'Investors' get rich quick, reap top niche

Could you turn $100,000 into $192,805 in three months? A group of high school kids did, winning third place among 3,700 teams.

By RICK GERSHMAN
© St. Petersburg Times
published December 21, 2001

NORTHDALE -- Kevin Johnson is one of the state's hottest stock analysts. Over 13 weeks, in an unstable market, he and his team virtually doubled a $100,000 investment.

His team accomplished this remarkable return despite tightly controlled regulations, enormous competition and even corporate sabotage.

Oh, and one other thing: homework.

Johnson, 18, is a Gaither High School senior who lives in North Lakes. The money his team invested was not real, but his stock-picking ability certainly is.

He led a seven-member team from Gaither that finished No. 3 in the state -- out of about 3,700 teams -- in the Fall 2001 Florida Stock Market Simulation. It is an investment exercise in which students simulate buying and selling real stocks, which appreciate or depreciate based on the stocks' actual performance each day.

In other words, had the students used real money, they would have made real money. When the session ended Dec. 7, Johnson's team had turned $100,000 into $192,805, good for third place in the state and first place in Gaither's 337-team region. Gaither alone had 45 teams.

"It not only gets them ready for the real world, it is the real world," said Hal Pochop,the team's economics instructor. "They're using techniques that a high-level trader would. They're using real-world strategy and doing real-world things."

Second in command to Johnson was Josh Tway, a 17-year-old senior. Rounding out the crew are Gary Amos, Natasha Brown, Renae Cazares, Steve Mai and Juan Nunes.

Johnson contributed vast knowledge of the market, though "everyone's input was taken into consideration," he said. A real-life investor, he says he has watched the market since he was about 8 years old. His mother, Tamara Mahoney, said his interest in the stock market really took off in mid 2000, when she gave him money to invest. All through childhood, she said, "he always had something going on," from baseball cards to Beanie Babies. "He worked the flea market, liquidating his own toys. He's always been a collector of sports memorabilia. ... He bought anything he thought would have a mass appeal."

Tway was happy to join forces with Johnson.

"(My job) was basically sitting there, being his little lackey, doing research," Tway laughed. "I just want to learn as much as I can."

When Pochop gave students in his first-period economics class a signup sheet to choose teams, Tway said, Johnson "was the first person to sign up. I was the second. I knew I had to be on his team."

Johnson's team actually entered the competition's final day ranked No. 1 in the state with $201,269. When the market closed, though, his team's portfolio had lost a little over $8,000, still enough for third.

The first-place team was from Randazzo School, a private, 205-student school in South Florida's Coconut Creek. Randazzo finished with a portfolio valued at $205,509. Second place was Lake Howell High in Winter Park, with $194,181.

Those returns were far greater than those of other state leaders. In the simulation's spring 2001 session, the top team finished with slightly more than $160,000.

"These teams did phenomenally," said Jennifer Thomas, who oversees the simulation program for the Florida Council on Economic Education. "These are some of the highest returns we've had."

Said Pochop: "What's great is (Johnson's team) did it all on their own. They didn't get any special help, any special considerations or anything."

Military, even airline stocks

Tway and other team members helped with research, but they deferred to Johnson to pick the stocks, and he proved prescient.

Every team was allowed 50 trades. Since the simulation began Sept. 17 -- the Monday the market reopened after the Sept. 11 terrorist attacks -- Johnson took advantage of the subsequent 684-point Dow Jones drop for some good buying opportunities.

Military and defense contractors seemed like good options in an America headed for war. Johnson also went for gold and technology stocks. Both did well.

Johnson's team got in on the semiconductor industry at the start of October, right at the industry's bottom. "You could see there was value there," Johnson said.

A Nortel Networks buy was one big winner. The team bought 4,450 shares at $5.47 per share. It was up to $8.84 when the game ended, netting a cool $15,000. Even better was Gateway Inc., which produced almost $17,000 when the team's 4,200 shares increased more than $4 over five weeks.

Though it might have seemed a strange time to invest in an airline, the team picked up 1,875 shares in Northwest Airlines at the start of October and held on for two months. Shares were up $4.60 when the team sold, a profit of over $8,500.

The success of Johnson's team might have bred some jealousy. The crew was the target of corporate sabotage that took Johnson from big business to Big Macs. To trade, teams sign on to a computer using an ID and a password. On Oct. 12, someone apparently got hold of the password for Johnson's team and bought 550 shares of McDonald's Corp.

Though the amount of shares was relatively small, the buy price was $29.49 per share, making it a $16,000-plus investment. Worse, the unknown saboteur used up two trades in buying the stock. Every trade is valuable, as each team is allotted 50.

Johnson and Tway later changed their password. The stock closed at $26.90, so the team eventually lost about $1,400 on the deal. But it didn't affect the portfolio too adversely, and despite the final day drop, Johnson's team still finished higher than 99.9 percent of its competition.

"Going for first place meant going high-risk, being really aggressive, and everyone on the team showed a lot of trust," Johnson said. "Everyone knew we would all ride together when a stock was going down. Early on, we dropped to 305th in the region (out of 337), and a week later, we were 15th in the region."

Though Johnson envisions a career writing for high-tech firms as an independent contractor, he said he would like to get a Series 7 license, the first step to becoming a stockbroker or investment manager.

Then again, after his stellar simulation run, he might not have to wait that long.

"I'm waiting on investment firms to give me a call," he joked.

© 2006 • All Rights Reserved • Tampa Bay Times
490 First Avenue South • St. Petersburg, FL 33701 • 727-893-8111

Contact the Times | Privacy Policy
Standard of Accuracy | Terms, Conditions & Copyright