Fifth grade students rule the stock market

May 19, 2008 7:36:55 PM PDT
It has been a nail-biting time to be a stock market investor with all the wild ups and downs this year. However, there's a stock club on the Peninsula that's always made a killing -- in good years and bad.

Judging from the money they've made in this volatile market, members of the stock club at Westborough Middle School in South San Francisco may be more savvy than real life traders... and they're only in the fifth grade.

The club has won so many student stock market competitions over the years, there's not enough room on the classroom walls for all the plaques. This year, the club will undoubtedly win again.

With make-believe seed money of $100,000, these young capitalists made a profit of $50,000 in just 12 weeks.

"My favorites are the really small companies, cause they tend to shoot up and down so you either make a lot of money or lose a lot of money," says Nolan Isozaki.

"We just looked up the biggest gainers and we risked a lot," says Nicholas Cheng.

That included selling short -- the risky practice of making money from stocks when they drop in value.

"We did some short-selling, like if we thought if one stock was really high and thought it was maybe going to come down, something like that," says Mohanad Alazzeh.

The young traders even made money from the March collapse of Bear Stearns. They bought the investment bank's stock when it plummeted to five dollars then sold it at eight when they got wind of the buyout.

"It actually went up to $12, so we still made money, but we could have made a little more," says Omar Bakir.

"They really get into it. They really get involved," says advisor Steve Patane.

Patane started the club 14 years ago to get students interested in math, but he never thought they'd have this much fun.

"Oh, these kids are funny. They'll jump for joy when they're making money, but all of sudden it will tick down a dime or so, and they're having a panic attack," says Patane.

The trading may be make-believe, but the kids take it seriously. They spend time researching their picks.

"You don't just buy some random stock that's going up. You have to look at what they're doing and what their company is about," says Nicholas Cheng.

"If you walk into say a Costco or something, and you see all these products, that tells you that world round they're pretty big, and the big companies, it takes more than one thing to make them fall," says Mohanad Alazzeh.

In competitions, their goal is to make as much money in 12 weeks, so they take big risks. But they have different advice for you and me.

Vic Lee: "Do you think you ought to be safer and more conservative in your stocks?" (All raise their hands)

And what were some of their favorite stock picks?

"I think the blue chips are the best, such as Disney," says Mohanad Alazzeh.

"I would say Microsoft and Yahoo," says Omar Bakir.

"GE cause it makes all our appliances and we need them," says Jason Leung.

The best advice the kids can give you in this up and down market is don't panic. A stuffed animal that sits atop their computer is a constant reminder to them that a bear can always turn into a bull.

ABC7 Extra:

If you're interested in getting more stock market wisdom from our young traders, we're streaming Vic Lee's entire interview with them in the media player above. You can also click here to watch.


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