Good for them, but the timing seems that they caught the market right on the upswing, as 10 weeks ago was the start of the market really starting to get some gains back.

Its easy to take on more risk when its not real money. I would be interested to see their performances if their grades were directly linked to their performance.

This is tongue-in-cheek, but the sad truth is that this is how plenty of investors view investing.

I got a 3x return in under 24 hours back in November. 2x is for chumps. Silly fifth graders. :D

They are kids. Good for them and I hope they enjoy their trip. Don't get bent out of shape because they did well at an assignment.

@Sean Masters: Oh, and that was with real money, too.

...and I got a buddy of mine a 5x return in the same time period by talking to him for about an hour about basic stock market evaluation. He had a much larger investment than I did, which allowed him to diversify and take advantage of high volatility across multiple industries.

...and my fantasy portfolio (i.e. "play money" as these 5th grades did) is up around a 12x return right now.

It's really, really easy to make money in the stock market if you just learn the basics and don't go tossing money in on a whim.

Correction: if you lose money in stocks, you're dumber than THESE fifth graders. I wonder how many of those 1,500 teams lost money?

Plus, I bet I could take that whole team in a fight.

@Sean Masters: Then how come so few actually make any decent money on stocks?

@HIV 2 Elway: I would agree. Most people do fantastic if they do a fictional stock contest. They take greater risks and they'll sell stocks quicker than if it was real money. Those who invest seriously will generally hold stocks hoping for things like dividends and such.

Bonus question: How many of us would have a real $100,000 to deal with? How would these fifth graders do with an amount the 'average' person has to invest? Perhaps just 5k?

@dragonfire81: Amateurs tend to jump on waves after its too late. They are growth buyers instead of value. They jump in when the S&P is already high and bail too late.

@mgy: Further correction: if you lose money in stocks, you're unluckier than these fifth graders. And even you think that it was smarts that helped them win (which I will concede... with emphasis on helped), then it was probably smarts that came at least partially from parents and teachers. Set a 5th grader off on his own and see how well he does...

@mgy: It's the age-old question: How many fifth-graders can you fight and beat at once?

I'd put my money on 7 for me. The key is to use your bulk and to throw them into each other.

This story is just dumb luck. There were probably dozens of other similar contests going on across the country over the same period of time, and the kids that somehow double their money are the ones everyone pays attention to. Nevermind the 5th grade class that put all their money in GM and lost it all - there's no AP story about the hypothetical money they could have lost.

By the way, Nassim Taleb wrote a great book about this phenomenon: "Fooled by Randomness." He's a bit of a dense writer, but it's a really interesting book.

@mbgrabbe: True, but I'm impressed with the teacher who is covering this topic with kids so young. Hopefully they won't be falling for any Nigerian Price scams in the future.

With the market bouncing back like it is, this seems like a case of just good timing rather than anything else. If these kids has invested in those companies last year, they would have lost money.

Solution for all of our economic troubles: Get rid of child labor laws, fire financial CEOs, employ children. = Profit?

These things always do this. One of my greatest annoyances are my friends who aren't investing but continually say, "man I was going to buy that stock three weeks ago at X shares and look, it's up X% in the last two weeks!"

@mbgrabbe: I would agree if this were an isolated incident, but is it dumb luck the the students of this teacher consistently score at the top year after year? Dumb luck is not usually repeatable.

If you started out investing at the bottom of the market, the only place you can go is up. However, most of us have had money in our 401k and IRA investments for years, so even if the market went up some, we're still down a lot, especially if some of us pulled money out of the market out of fear.

"Never pull out! Even if the shares are worth less, you still have the same number of shares! The market will recover!" has been yelled at me for years.

@HIV 2 Elway: nailed it. Too many amateurs treat the market like a lottery ticket instead of something that requires intelligent thought.

@BuddyGuyMontag: ...or they actually did their 'homework' and were able to predict swings. its pretty easy if you actually look into it instead of putting money into it because the name sounds cool.

10 weeks of play money does not an investment strategy make.
And, seems like Confirmation Bias is pretty strong in this story.

They should sell today.

@stopNgoBeau:

Then whoever told you that was an effing moron.

I sold every single equity in my 401k when the market hit 13,700. Back when everyone was cheering the record market, I shifted into bonds. I stayed there all the way to 9000, then bought back in. That is two moves over three years and I saved about 120K in value that I would have lost.

I bought in too early, and rode the value up and down again since, but I skipped a huge percentage of the market's decline.

Try the Buffett Maxim. "Be fearful when others are greedy, and greedy when others are fearful." Also known as buy low, sell high.

I wonder how many lap dances & jaeger bombs the traders had to buy the kids to get some stock tips out of them...

@Saboth: not necessarily true. They would have gained or lost money based upon the timing of their investment(s).

@ScubaSteveKzoo: Just take one of them by the arms and windmill them around so they kick the others. Then make the one you spun walk away. Hi-larious.

@catskyfire:

That is why they do better. Give anybody something to do with "zero" pressure and they will succeed. The moment you add pressure, people second guess themselves, make bad decisions and fail.

Thousands of teams competed, and only one had spectacular results, and they were being headed by a guy who had won this contest before.

And really, 10 weeks is nothing in terms of investment. I'm sure there are plenty of people making money in the markets by constantly flipping stocks.

@Saboth: But if they were doing the contest last year, I think they would have picked different companies.

Luck and timing definitely play a major role, but thinking and making good educated guesses helps.

@Sean Masters: Actually, there is a theorem known as the random walk theorem. It states that on the average long haul, flipping a coin to make your choices will get you results that mirror the market as a whole. In fact, over the long term, everybody pretty much manages to mirror the market over the long haul. The best fund managers might have a good year or two to yell about, but over the long haul they also tend to mirror the market.

If somebody is saying they consistently beat the market.... well, isn't that what Abramoff said?

@Sean Masters:

True, I'm just saying...pretty much anything is a good investment right now, the problem is not many people have any money to invest.

@gttim:

The market isn't a stochastic process. Brownian motion cannot be used to describe the "value" of a security.

@gttim: any reason that same theory wouldn't expand outward to a group of investors, or the entire population of investors? For instance, if I am constantly and consistently beating the market (which directly contradicts any law of averages), would that simply mean that another person or persons is constantly and consistently losing against the market?

I will have consistently outperformed the market over 10 years come this fall. Are we talking about longer time spans than that? That's fine if we are, again I am just asking, not arguing.

@Swizzler121: its pretty easy if you actually look into it instead of putting money into it because the name sounds cool.

Funny you should say that. I won a stock contest circa 1990 when I was in grade school by investing in Nintendo, Microsoft, Nike, and a couple other names I recognized. I think there was some Playboy in there too. Investing because the name sounds cool or a child knows the brand is sometimes a good play, since those are the ones that are popular or at least marketing themselves well.

reminds me of story from econ class. you have 100 people flipping coins, the object is to flip heads. After 1 flip, 50 people are left. After 2 flips, 25. 3 flips, 12-ish. And so on until there's on person left who must the world's foremost expert on flipping heads.

@starrion:

Exactly. I don't know how many times I have heard someone say "I quit contributing to my 401k because the stock markets are so low". I want to shake them.

Doubling 100k in 10 weeks? Not impressive at all.

@HIV 2 Elway: Exactly. It's pretty much the definition of 'moral hazard', which I'm curious to know if the teacher thought them that. Foundations in economics is much more important than trying to time the market.

@BuddyGuyMontag: I guess I assumed part of the article was to point out that the market the last few months has been one of huge gains and if you bought in since January, like these fifth graders, you're probably up 20% at least.

@gttim: As I get older, I subscribe more and more to the random walk theory.

However, if you can afford them, being heavy on blue chips and collecting the dividend checks is the best way to insulate yourself from risk in equities.

These games are pointless. The only way to win these short term investment scenarios is to invest heavily in crappy stock and get lucky. When my economics class did this in high school the people who chose the crappy penny stock won. The people who won were people who through all their money into a single penny stock. People won with stock that went from like 15 cents a share to like 30 cents a share. I think k-mart was a big winner at the time because it was pretty much worthless since it was a few months after their bankruptcy.

@mbgrabbe: I think it's a great class project. It just isn't something that transfers cleanly to the real world. But a gold star for the teacher: what a great way to get kids interested in things that matter.

All this shows is that timing is key to success in the stock market.

Buying at the right time is only half the battle. You also have to sell at the right time.

@Sean Masters:

Sean, even in a coin-flipping contest (which requires no skill whatsoever), with a large enough sample, some people are going to do well.

If your odds of beating or underperforming the market in a given year were 50/50, then about 1 in 1000 people would beat the mkt 10 years in a row (1/(0.5^10)), purely by random chance.

The question does come to mind, if this guy has so much success with the teams of 5th graders, why isn't he a very wealthy investor who teaches in his spare time?

@mbgrabbe: We only had a grand to work with in my 10th grade Economics class, but I was one of the few to make any money, going with a portfolio heavy on beer (Budweiser), porn (Playboy), and condoms (Trojan). I only made about $23 on that $1,000 in the two weeks or so of our project, but that's still better than losing. And if nothing else, it's enough to buy you a six pack, a Playboy, and a box of condoms...

@NeverLetMeDown: Are we just talking about long positions here? Because there's no way that you can say that all professional day traders who consistantly get the same returns year after year are just getting lucky. If technical analysis is just luck then why don't half of all professional technical traders lose money? People holding short positions, like sean masters, can easily beat the market over and over if they know what they're doing.

Consumerist, don't fall in the "media trap" as has been already said, your headline is misleading and absurd.
If thousands of teams were on the competition just by pure and random luck a team will inevitably bring substantially higher results than the rest of the teams (just as every year a couple of mutual funds "substantially beat the market" and appear on all magazine covers). It has been proven through numerous research (more recently, from Eugene Fama and Kenneth French) that stock picking is a losers game; just by constantly buying and selling you are not only paying commissions, but also losing on the bid-ask spread.
The best way to invest is through a globally diversified portfolio of index funds built according your true risk tolerance and own it forever. Stock picking, market timing, and track record investing are the three worst mistakes that investors can make and it only benefits the financial industry at large.
Those fifth graders were just luckier than 99.9% of the rest of the teams, just as you would statistically expect when a lot of participants are playing the same game.

@Corporate_guy: how is this a bad thing? Or even a luck thing? Would it have been equally "lucky" if these kids had invested heavily into a "crappy penny stock" and lost?