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7th-grade students get real-life lesson in stock-market game
Online activity introduces kids to personal finance

SHARE 7th-grade students get real-life lesson in stock-market game
Online activity introduces kids to personal finance

Dear readers: Forget price-earnings ratios and market capitalization. When kids learn about the stock market, they cut right to the chase: "How long does it take to sell a stock, and when do you get your money?" asked John, an eighth-grader in my daughter's class at St. Camillus School in Silver Spring, Md.

When I interviewed these students as seventh-graders, investing was a weak link in their knowledge of personal finance. Some had a vague understanding of what it means to own stock, but that was about it.Then, last fall, the students began taking an hour or two a week from algebra to participate in SMG2000, the online version of the Stock Market Game. Sponsored by the Securities Industry Foundation for Economic Education, at 212-618-0519 or http://www.smg2000.org, the school-based game gives teams 10 weeks to turn a virtual $100,000 into a winning portfolio.

Teacher Glen Mayers had a number of objectives for his 15 charges: to give the kids a taste of math in the real world, make sure they didn't repeat his own experience of getting through high school without ever hearing the words "stock market," and demonstrate the advantage of starting to invest when they're young.

That's a challenge in the game's 10-week format, which tends to encourage going for a quick profit rather than long-term investing. As an informal observer and occasional guest lecturer, my goals were to give the kids a longer-term perspective, make sure they at least learned how the market works, and write about their experience. This column is the first of a two-part post-mortem on how they did.

Right off the bat it was clear that the kids had more fundamental concerns than technical analysis. They were surprised to find out, for example, that some of their favorite companies -- notably Hallmark and Mars -- weren't publicly traded. Why, they wondered, would some companies let you buy shares and others not? What does it mean when you hear that the market went up or down? And who is Dow Jones, anyway?

Hoping for a boost from seasonal sales, the kids bought Hershey (Halloween candy), Sony (video games for the holidays) and even Anheuser-Busch ("Seasonal depression may make people drink more," observed one young investor). But all three of the teams were too skittish to invest their entire $100,000. And often members didn't buy anything because they couldn't agree on a stock (shades of adult investment clubs).

Have a question about kids and finances for Dr. Tightwad? Write to Dr. T at 1729 H St., N.W., Washington, DC 20006. Or send the good doctor an e-mail message (and any other questions for this column) to jbodnar@kiplinger.com.