The NEW stock game
I've seen many PF bloggers argue that finance needs to be a far larger part of the high school education. Which is to say any part of a high school education!
I didn't have to take personal finance. It was that or economics. I chose economics for reasons I cannot remember, except I had already learned how to write checks and balance a checkbook thanks to some work in another school program. So I really didn't want to go through all that again.
I remember just about nothing from my economics class, except for a vague recollection of supply and demand charts. But in a recent post, J Money had an excellent point: Why do schools teach about the stock market and not about credit cards etc?
I completely agree. Kids shouldn't be playing the stock market game when they know nothing about credit cards, saving or various investment options -- all of which ought to be covered in a mandatory personal finance class.
Unfortunately, if anything, it seems like curricula are getting less stringent, rather than more so. Maybe I'm just lucky. Alaska has some of the highest teacher salaries in the country. Which is to say, you can just about make a living as a non-university professor. Imagine!
Seriously, though, I had a fabulous education and took a lot of honors/AP classes because I'm a total nerd. And yet. I walked away knowing nothing about CDs, mutual funds, bonds, etc. I was lucky enough to have parents who preached financial responsibility and caution/restraint when using credit cards.
Meanwhile, it seems like the bulk of personal finance classes teach the stock market game. Kids pick some stocks and watch them over time. You keep an eye on the highs and lows. And that's about it.
Um... Isn't that just teaching kids that stocks are a game? They're fun, you can make money, and you can just pick some at random and hope they increase in value!
Here's my proposal for the stock market game:
- When studying stocks, you have to at least review the crash of '29. Preferably, you'd also cover the Internet bubble in the '90s and some of this past decades' debacles.
- You can't choose stocks at random. You select around three companies, read through the annual reports (as best you can, anyway) and write up a paper on why you chose the company you did.
- Track any major news going on with that company -- layoffs, expansions, problems with products -- and note how it affects stock price. You should also have to keep a log or do a quickie Q&A on whether you'd sell, keep or buy up more shares.
I think this is the best way to teach kids about the stock market. I took AP US History and that sums up my entire education about the stock market. (At least, before I worked for a start-up that tracked SEC information. I can now actually read SEC filings and make (some) sense of them.)
In other words, I learn to completely distrust the market. I learned that it's usually based on blind fear and/or blind enthusiasm.
I suppose this is definitely not the worst lesson to take away about the market. Still, if you want any kind of retirement account, you need to understand the stock market better than just to treat it cautiously.
Hence the new stock market game I'm proposing.
What do you think? Would you add or subtract to the rules I mentioned?