By Amy Joyce Washington Post Staff Writer Friday, March 19, 1999; Page A01
Clad in baggy jeans and surrounded by sports memorabilia, 16-year-old Jason Belinkie is expertly surfing the Internet on his home computer. And like so many of his friends today, he is checking in on his latest love: the ups and downs of his favorite stocks.
Abercrombie & Fitch Co., America Online Inc., Intel Corp., Microsoft Corp. and Amazon.com Inc. top his list. Belinkie says he likes to buy stocks for things he uses, but this did lead to one bad choice a couple of years ago when he bought Oakley Inc. stock. Everyone was buying Oakley sunglasses, he explained. But soon after he bought the stock (not to mention the sunglasses), the price went down a bit. His theory: You need to buy Oakleys only once every couple of years. He said he didn't really lose much money on that venture. So he shrugged, sold it and read up on his next pick.
"I do this just about every day," Belinkie, a junior at Bethesda's Walt Whitman High School, said one recent afternoon as he typed in "stock quotes" on the America Online home page, glanced at the numbers and then traveled to the day's analyst advice. Belinkie wouldn't disclose any figures, but he said, "My earnings have about doubled."
Talk about a new generation. The national stock market craze has caught on with a growing number of teenagers, for whom swapping investment tips is just the latest schoolyard chatter. There are no reliable estimates of how many teens are buying and selling stocks -- all trading accounts must be owned by adults. But evidence abounds of their rising interest in the market. High school stock clubs are bulging (Whitman's has about 80 members), and about 200,000 teens across the country are playing the Stock Market Game 2000 (known as SMG2000) -- one of several national computer stock market trading games available on the Internet. That is up more than 50 percent from last fall.
And many local teens say they are investing real money.
Belinkie said several of his stock choices have resulted from friends' advice. He heard from a friend at school that Abercrombie & Fitch was going to report unusually high earnings, so he did what he usually does when he gets a tip: called his dad at work and asked to buy a few shares. His father, Harris Belinkie, a financial adviser, said he has never had to veto a choice yet.
Another friend of Belinkie's told him about a stock called Theglobe.com Inc. one morning. "It went up from like 5 to 85 then down to 20 in one day," he said in amazement. "But I couldn't buy it because I was in school."
To trade stocks, a minor needs a parent to set up an account with an adult named as custodian to approve any transactions, said Thomas Bird, vice president of investments with brokerage house Legg Mason Inc. in Greenbelt. Several teens interviewed said they received stocks as gifts from relatives and then developed an interest after their parents encouraged them to follow their performance.
"Once my dad told me a lot of my money was invested, I wanted to see how it was going," Belinkie said.
Meeghan Long, a 17-year-old senior at Bishop Ireton High School in Alexandria, said her parents set up her portfolio when she was in eighth grade, primarily with money inherited from her grandmother.
Long said she likes to reinvest the dividends in different stocks. "I have to get my parents' signature and stuff," she said. "But I make the suggestions." Long said she started with $9,000 in her stocks and recently estimated they are worth about $23,000.
Her stocks include Microsoft and Procter & Gamble Co. and a couple of biotech stocks. She said her interest in biotechnology stems from her desire to become a doctor, and from suggestions from her mother, who is a nurse at Children's Hospital. Long keeps up on her investments regularly. "I use the Internet to chart," she said. "But if you just read the headlines of the paper it helps to stay on top of what happens."
So what's the draw? Some of the same factors fueling the investment boom among adults: talk of overnight fortunes being made with some risky stock picks, speculation that Social Security may disappear and rising computer savvy.
Many of their parents -- about 41 percent of U.S. households -- own stocks, a sharp increase from previous years attributed in part to the rapid growth in tax-advantaged retirement accounts since the 1980s. And more households are trading, thanks to the advent of discount brokerages and online services, which have dramatically reduced the costs and increased the ease of buying and selling stocks compared with the days when virtually all trading was conducted through fully commissioned brokers.
Meanwhile, teenagers have grown up with personal computers. Belinkie, for example, likened his stock trading to playing a video game. If it weren't for computers, he said, he wouldn't be as interested: "Access wouldn't be as easy. I don't really pay attention to annual reports."
Teens also have the confidence that springs from having only seen the market go up. They are too young to remember the last protracted downturn in the stock market -- a quarter-century ago.
"Kids want to know about investing," said Mike Rauer, a history teacher and founder of the economics club at Bishop Ireton, which has 56 members -- of whom 50 are trading real stocks. "All of them think about the stock market because it is doing so well right now."
The market is also hard to avoid these days. "The stock market is always in the news," said Allen Cox, Maryland regional Stock Market Game Coordinator and an economics teacher at High Point High School in Beltsville. "And most kids are getting the word that Social Security won't be around for them."
"I'm investing for the long term," said Sean Cary, a senior at Bishop Ireton. "I'm starting my retirement account."
Cary's parents set up his account a couple of years ago, but he has controlled it since his 18th birthday in January. His grandmother gave him money for stocks for Christmas about a year ago and let him make his picks. He has held on to them since then. He laughed and said that he hopes his stock investments will allow him to "retire at 35 and travel the world."
Cary invested in what many of his trading peers seem to pick -- Internet, computer and other high-technology stocks. "I had been researching some computer companies because I knew technology stocks have been doing well," he said.
Dell Computer Corp. was one of his picks. He also has Walt Disney Co. "I try to diversify as much as possible," he explained.
And he gets good practice because he is playing SMG2000, the national game sponsored by the Securities Industry Association's Foundation for Economic Education. Belinkie and his classmates played the market game last semester but are now playing the Yahoo version.
At a recent prep meeting for the market game at Ireton, the desks were full of team members, including some who were sitting on the floor for lack of space.
"Man, this stuff is expensive," said one student looking at stock prices. "My net gain last month was . . .," started another. And when Rauer, the teacher, said something in passing about the price of a particular stock being $50 a share, he was promptly corrected by a voice in the back of the room: "Nuh-uh. It's $85."
Rauer participated in the New York Stock Exchange Seminar for teachers last summer and initiated the Bishop Ireton Economics Club this year. In addition to playing the stock market game, the club also focuses on consumer education, investment information and personal finance.
"We play the stock market game to give the students real experience without the penalties of losing their investment if they buy the wrong stocks," Rauer said. He also teaches the students to watch out for scams and what to do if they believe they are victimized by unfair practices.
Because of space restrictions and a limited number of computers, the Bishop Ireton club had to turn away teens who wanted to join after the first 56 paid $10 a head to for membership, he said. Some students use the club and game to hone their already sharp investing skills. Others are trying out the market for the first time.
Sherman Patrick, a 15-year-old sophomore at Ireton, said his parents are handling his "real" stocks, but since joining the club he's starting to get interested in them himself.
Patrick hopes to start playing a more active role in his own financial future after he plays the stock market game for a while and applies it to real life. Although he is "concerned about using real money," he plans to start soon, "when I get used to doing it," he said.
"I kind of like the risky stocks for the games," Belinkie said. "But in the real world of stocks, I would never pick something as risky because you'd lose a lot of money. Microsoft is a sure thing. . . . Intel is good even though it's been going down lately. But it'll go back up."
The number of Washington area teens playing the stock market game is rising fast. The Maryland region that includes schools from the District, Baltimore and the Washington suburbs has more than 1,400 teams (of about five players each) playing this spring, up from 26 teams in 1985, according to the Securities Industry Association. The Virginia region that includes the Washington suburbs has 753 teams playing this spring, When the game started in 1993, there were only 100 teams in that region.
"I think there's more of an interest in the stock market, or at least a greater awareness," said Dick Roth, co-director and economics teacher at Edmund Burke school, in the District. He often hears students casually talk about stocks to each other. "It's like young boys talking about carburetors 15, 20 years ago."
Aleksy Nazarov, 18, who immigrated from Ukraine and started learning English just two years ago, said he became interested in the stock market when he started playing the stock market game. "We made huge profits, so I decided to do it with real money," said the senior at High Point High School in Beltsville. "When I started, I was doing quite well, until the crisis in Brazil. That threw me off."
Nazarov, who calls himself an active trader on E-Trade, an online brokerage, said he mostly buys Internet stocks. He's hoping to go to Harvard University to study international relations and his new love -- economics.
Do his parents trade in the stock market, too? Not on your life, said Nazarov -- he doesn't think they would understand it.
Ann Cockrell, a teacher at Whitman, said she is surprised sometimes by her students' market savvy. "They start throwing around names like [Federal Reserve Chairman] Alan Greenspan like they talked to him yesterday," she said.
At the same time, the stock market game has humbled some hotshots. "A couple of kids have said this is harder than they thought it was," Cockrell said, "so they come away with a respect for this and [discover] it's difficult to do."
Some local teachers say the teen stock enthusiasts overall tend to be male, from homes with computers and with parents who are involved in the market but who are not necessarily affluent. For Belinkie and his friends, the explanation is much simpler: "It's like gambling. Fun."
And Belinkie's not worried about a market crash affecting his stocks. He said, "I would just hold on to them. Microsoft or something like that would never just die."
Getting in the Game
The Stock Market Game is available to students in grades 4 through 12.
To get more information on the game, visit www.smg2000.org or call the Securities Industry Association at 212-618-0519.
If you are in the Maryland region, call The Council on Economic Education in Maryland at 410-830-2137
Virginia Council of Economic Education: 804-828-1627.
The District doesn't have its own coordinator, but 15 schools are involved in the game through the Maryland Region. The Washington Post serves as a sponsor and can be reached at 334-4544.
Registration fee varies.