Learn­ing a les­son from the mar­kets

The Daily Telegraph - Your Money - - Stock Market - By Harriet Meyer

SIXTH for­m­ers at St Bartholomew’s School scooped third prize in the Shares4Schools com­pe­ti­tion af­ter do­ing sub­stan­tially bet­ter than most pro­fes­sional fund man­agers.

Luck­ily for the pupils in New­bury, Berk­shire, the com­pe­ti­tion ended be­fore re­cent stock mar­ket set­backs and their port­fo­lio in­creased by about 21 pc from £1,500 to £1,809 be­tween last Oc­to­ber and June this year.

This brought it to near the top of the league ta­ble of 54 schools, and com­pares with growth of less than 14pc on the FTSE 100 in­dex over the same pe­riod. That in­dex is the bench­mark for most Bri­tish unit and in­vest­ment trust man­agers — and many fail to match it.

The school in­vest­ment club con­sisted of 10 stu­dents in Year 12, who started to buy and sell shares in Oc­to­ber last year, meet­ing once a fort­night dur­ing their lunch break af­ter rais­ing the ini­tial £1,500 in­vest­ment pot by ap­proach­ing lo­cal spon­sor Voda­fone. It pro­vided half the sum, with the re­main­der sup­plied by The Share Cen­tre, which runs the com­pe­ti­tion.

Sarah Shilito, head of the Voda­fone UK Foun­da­tion said: “Our aim is to se­lect projects which un­lock the po­ten­tial in young peo­ple, so we were de­lighted to help ed­u­cate stu­dents by in­vest­ing in this ini­tia­tive.”

Phil Gray, 53, a teacher of eco­nomics and busi­ness stud­ies, who over­saw the com­pe­ti­tion, added: “We ben­e­fited from a group of stu­dents with a flair for fi­nan­cial af­fairs, who were in­ter­ested in how the mar­ket works.

The port­fo­lio is in­vested through an on­line deal­ing ac­count with The Share Cen­tre, and con­trolled by teach­ers or adults au­tho­rised by the school. Rules dic­tate that the team had to make one share trade or more each month, and that at least 50pc of the port­fo­lio had to be ac­tively traded.

The St Bartholomew’s team had a care­ful stock-pick­ing strat­egy, en­sur­ing they had some rel­a­tively se­cure hold­ings in ‘blue chip’ or large com­pany shares. How­ever, they took a high-risk approach in some re­spects by hold­ing just four com­pa­nies, with a few lit­tle­known stocks. Mr Gray said: “We bought one stock to start with, then two more a few weeks later. In Jan­uary we bought a fourth, choos­ing com­pa­nies be­cause they were do­ing well and their shares showed a steady rise.”

As a solid base, they chose Tesco and Bar­clays. They bought £400 worth of shares in Tesco at £3.93 in De­cem­ber last year, and sold half to­wards the end of Jan­uary at £4.15, keep­ing the re­main­der un­til the end, when they sold them at £4.40.

Mr Gray said: “I en­cour­aged them to read back­ground in­for­ma­tion on the hold­ings, but didn’t go into tech­ni­cal anal­y­sis.

“I pre­ferred them to read news­pa­pers and web­sites to get tips on which stocks to pick, which in turn makes the com­pe­ti­tion come alive for them.”

How­ever, the star stock, from which they prof­ited most, was Party Gam­ing, the world’s largest on­line gam­ing com­pany, which is listed on the FTSE 250 in­dex.

The club bought two lots of shares, one for £400 in Novem­ber last year, and an­other for £300 in Jan­uary, both when it was trad­ing at about 28p. They sold them at a healthy 45p in March.

Mr Gray said: “The stu­dents de­cided to buy as there had been a fall in the share price when on­line gam­ing was ef­fec­tively shut down in the United States.

“They thought the stock was un­der­val­ued and likely to rise, and when it was clear they had made a lot of money they de­cided it was a good time to get out.”

An­other stock on which the club took a gam­ble was Prother­ics, a phar­ma­ceu­ti­cal com­pany listed on the Al­ter­na­tive In­vest­ment Mar­ket (Aim). They bought 370 shares for 79p in Jan­uary, but sold them at a loss for 73p in June. Ev­ery school has an equal chance in the Shares4Schools com­pe­ti­tion. While Eton Col­lege has pro­duced more than its share of se­nior fi­nanciers over the years, it ranked 45th out of 55 schools at the end of this year’s com­pe­ti­tion.

To find out more, go to www.shares4schools.org. Schools that would like to par­tic­i­pate in the 2007/08 com­pe­ti­tion should reg­is­ter on­line be­fore Septem­ber 29.

For more in­for­ma­tion on this year’s com­pe­ti­tion, go to www. tele­graph.co.uk/shares4schools

Flair for fi­nance: teacher Phil Gray and his bud­ding St Bartholomew’s bro­kers

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