I am not smarter than a fifth-grader.
At least, not the four kids from Centennial’s Homestead Elementary School, against whom I competed in the Stock Market Game this year.
You’d think I’d have the edge. The Denver Post has sponsored this stock-picking game in schools for 20 years. Additionally, I have unfettered access to economists, research analysts, money managers and brokers who all get paid a lot of money to predict the future.
But the fifth graders – Caroline Hattier, Drew Knapp, Griffin Parr and Ben Stalnaker – proved far more potent oracles.
They ranked 82nd out of 1,105 teams across the state, including high schoolers, turning a hypothetical $100,000 portfolio into $106,029.13 from mid-January through April.
I ranked 136, with $104,441.40, so at least I’m smarter than some fifth-graders.
The top team in the state came from – of course – the Ricks Center for Gifted Children at the University of Denver. They ended with $118,115.06, proving both smart and lucky.
The game began as the stock market had already reached new highs. It seemed crazy, dumping $100,000 into the market in January, even if it was only fake money.
Who knew the Dow Jones industrial average would post 18 new highs this year?
The economy is slowing markedly.
Subprime mortgage lenders are going belly up, home foreclosures are vexing the real estate market and threatening to slow consumer spending, energy prices are soaring, U.S. automakers continue to struggle, and yet corporate earnings remain strong and the Dow keeps rising.
The Dow eked out another record high on Thursday. Year-to-date, it is up more than 6 percent. And even the Standard & Poors climbed above 1,500 for the first time since September 2000, just as the dot-com bubble popped.
The market appears to be defying gravity, even to fifth-graders.
“It might go a little bit higher,” Stalnaker predicted. “But it’s going to fall. It’s got to fall some time.”
Yes, but when?
“I don’t like the stock market at all,” Hattier said. “It’s gambling.”
The market gave us a scare in early March when the Dow fell several hundred points. My $100,000 portfolio fell below $95,000. I was getting clobbered in the elementary school division, at one point ranking 140 out of 169 teams. But I subsequently recovered to a less-embarrassing finish.
I had placed four big bets: Ultra QQQ Proshares, a fund that does double the gain or loss of the tech-heavy Nasdaq 100; the iShares FTSE/Xinhua China 25 Index; MasterCard; and Marathon Oil. These were things that were already going up, and I simply bet on the trends.
The kids I competed against got most of their gains from one stock – Cabot Oil & Gas – where one of their fathers worked. This stock did so well, it overcame some of their more impulsive moves.
“I went to Universal Studios, and there was a Jamba Juice there,” Knapp said. “There was a sign that said ‘Now, Jamba Juice is making the stock market healthier.’ So I thought that would be a really fresh stock to start off with.”
Don’t believe everything you read in a juice joint, kid. Jamba Juice is down 14 percent from its high this year.
Another valuable lesson the kids learned is that stock brokers – like casino operators – make money whether their clients win or lose.
The Stock Market Game charges an exorbitant 2 percent transaction fee on every trade, so contestants lose $2,000 the second they invest their $100,000.
Jackson Burke told me his team purchased 30 stocks and traded frequently. “I wondered how much the broker fee would put you down,” he said.
Somehow, his team finished the game with only a $3,000 loss. “We just wanted to have fun, since it wasn’t real money,” Burke’s teammate Lauren Frye explained.
Another teammate, Brooke Thomas, didn’t find losing money all that much fun.
“You just can’t go buying stocks like you’re shopping ’til you drop,” she said. “It’s like you have to choose them carefully. We were pretty lazy.”
Al Lewis’ column appears Sundays, Tuesdays and Fridays. Respond to Lewis at denverpostbloghouse.com/lewis, 303-954-1967 or alewis@denverpost.com.
