Spring 2006 “InvestWrite” Competition Showcases Analytical Thinking and Writing Skills of Students Nationwide
Students Explore Risk Tolerance, Sector Analysis and Mutual Funds in National Contest
New York, N.Y., May 2, 2006 – The Foundation for Investor Education (FIE), a nonprofit organization dedicated to raising the level of investor education across the nation, today announced the top three winners of its spring 2006 “InvestWrite” stock market student essay competition. The Foundation’s “InvestWrite” competition is an innovative extension of its award-winning Stock Market Game™ (SMG) program.
The three top winning students from grades four through 12, chosen from 1,032 classrooms across the country, are from schools in Parkville, Mo.; Mountain View, Calif.; and Naugatuck, Conn. In all, 30 students were cited for their understanding of the proposed subject matter, their analysis of the topic, and the quality of their essays.
This teacher-designed writing competition reinforces students’ critical thinking skills and bridges classroom learning in subjects such as mathematics, social studies, economics, and finance with the practical, real-world knowledge required for successful investing and saving.
“Through ‘InvestWrite,’ students demonstrate their analytical knowledge of saving and investing,” said Donna C. Peterman, the Foundation’s chairman and senior vice president, PNC Financial Services Group. “Students apply what they learn in the classroom to real life situations and experience firsthand the results of their investment decisions.”
The top three winners were:
Elementary Division (4-5): Daniel Wenkai Chen, a student in Ms. Judy Pinkston’s fifth-grade class Hawley Hall Elementary School in Parkville, Mo., competed against 427 other fourth and fifth-grade students nationwide to win the top prize. The Elementary Division focused on investors’ risk tolerance. In his entry entitled Risk Factor, Chen described his risk tolerance as moderate and noted, “To identify a moderate stock, you must make sure it’s still growing and earning at least 10 percent or more each year.” His “portfolio” included Union Pacific Corporation, Amgen Inc., JC Penney Company, Globalsantafe Corporation, and Delphi Financial Group, Inc. Chen cautioned potential investors to, “make sure you don’t buy the stock at too high a price so that its PE (price earning ratio) will be below 20 percent. You should also try to get stocks that pay regular dividends.” His stock pick of Union Pacific certainly met his criteria with “a growth rate of 21 percent with a forward PE of 15.49 …and a dividend of 1.4 percent.” As a moderate risk-tolerant investor, Chen also advised diversifying into different sectors as well as including some international stocks in a well-balanced portfolio.
Middle School Division (6-8): Adam Spencley, a sixth grader in Ms. Agnes Kaiser’s class at Crittenden Middle School, Mountain View, Calif., competed against 493 entries submitted from students in the sixth through eighth grades. Middle School competitors were asked to analyze the future performance of an industry sector over the next five years. Spencley analyzed the health care industry and the economic impact of America’s aging baby boomer population on this sector.
His essay examined America’s demographics noting that the estimated number of boomers in the U.S. is over 78 million, or 25 percent of the total population. Spencley explained, “As these boomers age, there will be increases in health care spending, prescription drugs, nursing homes/assisted living centers, and cosmetic surgery.” He also described how Part D of the Medicare Prescription Drug Improvement and Modernization Act of 2003 would impact every segment of the health care sector. “Under this plan, the United States government will now help pay for prescription drugs. These payments are expected to exceed those of both individuals and the private health insurance companies. More boomers will be able to get prescription drugs through Medicare and the amount of money spent on prescription drugs will increase. It is estimated that it will rise to $369 million by the year 2010,” Spencley noted.
Increases in health care spending in the coming years will prove a boon for the health care investment sector. As Spencley explained, “The increase in spending will create more jobs in the health field, increase wages for its workers, and increase the demand for health care goods and services.” Spencley is hedging his “portfolio” with health care stocks and estimates “that the health care investment sector, which increased by 8.4 percent over the last year, will continue to do well over the next four years. Health care stocks are a good option for investors because they consistently yield profitable returns.”
High School Division (9-12): Stanley Fofano, an eleventh grader at Naugatuck High School in Naugatuck, Conn., was the High School Division champion. Ms. Johanna Walsh, Fofano’s economics teacher, submitted his entry, which was chosen over 351 other high school students nationwide. Fofano’s essay, Mutual Funds Vs. Stocks, analyzed the financial impact of investing in a blue-chip mutual fund over a stock ranked high in that fund. In his entry, he evaluated the merits of both investment strategies given the hypothetical scenario of needing a $5,000 down payment for a new home in five years with $3,500 to invest today.
Fofano debated investing the amount in the T. Rowe Price Blue Chip Growth mutual fund or in Microsoft, one of the fund’s top holdings. While Fofano acknowledged that investing solely in Microsoft might yield a higher annual rate of return, a mutual fund offers the benefit of diversification and security. He explained, “T. Rowe’s mutual fund may lessen any disadvantages brought by Microsoft’s stocks because of its wide variety of stock holdings.” His essay also noted, “By investing in a mutual fund, I would also be relying on T. Rowe Price’s strategy of investment rather than on my own concept of investing… these investors are constantly watching the market and, because of this, they are more likely to know on which stocks to invest.”
“The InvestWrite contest is a classroom staple on teaching America’s youth critical financial literacy skills, ” said Kathy Floyd, the executive director of the Stock Market Game™ Program. “We continue to be impressed with the quality and thoughtfulness of these essays."
Teachers nationwide participating in the program performed the first round of judging for the essay competition. Independent, volunteer judges drawn from industry, education and local communities then chose the winners from among 1,271 essays submitted by the teachers.
Each of the top-three student winners will receive a variety of prizes, including a laptop computer, a trip to either Disney World or New York City with their parents, and a $1,000 savings bond. Second- and third-place winners also receive laptops and other prizes, while seven additional finalists in each category receive $100 gift cards. The first-place student’s teacher will also receive a laptop, a subscription to the Wall Street Journal and a five-day trip to New York for the New York Stock Exchange’s Teachers’ Workshop Program.
The Stock Market Game Program™, administered by the Foundation for Investor Education, an affiliate of the Securities Industry Association, is an online education program used in thousands of classrooms nationwide to help teach math, social studies, business, economics, and language skills while focusing on the importance of long-term savings and investment. More information about the SMG Program is available at: http://www.stockmarketgame.org/