Twice a year Hawaii’s students brush up on economic indicators, research the stock market and participate in the Hawaii Stock Market Simulation.

Hawaii SMS, administered by the Hawai‘i Council on Economic Education, is a fun, interactive educational program that allows students to manage their own financial portfolio by buying and selling stocks and bonds at real-time prices and encourages them to learn how the U.S. market system works. With more than 1,500 students participating across Hawaii this fall, SMS ended on a high note with some impressive final portfolios, including a 41.5 percent return by a four-person team from Hawaii Baptist Academy.

The fall SMS ran Sept. 28-Dec. 4, with teams investing a hypothetical $100,000 in stocks, bonds and mutual funds over the 10-week period. By gaining an understanding of the securities markets, students can learn about the importance of saving and investing. This knowledge will be carried with them when making sound economic and financial decisions for their future.

“Financial independence is high on our list of priorities,” said Lurline Choy, a Sacred Hearts Academy teacher of the Growth Division’s winning team. “Each child is provided with basic (financial) information, and thanks to the Stock Market Simulation program, they are able to have a firsthand experience on how to set up an investment portfolio. No matter what kind of classroom one is working in, financial literacy is a must.”

Many teams worked together to research companies prior to the start of the simulation.

“We researched all of our companies before starting the game,” said Serena Luttropp, a sophomore at Sacred Hearts Academy. “We invested based on how well the companies did over the weeks we were tracking.”

When asked whether anyone experienced anything unexpected throughout the competition, Jeffrey Zhang, a senior at Hawaii Baptist Academy, said, “When we first started the simulation, I proposed the idea of investing in Macy’s because their stock usually increased around Black Friday. At first our group did not approve of it until I showed them the trend of Macy’s stock in the past few years. During November Macy’s stock drastically dropped. My group tried to persuade me into selling it. I resisted, however, because I hoped we would profit from Black Friday. It wasn’t until Macy’s had dropped 21 percent that I finally conceded and sold Macy’s stock.”

Mitchell Chamness, a senior at Hawaii Baptist Academy and one of Zhang’s team members, said he was surprised at the volatility of the stocks.

“I knew stocks fluctuated, but I was surprised how quickly some dropped,” he said. “We had two drop over 20 percent in a matter of a few days.”

After learning about how to invest, students would then come up with their own methodologies for stocks, bonds and mutual-fund selections.

Chelsea Pua, a senior at Kealakehe High School in Kona, said, “I based my selection of the stocks I bought off of the fundamental and technical aspects, such as the EPS (earnings per share) rating, RS (relative strength) rating, revenue and so forth.”

Teachers who have their students participate in the program agree that it can be a useful tool in teaching about saving and investing.

“Hawaii SMS is a great way to introduce the principles of investing and how the stock market really works,” said Stan Herder, a teacher at Hawaii Baptist Academy who oversaw the winning team in the Aggressive Division that posted a 41.5 percent return. “It’s great that students have the opportunity to realistically experience investing without having to invest real money and learn some of the risks as well as rewards in investing. As much as anything, students realize that investing is something they can do.”

The spring SMS begins Feb. 15 and ends April 22. Prior to the start of the simulation, HCEE will offer a professional development workshop on Oahu and Hawaii island for teachers who want to learn more about the program and implement SMS in the classroom. Visit www.hcee.org or call 536-6304 for more information.

HCEE is a statewide partnership of business, labor and education. It is an independent, nonpartisan, nonprofit, 501(c)(3) educational organization. HCEE’s mission is to promote and improve the teaching of economics in Hawaii’s public and private schools and increase the economic and financial literacy of Hawaii’s students and residents.

Hawaii SMS is administered by the Hawai‘i Council on Economic Education in partnership with the Department of Commerce and Consumer Affairs Office of the Securities Commissioner.

Melissa Michaels is senior program and outreach coordinator for the Hawai‘i Council on Economic Education.