The kids are alright

As you likely know by now, I have spent the last few months teaching an investing and personal finance elective at a local high school. It has been a busy few weeks, but the semester is now over. Graduation has come and gone, grades are in, and, finally, time for a few reflections.

First off, congrats to the Notre Dame Academy class of 2023. I can’t say enough about these kids. Humanity has apparently evolved quite a bit since my high school days. They are bright and inquisitive and all of those things, but also much more human and more full of empathy and love than I remember from my high school days.

Being around the high school the last few months has given me a glimpse into the future. I’m happy to say the future is going to turn out just fine.

Second, hug a teacher. Seriously, appreciate all the work they do. I was a tourist with one simple elective and not a lot of kids and they were actually interested in the topic (by in large) and it was still a ton of work. Yes, it is somewhat gratifying work. But a ton of work. I always knew I was not qualified to home school, and wanted my daughter out of the house and in school where she would be surrounded by adults she respects (unlike at home). This semester has done nothing to diminish my respect for those who do this for a living.

Now, on to investing. We did a lot of things in the class. Everything from how to balance a checkbook to reflections on risk tolerance to the dangers of credit to the value of compounding. But most of the focus was on investing. Every few weeks students would have to pitch a stock to the class, and at the end of the class the students would vote on which stock from the list we would add to our in-class (non-cash) portfolio.

Happy to say we ended up market-beaters, by an impressive 28 percentage points.

I should probably keep it to that, and not give you more details. But in the spirit of full disclosure, it is good I waited until Friday, May 26, the day after Nvidia reported earnings, to close things out. (A coincidence, I swear.)

The Investing 101 full class portfolio:

First thing to notice is, the kids were true to Peter Lynch and did invest in what they knew. There was a lot of video gamers, a lot of sports, and a lot of fast casual dining in our pitch meetings. And we did ok even without Nvidia’s wonderful Friday. I’m proud of them.

And yes, there is of course some irony in the entire exercise. The guy who preaches thinking in terms of 10-to-20-year intervals is judging stocks based on a couple of months. I have no good response to that. This was obviously a game, a simulation. Something to (1.) perhaps get them interested and (2.) definitely fill time in class. But please, do not judge your real-life success based on a couple of months worth of results. And Etsy probably remains my personal favorite from that list, so…

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The kids certainly didn’t pick all winners. And a few pretty clearly, especially early in the semester, Googled “best stock to buy right now” or something like that and ended up with some pink sheet dogs. Hopefully that was a lesson learned. Our worst performers, unadjusted to the market… There are a couple on this list I had to look up myself.

But probably my favorite lesson of the endeavor, and perhaps the most on-brand outcome I could have dreamed for, involved the individual with the best portfolio. In addition to tracking the stocks the students voted to include in our combined portfolio, we also tracked everyone’s individual picks. The winning portfolio:

Without getting into the weeds, let me just say that the winning student would not have been the student the class would have picked to win back in January. When the winner was revealed, there was a lot of moaning from the room. “But his picks are so boring.” “Anyone could have picked those stocks.” “He didn’t take any risks.”

Indeed, you won’t find Nvidia in that list. Or Spotify (up 65% from when a classmate picked it), or ASML (up 17%). There was no GameStop (up 21% from the January pick). But there was also no Vision Energy, Lumen, or Mogul Energy.

It was, as they said, boring. Beautifully boring. And I like the chances of that group continuing to do pretty well twenty years down the road.

Somehow, the cosmos aligned in just the right way that my experiment in teaching kids about investing concluded with the lesson that, well, it is not supposed to be difficult.

With the grades in, I am officially retired from teaching. Yet another job I couldn’t keep for more than a few months. But it was a good few months! It also means you have one last chance to support the school by clicking here (keyword: “Lou’s a nerd”) before I turn my attention elsewhere.

Walking away, I am reasonably sure at least one of these kids will take the time to fill out the 401k paperwork on the first day of their first job out of college. Who knows: With a little luck, perhaps maybe one of them will even pick some boring stock and let it ride for 40 years until retirement.

If they do, I’ll consider my time in education a success.

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