On a given Monday during the school lunch hour, nine Parker School students can be found crunching numbers (and lunch) and performing company data analysis in the library. They are members of the school’s new Investment Club.
The research they are doing is real and so is the money they will use to invest. With close supervision and guidance, the students will be making investment decisions and utilizing assets from a fund set up specifically for the club. The fund has been created solely with monetary gifts from donors with an interest in financial education.
“Thanks to Scott Elliott and Rick Baird, our students now have the chance to learn about economics and finance in a decidedly ‘hands-on’ way,” said Parker Headmaster Carl Sturges. “This is truly a unique opportunity for high schoolers to experience the inner workings of an investment operation.”
The Investment Club, open to Parker juniors and seniors, is the brainchild of part-time Big Island resident Rick Baird, a portfolio manager at Yellowstone Partners and founder of Wind River Advisors (now a part of Yellowstone Partners, which has offices in Idaho, Utah, Ohio and Washington).
Scott Elliott, a portfolio manager and partner at Wellington Management (based in Boston, Mass.) is running the club, and Baird will join him in October. Elliott’s area of expertise is asset allocation and he has worked with investors in over 30 countries. He is also the parent of two Parker Lower School students.
“Financial decision-making is an unavoidable part of adulthood, and evidence suggests that most adults do a poor job of managing their finances,” said Elliott. “There is no easy path to great investment returns and few are capable of being truly outstanding investors. However, there are very real steps we can learn that will meaningfully improve our portfolio’s long-term performance. These young adults won’t be investment gurus at the completion of the year, but they will have had exposure to the complex world of investing in a fun and safe environment, and they will be able to think more critically about the financial decisions that lay ahead of them.”
The main goals of the club are to teach the students: 1) how to be informed financial decision-makers as they enter their adult life by examining many of the key financial decisions they are likely to face; 2) to examine and avoid unnecessary costs of investment management, brokerage and other fees; 3) to avoid typical investing mistakes; and 4) how companies, the economy and financial markets really work.
To prepare for the Investment Club, the students were required over the summer to read Peter Lynch’s Learn and Earn, and Joel Greenblatt’s The Little Book That Beats the Market. Elliott is a firm believer in the importance of financial education. “There is a real need to help kids develop good financial decision-making habits at an early age….to prepare them for the many financial decisions they will ultimately face; at a minimum, to help them avoid the most common and costly mistakes,” he said.
The Investment Club students take turns every few months serving in officer roles and also covering specific industry sectors.
Junior Maia Tarnas, who currently serves as president of the club and covers the health care industry, said, “As someone who had never really thought about investment before, Investment Club has opened my eyes to the world of business, finance, the stock market, bonds, loans…everything! The economy is such an important part of our daily lives and this is such a great opportunity to learn about it. In addition to learning about the stock market, we get to learn about items such as college loans and renting and buying homes and cars, which is extremely useful.”
Now that the students have completed the financial and valuation analysis of the companies they cover, next week they begin developing and debating their investment recommendations. Elliott, for whom teaching has been a longtime dream, is enjoying his new role as Investment Club Advisor. He said, “It is inspiring for me to have such a motivated, bright, and curious group of students as we have in the Investment Club.”
For more information, please visit www.parkerschoolhawaii.org.