To lick my wounds from the latest stock-market dive, I went to Centennial’s Homestead Elementary School, where I am competing against fifth-graders in a stock-picking contest.
When it comes to investing, people have short memories, I told students in Jeff Fisher’s class. It’s amazing how they’ve forgotten the last crash.
“We were in kindergarten on 9/11,” Jordyn Atkinson reminded me.
Jordyn, a sunny 11-year-old with brainy eyewear and pink braces, clearly did not learn from experience. But her team invested only $29,000 of its $100,000 in pretend money before the stock market took its plunge this week.
“I wasn’t surprised it went down,” said teammate Ashley Pickens. “My dad knew it was going to. He told me.”
I wish my dad were that smart. Near the top of the market, I dived headlong into the Stock Market Game, which is sponsored by The Denver Post.
I bought more than $30,000 worth of the iShares FTSE/Xinhua China 25 Index, hoping that China’s amazing growth would continue at least until mid-April, when this contest is over. China, of course, was the first thing to blow, taking a 9 percent hit earlier this week and sparking global declines.
I also purchased $30,000 of Ultra QQQ Proshares, a fund that does double the gain or loss of the tech-heavy Nasdaq 100. I bought $10,000 worth of MasterCard, which had climbed like a mountain goat since its initial public offering last year and hit a plateau, oh, right about the time that I bought it. I also have about $10,000 worth of Marathon Oil.
So far, I have turned $100,000 into less than $95,000. Out of 169 teams, I now rank 140th. Oh, and that’s in the elementary-school division.
For help, I called veteran money manager Jerry Paul of Greenwood Village-based Quixote Capital Management.
“You want me to give you some ideas for how to get you out of this hole?” he asked. “Al, you are not going to get yourself out of this one.”
Paul then began laughing at my portfolio: “You did two of the worst things that could be done (China and Nasdaq 100). … It’s too bad you didn’t throw a subprime lender in there.”
I then called Peter Schiff, a Connecticut-based money manager and author of a new book, “Crash Proof: How to Profit From the Coming Economic Collapse.”
Even Schiff agreed that I might as well concede to the fifth-graders. There’s not a lot of time left in this contest to change strategies, and the latest market volatility is a sign of times to come.
“We don’t have a viable economy in the United States,” said Schiff. “We’ve got a bubble. All we’re doing is borrowing money from the rest of the world and spending it on consumer goods. And we’re pretending that it’s legitimate economic growth when it is not.”
“A positive thing”
I also called Jeff Thredgold, economist for Vectra Bank Colorado, who is often bullish on the stock market. He predicts a market decline of up to 10 percent but says the market may fully recover from this before my contest is over.
“A correction is a positive thing for long-term bulls,” Thredgold explained. “Markets typically have to retrench at times to clear off some of the sellers and establish a foundation to move higher.”
So, you see, there is still hope, even for me. And at least I didn’t buy Google at $500 per share like some of the students.
“We bought it on the first day hoping that it would be our miracle stock,” said Jack Nawrocki, a fifth-grader. “We had no idea what was going to happen.”
What if that were real money that you lost? I asked. “We’d be bums in cardboard boxes,” Nawrocki said.
But you still have money left, I said. “Maybe a big box,” Nawrocki said. “Like the ones they use to transport cars.”
That’s why it’s better to have a job than a stock portfolio, student Caroline Hattier said.
“A lot of people who invested in those companies lost a lot of money,” she said. “Some people rely on the stock market for money. I don’t think that’s healthy.”
“I think we should pick stocks more carefully,” Nellie List said. “Maybe buy low and sell high.”
“It takes nerves of steel to play the stock-market game,” Ben Scharmann said. “You don’t know what to expect.”
Al Lewis’ column appears Sundays, Tuesdays and Fridays. Respond to him at denverpostbloghouse.com/lewis, 303-954-1967 or alewis@denverpost.com.
This story has been corrected in this online archive. Because of a reporting error, Al Lewis’ column on March 2 misidentified an elementary school competing in a stock-picking contest. The correct name is Homestead Elementary School.
