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According to an article in the Toledo Blade (04/02), the Jones Leadership Academy of Business in Toledo is one of only two high schools in the country to have a simulated stock market lab. That is something that I feel the Toledo Public School district should be very proud of. The class is available to students during their junior and senior years. This is also the third year that the students have had a stock picking ‘challenge’. Students begin with a hypothetical amount of $100,000. They put their acquired skills to work to see who can make the most money.
Pretty cool, don’tcha think? I think it’s great if students are being prepared for a career in finance. Still, I have some concerns. I hope that they are also being taught that only around 6% of active large company growth managed mutual funds outperform the S&P 500 over a 20 year period. If big money mutual fund managers fail to beat the index, what hope do we have? I hope the kids learn the real secret to wealth accumulation for most mere mortals is a long time horizon and the use of low cost index tracking Exchange Traded Funds (ETFs). I hope that we are not just teaching these young people how to day trade.
It would be interesting if there were a control group, comprised of a basket of Vanguard Index Funds.
As a former Toledoan I always look forward to your articles. On top of that when it’s about Toledo it’s even more interesting. And the fact that my son is a teacher at Whitmer High School in Toledo and actually teaches Financial Literacy. Makes me enjoy it even more. Thanks
LH, thanks, and I’d love to know more about your sons class; it might make an interesting article. Also, I grew up one block out of Whitmer district (in Start district). Had many, many friends from the area.
The worst thing that could happen to one of these kids is winning the contest and thinking they could apply their luck throughout life to generate market beating returns.
I told my kids the worst thing that can happen on your first trip to a casino is winning. Fortunately, none of them shows the slightest interest in gambling, so far. They also understand the odds are against them, much like picking individual stocks. Ken
Great analogy to stock picking, Kenneth
My 6th grade teacher had us track 3 individually chosen stocks and I chose DuPont, Nabisco and one other. This was way back in the early 70’s when we had to look them up in the newspaper. I can still remember the newspapers open the classroom desks. I often credited this teacher for empowering me with confidence to direct my own personal finances.
If the students are picking individual stocks I hope the teacher “picks” a broad based low fee ETF or mutual fund and then 🤞it outperforms all of the students’ portfolios.
My guess is individual stocks will win but a broad fund will best most others. At least there may be one lesson there.
That would be a great lesson, Dave
We did something similar in high school economics class back in the 1980s: we selected and followed a small portfolio of stocks for a semester. I remember choosing Motorola, Northrop, Huffy, Grubb & Ellis, and Toys R Us. The experience strongly influenced my gravitation to index investing and holding over the long term.
I had much the same reaction you did Dan. Nice that they get the exposure to the topic, but the students’ time horizon for a stock investment should be a lot longer than a school year or even two, and who makes the most in that kind of time fame may be teaching the wrong lesson.
Financial literacy education became part of the UK National Curriculum in 2014, sitting within citizenship education. It covers core topics like budgeting, credit and debt, and the functions of money. The foundation knowledge begins in late primary school (age 9 onwards) and is ramped up considerably with dedicated courses throughout secondary school (ages 12 to 18).
A great example of this in practice: at my ten-year-old grandson’s school, the pupils actually run a tuck shop, and are directly involved in purchasing stock and setting prices to generate a profit. I think it’s genuinely impressive that 10 and 11 year olds are doing this.
Mark, thanks to you and AI, I now know what a ‘tuck shop’ is. It seems that the UK is ahead of the US in both the teaching of financial literacy to our young students, as well as the appreciation of full flavored beer among our adults. It would be interesting to see how the financial habits of recent graduates of each country compare.
That’s all for now, I’ll be faffing about in the garage if anyone needs me.