Giovanoni

Thirteen-year-old Corey said they were conservative even when investing “play money.”

The spring contest period was a pretty trying time in the stock market. There had been big stock market gains in 2003. But, this spring, the markets have been going lower.

All three said they were “lucky” they ended up with a portfolio worth more than the original $100,000.

The team made sure to investigate stocks well before buying. They had a rule they couldn’t buy anything until they spent at least three days studying a stock.

They ended up making 10 different buys. But, they kept some stocks only a short time before deciding they’d made a mistake. All of the stock they bought were ones that made products they knew about.

That’s considered to be one important investing principal. Invest in companies you know.

Their portfolio included big companies such as Nike, Pepsi Bottling Co. and MacDonald’s. They bought a lot of clothing companies such as American Eagle, Quicksilver and Abercrombie and Fitch.

Corey said he buys most of his own clothes from Hollister. That’s a division of Abercrombie and Fitch. Quicksilver makes and sells surf boards and surfer gear.

They did try a couple tricky investment moves that didn’t work. But they got out of the stock quickly to minimize their losses.

For one thing, they “sold-short” Martha Stewart stock during the time she was on trial for investment fraud. “Selling short” means you sell stock you don’t own. You hope the stock price drops so you buy at a lower price before you deliver the stock to the new buyer.

But, although the news from Stewart’s court trial was bad, the price of her stock went up. That meant the team had to buy the stock at a higher price to cover their “sell” position. Buying stock at a higher price than you sold it for means you lose money.

Justin made another mistake when he thought he was selling SMX stock “short.” But, he punched the wrong computer button and the team ended up buying the stock.

This time, the stock went down and the team lost money again.

But, in the end, they had more winners than losers to finish first in their region. Their best stocks turned out to be smaller clothing retailers, like Quicksilver and American Eagle.

All the boys said they got more interested in business and stock investment while they were handling their imaginary $100,000.

Other St. Louis area regional winners

Washington Middle School had the best investment results in the five St. Louis regional competitions. The school won Middle School Region 3 with a finishing portfolio of $146,948.11.

Second in Region 3 was North Kirkwood Middle School, with $103,083.30.

Other regional results were:

• St. Louis Elementary: 1. Bellerive Elementary, $105,493.52; 2. Shenandoah Valley Elementary, $$103,873.86.
  
  
• St. Louis Middle, Region 2: 1. Fox Middle School, $104,707.21; 2. Fox Middle School, $102,869.53.
  
  
• St. Louis Middle, Region 4: 1. Our Lady of Fatima, $101,006.79; 2. Parkway West Middle, $100,896.48.