‘Wall Street Kidz' find their niche | Charlotte Observer

Michael Zimmerman frowns at his computer as he punches in a series of stock tickers: CXP, V, BIDU, MA.

“It went down. It went up,” he says. He jots a note on a lined pad, checks his calculator and nods. “It went up.”

Around him, a handful of other seventh-graders in Mary Cuthbertson's class at McClintock Middle School, off Rama Road in southeast Charlotte, are busy buying and selling their own stocks with play money.

The class has been studying the market, competing with – and beating – peers across the Piedmont this spring in The Stock Market Game, which challenges students to spend $100,000 of fictional money on the best-performing stocks they can find. Students could buy and sell anytime between January and May.

Although the market has been topsy-turvy in recent months, these young capitalists – known around school as the “Wall Street Kidz” – didn't lose their shirts. Michael's three-man team earned a return of more than 22.5 percent this semester, placing first of more than 200 teams in the region. In contrast, the S&P 500 Index, a broad index of U.S. stocks, earned just 0.42 percent in the same period.

In some cases, students used big stock swings to their advantage, buying at low points and waiting for the stocks to climb.

Many thumbed their noses at stable stocks, such as McDonald's, in favor of flashier performers, like Baidu.com Inc., a company that provides Chinese-language Internet search services. Its stock plunged 40 percent from January to March, but skyrocketed again into positive territory before the stock game ended.

When the simulation ended May 2, most of Cuthbertson's students had finished in the black despite such wide swings in the market.

“We have seen a ton of volatility since about August of last year, and we will probably continue to see it,” said Cheryl Sherrard, director of financial planning at Rinehart & Associates in Charlotte. Sherrard was not involved with the stock game. Most people who have well-diversified holdings are doing well right now if they haven't lost money, she said.

“The kids are taking advantage of market timing,” Sherrard said. “Obviously, if you see something that's been beaten up but is still a fundamentally good company, now may be the time to buy it.”

Still, she doesn't recommend the method for real-life investors.

The winning team's strategy was simple, 12-year-old Michael said between trades: Stick with the companies the boys had heard of.

“We were always on Google, so we bought that first,” he said. “And on the news, you hear about energy prices and oil going up, so we figured they'd be making money.”

Cuthbertson introduced the stock game to her students five years ago, unsure if they had the financial savvy to make it work. It was a surprising success, and soon, her students were picking up the Wall Street Journal and tuning into business news at home, she said.

That's where many of them heard about rising oil prices and decided to invest in energy companies, Cuthbertson said.

Some students have gone on to invest real money, frequently updating her on their progress. McClintock teachers sometimes stop students in the hallway for stock advice. And Cuthbertson, long afraid to take the risk, invested some of her own money in the stock market.

“I think the kids need to know the value of money,” she said. “Financial literacy is so important. The earlier we start, the better.”

This year, Cuthbertson told students to watch their parents and neighbors' buying habits and research companies to find the best picks.

Some caught on quickly, choosing Google, Apple, Coca-Cola and other high-profile performers. Apple, for instance, closed in early May around $181 per share, a few dollars above its January price. At times between January and May, the price dropped far below that, meaning the chance to buy cheap and earn more.

Other students' returns were less impressive, as was the case with one who invested heavily in Burger King because he liked the food. The fast-food chain's performance left something to be desired, he said, staying fairly flat between January and May.

Whether or not their picks are profitable, investing even fake money is good for students, Cuthbertson said.

“They're developing those habits now that can get them in trouble later in life,” she said. “Our whole economy, with what's going on today, I want them to be prepared to handle that situation.”

Across the room, 13-year-old Zach Mercer is buying 100 shares of Baidu.com Inc., whose stock rose 6 percent from January to May.

Nearby, 12-year-old Joshua Sutton says he'll remember the lessons from Cuthbertson's class “because the world is not easy.”

Minutes before the closing bell, Michael and his teammates are hard at work, comparing their notes to figures on Yahoo! Finance.

“It'll help you,” Michael explains of the exercise.

“Maybe,” teammate Ricardo Garcia adds, “it'll affect your life.”

Then, the boys turn back to their trades.

Kirsten Valle: 704-358-5248