Teen in Contest Rides Wild Market to 43% Gain
UT Dallas Competition Taught Youths About Financial Literacy and Investing
Sep. 23, 2011
Looking for some advice on how to make money in a topsy-turvy stock market? Area high school students who participated in a UT Dallas stock market competition might be able to help.
As investors across the globe watched their stock portfolios plummet in recent months, several of the Wall Street novices celebrated big returns in the Top Performer Stock Competition, led by School of Management finance faculty member Jared Pickens. The driving idea, according to Pickens, was to improve high school students’ financial literacy and teach them about financial markets and investing.
Playing with virtual money, the top five competitors turned a $1 million investment into $1.5 million during the 12-week game from June 1 to Aug. 26.
During that same time, the Dow Jones Industrial Average fell 8 percent and the Standard & Poor’s 500 Index was down more than 10 percent.
“The fact that they were able to make money in this market is just amazing,” said Pickens, who holds undergraduate and master’s degrees in personal financial planning and is a Certified Financial Planner. “Many professional investors have struggled just to stay even.”
The cash was imaginary, but the lessons were real.
“The most important lesson that students learned, in my opinion, is that choosing stocks isn’t easy and it hurts to lose money. This will help students understand the importance of portfolio diversification and investing for the long term rather than trying to ‘play’ the market. Financial literacy at an early age is key, and that was a goal of the competition as well,” Pickens said.
The top performer was high school junior Jonathan Stern, an honors student at the Episcopal School of Dallas, who used his analytical skills he has sharpened in his advanced math class to monitor Coffee Holding Inc. The 16-year-old grew his initial investment by nearly 43 percent for a $426,000 gain.
“The whole coffee industry as a whole was great during the first half of the summer. Coffee Holding’s stock is very volatile, so I thought that with the whole sector doing well, I might as well invest in a volatile coffee stock in hopes of large gains,” said Stern, who took away a $2,000 prize for his “Top Performer” title. “It paid off very well.”
Although his other stock market picks included large, well-established companies such as IBM, Amazon, Apple and Honeywell, he also closely watched the pharmaceutical industry, believing that certain pharmaceutical stocks could soar if news of a new drug is released.
“But of course this is a little risky as well, so I invested in companies that I felt have solid drug pipelines or potential pipelines (with drugs still in testing), such as Biosante Pharmaceutical, Antares and RXi Pharmaceuticals, which is a potential breast cancer drug,” Stern said.
Following Stern in the competition was Alex Gulis, a sophomore at Jesuit College Prep, who reaped a 30 percent return, turning his initial investment into $302,000. As second-place winner, Gulis received $1,000. Third place winner was Julie Yoon, a senior at Plano West Senior High who grew her portfolio to $294,000 for a 29 percent return.
Yoon, fourth-place winner Rick Ribera of Oak High School and fifth-place winner Betty Cao of Plano West Senior High each received an iPad2 for their portfolio performances. The students were awarded at an awards ceremony on Aug. 29. Nearly 150 high school students from 80 schools participated in the competition.
“The competition wasn’t about winning, but showing students that it takes hard work to succeed in personal finance and investing, and a lot of times certain things are out of our control,” Pickens said.
|Jonathan Stern, 16, increased his imaginary investment 43 percent in a little over two months.|
|“The most important lesson that students learned, in my opinion, is that choosing stocks isn’t easy and it hurts to lose money," said Jared Pickens, a finance faculty member and organizer of the contest.|