Students make a killing in the stock market

May 12, 2009 1:38:40 PM PDT
If your portfolio has turned upside down, bleeds red ink, and looks black and blue, ABC7 knows some eighth graders who might make your investment strategist's face turn white with embarrassment.

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In 15 weeks this winter and spring, a team from Abbott Middle School in San Mateo turned $100,000 into $361,000. During that same period, the market lost six percent.

There is just one catch. The kids did not use real money. They were playing the Stock Market Game, sponsored by and Merrill Lynch, in which more than 20,000 students across the state make investments, and pay fees, and see losses or gains.

Abbott won among middle schools, due partly to having a "ringer" in teacher, Andy Anagnosto, who helped his team win the state title last year as well.

"I spent two decades as a broker for Merrill Lynch," Anagnosto said. "I lived it 20 hours a day."

Andy left the firm to teach algebra three years ago. "I wanted to live a more normal life," he said.

And, since he had been investing all of that time, he says he could afford the move.

The contest has become a passion for the teacher and his students. Eighth graders Nestor Agiurre, J. D. Ginnini, and Anthony Poimbeouf met every day, reading the news and trends.

"We turned our portfolio over three or four times," one of them said.

The team made its biggest gain by selling short on City Group and Bank of America. When those stocks fell, the portfolio made $80,000 in one day. Then, they bought long, and made money as the stocks went up.

"It's a matter of common sense, and sometimes just keeping your eyes open," Anagnostou said, who recalls receiving advice from Nestor, who had visited a busy U-Haul one weekend. "Nestor said it would be a good investment."

Nestor was correct. U-Haul made a moderate gain, but Anagnostou sees the victory more from a teacher's perspective. "Here's a guy who used to be a trouble maker, and suddenly, he was thinking critically," Anagnostou said.

ABC7 asked Anagnosto if he has investment advice for the rest of the world.

"Buy the market when there is blood on the street; when people think the market is terrible, that is the time to buy," he said.

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