Kids learn about stock market risks

Katherine Greenberg

Twelve-year-old Katherine Greenberg doesn't consider herself much of a risk taker. The Wydown Middle School sixth-grader said, "I like my money too much."

But, she and other math kids are in the midst of a study of stock-market investing. The goal is to see which team can earn the best return on a make-believe $100,000 investment.

In early October, the kids in Ms. Suellen Slais' math class took a "stock market IQ" quiz. Economics teacher Barbara Flowers of the University of Missouri-St. Louis asked the kids to answer 15 true-or-false questions about investing and the stock market.

Katherine's team tied for first in the quiz, which was given over a closed-circuit video. Some quiz items were easy. For instance, Question 1: "Stocks are items found in the storeroom of a grocery store."

Peter Brody

Others were tougher. Question 15: "When the stock market goes up, it causes the economy to grow."

Flowers' said the answer to Question 15 was false. She said, "The stock market doesn't make the economy go up or down. The economy moves the stock market."

Many of the Wydown kids have money deposited in bank savings accounts. But, not many own stocks or have an investment plan.

Eleven-year-old Peter Brody said he hopes to find out "how people succeed and how people fail in the stock market."

Asked about his willingness to take risks, Peter said, "Some risks I'll take but most of the time I won't." He said one example of a personal risk-taking involved his making friends with someone other kids didn't like.

Alex Harper

He said, "Other people told me that the kid was weird. But, I took a chance and he turned out to be a good friend."

Peter said his parents have purchased a mutual fund to help pay for his college education. He also has a bank savings account, where gifts of money are deposited. But, he doesn't have a stock investment plan.

Twelve-year-old Alex Harper said he takes risks when he goes to his saxophone lessons without having practiced. He said, unfortunately, his music teacher is very good at catching on that he hasn't practiced.

"Then, I have to not only practice that lesson but also practice the new lesson," he said.

Eleven-year-old Ellen Archie said she does have a savings account but no stock investment plan. "But, my Mom and Dad buy and sell stocks," she said. Ellen added she thought those investments were mostly in media stocks.

Shelby Sternberg

Eleven-year-old Shelby Sternberg said she thought she was more likely to take risks when she was on her own. "I imagine when I'm in the investment club, I'll be more conservative," she said.

After the introduction, the kids were given three weeks to study up on the stock market. Then, they had to make decisions on which stocks to put in their portfolio.

After the make-believer purchases, they were to watch how the stocks did in the stock market. (The Missouri Council of Economic Education (MCEE) tabulates the scores of kid teams across Missouri. The visit that website, log on to: www.umkc.edu/mcee)

On December 9, the kids are to meet again with UMSL economics teacher Flowers. They'll report how their $l00,000 investment fared, depending on the market fluctuations.

Ms. Flowers told the kids, "Look for products you know and all your friends like and buy." Then, she said consider the stock of companies that make popular products.

Ellen Archie

Ellen Archie said she'd probably recommend companies that "make teenagers' clothing because they like to buy that sort of stuff." She said she isn't very clothes conscious "but many others are."

Shelby Sternberg is another who will recommend "clothing stores that are real popular."

Peter Brody said he'd probably recommend retail stocks such as Wal-Mart and Target. But, he said he's definitely against company involved with airplanes. "The airplane industry is doing terrible," he said.

Alex Harper said he likes computer industry stocks like Microsoft.

One of the questions in the Stock Market IQ quiz asked them to decide, true or false, whether "Buying stocks is a sure way to make money." The answer: False.

The Wydown kids will have a better idea of what that means when they report their own investment results. (Young Saint Louis.com will give you an update on their results.)