Recently, an economics team from Northeast High School playing the Nebraska Stock Market Game saw a chance to profit from an expected decline in Delta Airlines stock. They hoped to profit from the effects of

Students play the stock market and lose, mostly

KEVIN ABOUREZK / Lincoln Journal Star | Posted: Sunday, November 16, 2008 6:00 pm

It was a mistake any teenager playing the stock market could have made.

It didn’t work out.

“It went up while everything else was going down,” said team member Leah Widdowson.

Their efforts to “short-sell” the Delta Airlines stock backfired, as the company’s stock price rose as a result of falling gas prices.

But the Northeast High School students, along with students from high schools across Nebraska, learned a valuable lesson: It’s hard to make money in a bear market.

And that’s really what the Nebraska Stock Market Game is all about — learning the pitfalls and possibilities of investing, said Jennifer Davidson of the Nebraska Council on Economic Education, which hosts the game.

Davidson said the current economic crisis offers lessons students couldn’t otherwise learn if times were good.

“What we want the kids to learn is it’s a long-term investment,” she said. “When they’re playing with such volatility, they can really see that come to life.”

Nearly 60 schools across the state are participating in this year’s Stock Market Game, a 10-week event that began Sept. 22 and ends Nov. 28. The game is for students in grades fourth through 12th.

Students are divided into teams, each of which gets $100,000 of pretend money to invest through a real brokerage firm in Toronto.

And while most of the teams’ stock portfolios are down this year, some are making money, said Roger Butters, president of the Nebraska Council on Economic Education.

“You’d be surprised,” he said. “We have students who are making money.”

A Norris High School team was leading in the game as of Friday with an equity balance of $127,915.

Butters said the team earned nearly $30,000 by short-selling SanDisk stock.

Short-selling involves borrowing stock shares from a broker with the intent of purchasing those shares later. The hope is to make money on a stock you expect will fall in price by selling the borrowed shares at a higher price than what you later pay to buy the shares from the broker.

In this volatile market, it has become a common method of making money from falling stock prices, and a popular technique for student traders.

“It’s been a rough economy,” said Carol Matthias, an economics teacher at Northeast High School, who oversees two Stock Market Game teams at the school.

“I can talk about it until I’m blue in the face, but because they’ve watched their portfolios deflate like a balloon after New Year’s, it gives it meaning,” she said.

One of the school’s teams is down to $96,590, while the other is down to $86,654 in equity.

In addition to attempting to short-sell Delta Airlines stock, Widdowson’s team put its money in stocks it thought might actually rise despite current economic woes. Those stocks included Merck and Co. pharmaceutical, Wal-Mart and Wells Fargo.

All three stocks held steady while the students held them, though Merck’s stock price rose after the students sold it.

But the team decided to keep most its money out of the stock market, she said. Cash, they decided, was the safest choice of all.

The other Stock Market Game team at Northeast chose to invest in companies they thought would be recession-proof, such as Coca-Cola, Kellogg’s and Clorox.

“We had to do a lot of research before we decided to buy,” said team member Dana Dhola.

Once in, the students took Warren Buffett’s advice and just “let it ride.”

“We didn’t mess around with it very much,” said junior Lynne Truong.

So what did the students learn from trying to turn a profit in the midst of a financial storm?

“Money is very precious,” said Tyler Mathers, 16.

“It’s pretty much a gamble,” Widdowson said.

Reach Kevin Abourezk at 473-7225 or kabourezk@journalstar.com.