While they wouldn't recommend buying stock in Ed Debevic's '50s diner in Phoenix, a group of 15 Payson High School students thoroughly enjoyed having lunch there last Thursday.
It wasn't the food that made the experience so pleasurable. In fact, the students gave the fare a pretty unanimous thumbs down.
No, it was the awards they were reaping at the luncheon for the strong showing they made in the recently completed Arizona stock market Simulation that made the event memorable. Competing in three-person teams, the 15 juniors and seniors, all members of Tim Fruth's Financial Services class, finished third, fourth, seventh, 16th and 19th out of a field of 234 teams from high schools around the state.
With the most teams finishing in the top 50, PHS was the top performing school in the competition.
"I don't want to use the word 'shocked,'" Fruth said with a sly grin, "but I was pleasantly surprised at how well they did."
During the 10-week trading simulation, which is sponsored by The Arizona Republic, Intel Corporation, Morgan Stanley Dean Witter and the Arizona Corporation Commission, each team invests a hypothetical $100,000 in stocks listed on the New York Stock Exchange, Nasdaq, Amex and mutual funds. The teams then use the Internet to access their portfolios, research stocks, enter trades and view their daily ranking among all state teams in their division.
With final positions based on portfolio values, the five PHS teams finished with respective increases of 29, 28, 13, 8 and 5 percent.
"This was during a time when the stock market plummeted," Fruth said. "The Nasdaq was down 25 percent or so.
"All of our top five teams had good returns, and that's just phenomenal when the stock market is just getting killed."
While the sixth PHS team finished 88th with a portfolio value loss of 4 percent, that still represents a significant improvement over the actual market.
Senior R.C. LaHaye, who is now known among his classmates as R.C. Schwab for his "day-trading personality," is a member of the team that finished fourth. "We were in first place most of they way," he said, "but then we ran out of trades." Each team is allowed just 60 trades.
LaHaye's team attributes much of its success to investing in Internet analysis stocks.
"They upgrade and downgrade stocks, and they ended up paying off best in the end," he said.
Despite his nickname, LaHaye's advice to adults who covet large real-world returns is to stay long term. "Don't day trade," he warned.
While his father dabbles in the market, LaHaye said he didn't solicit any advice from him. "He's got like mutual funds," LaHaye said, "and diversifying is good.
"He just wouldn't get as big a return as quick. But I was also taking a lot bigger chance than somebody who diversifies."
Senior Sara Siverson, whose team came in 16th, said they "just bought a few things and left them." The stocks they invested in included a Vail ski resort and Bausch & Lomb.
"We bought the resort stock because it was ski season, and we bought Baush & Lomb because we read an article about their new products," Siverson said.
Her advice to those who would love to equal her team's 8 percent return is "to do long- term investing and maybe to stick it out. I would stay in for years instead of doing day trading," Siverson said.
The approach that Sara's team used is probably what most people should do, Fruth said.
"They just bought a few things and left them," he said. "That was their style, and there's nothing wrong with that. They made a lot of interest on their money."
Fruth's class is designed to help students make wise consumer decisions "to make sure they are prepared for being out there in the real world." A major part of that is how to manage and invest money.
"I don't know about you, but when I grew up one of the taboo things in the household was talking about money," Fruth said. "I don't want these guys to ever have that excuse that they didn't know about investing and stock markets and getting returns on their money and stuff like that."
Meanwhile, LaHaye and Siverson are anxiously awaiting the next competition, which begins in February. While neither is quite ready to pursue a career in finance, both feel much better prepared to take care of their money in an increasingly complex world.
"I don't think I'd do it for a career, but I sure will for investment," LaHaye said. "This is much better than learning out of a book."
Arizona Stock Market Simulation
Payson High School Top Finishers
(out of 234 teams competing)
Place Team Members Portfolio Value
3rd Ryan Lodge $128,882.11
4th R.C. LaHaye $127,584.38
Jon W. Pelto
7th Stephen Laub $121,276.61
16th Sara Siverson $107,089.53
19th April Cronin $105,205.93