Warwick's Young Money take lead in stock contest

The KPMG Investment Challenge kicked off last month, with Warwick Academy’s Young Money taking an early lead.

The team is one of 15 from eight of the island’s schools taking part.

The annual competition sees the school teams investing a virtual $50,000 in the stock market over a six-month period.

The team that makes the most cash wins.

So far, the money is going into technology and telecommunications.

Internet companies, digital consumer goods and telecommunications technology feature strongly in this year’s portfolios, with many students banking on Apple Inc. and Research in Motion, creators of the BlackBerry.

This is the sixth year KPMG has held the contest.

The company provides a mentor to each school and encourages visits by clients and other business leaders.

The accountancy firm launched the contest in 2005 as part of its commitment to education and youth development.

It is aimed at students in their fourth year of senior school and lets them experience the challenge and thrill of trading in stocks and shares without the risk of losing real money.

KPMG monitors each team’s trading activity and compiles a monthly performance analysis of each team’s portfolio, which will be printed in the Bermuda Sun.

In May, at the end of the six-month trading period, the final results will be announced.

The top performing teams receive prizes of $10,000, $6,000 and $4,000.

KPMG says the “investment club”-style contest aims to “stimulate interest in the concept of investing for the future”.

Students learn about capital markets and types of securities. They gain an understanding of how international business activities impact global and local stock markets.

The teens also become aware of financial career opportunities, such as accountancy.

Wanda Armstrong of KPMG said: “The initial portfolios of all teams are highly concentrated in U.S. and Canadian securities.

“The teams have chosen to invest primarily in common stocks and ADRs (American Depository Receipts), with only a small portion being allocated to preference shares. 

“Across industry sectors, the portfolios are very well diversified, with consumer products, basic materials and technology sectors leading the way.

“All teams are required to hold at least one Bermudian company in their portfolios, with most opting for well known names such as Bermuda Commercial Bank, ACE and Bank of Butterfield.”

By investing in everything from BlackBerrys to gold mines, Bermuda’s students hope to strike it lucky in the KPMG Investment Challenge.

Fifteen teams from eight senior schools are competing for a $10,000 prize by investing a virtual $50,000 each on the stock exchange.

Trading opened on October 25, with the first valuation four days later.

The students say they are already learning important life skills and business acumen.

Andrew Dobson, the teacher mentoring the Dobby’s Traders team from Warwick Academy, said: “The challenge gives students an understanding of the workings of the stock exchange and types of securities. Also, there are real possibilities in Bermuda for someone wanting a career in finance, so this does have quite a lot of benefit.”

This year, Internet and telecommunications investments feature strongly in his team’s portfolio.

Amanda Brown, 16, said the team’s strategy would be one of “risk taking”. She added: “This challenge is a good way to learn about business in real life rather than just learning from a text book.

“Luck also comes into it but based on the stocks we’ve chosen, we have a good chance of doing well.”

Rival school team Young Money has invested 40 per cent of their funds in technology stocks, such as Microsoft and Apple Inc. Isabella Arnold, 16, said: “We’ve also invested in Walmart because of the Christmas season coming up.

“This challenge is all about risk, about looking at each aspect of every option.”

Megan Berry, 16, added: “You also learn a lot about teamwork and time management.”

Last year’s newcomers, Somersfield Academy, are entering two teams this year.

Teacher Irina Marjanovic said: “Last year we were very inexperienced but this year we are better organized. We have LOM sending us their Blue Book and we are using their bulletins to guide us.

“The students are quickly realizing the importance of diversifying a portfolio, rather than putting their eggs into one basket. They are also learning the importance of doing your research.”

Daniel Nash, 14, of Somersfield’s Mucho Dinero team, said: “It’s important how you handle money in real life and this teaches you how finance works.”

Brother Liam Nash, 15, of rival team the Cheese Pirates, said: “Dealing with money is a reality of life and this teaches you a lot about investment, the stock market and how the economy works.”

Both school teams have invested in raw material mining stocks.

Liam said: “Mining stocks are quite high risk but there is a lot of potential in the ones we have chosen. One of our companies has recently found a lot of gold.”