"The good that came out of that was that they have very balanced portfolios," he adds. "They are very diverse, and you don't see any team that is too heavily invested in one industry or the other. I would describe their risk tolerance as moderate. They are not high-risk or low-risk investors; they are trying to make slow and steady gains. Nobody is coming into this with the expectation that they are going to make a million dollars or see supernatural portfolio growth -- even though some of the girls have proven us wrong with some of their returns."
He stresses the importance of financial education at an early age."If you look at the American population today, we are facing a retirement crisis for the baby boomers and the next generation to follow because some of the public supports may not be there in the long term -- Social Security -- in the way it has been and so forth," Cathey says. "For the individual to really reach a comfortable retirement level it takes much more than just a simple savings plan. You need to take advantage of 401(k) programs and you need to understand the opportunities for your money to make money for you in an investment opportunity. That is why we try to give the girls that very full, broad exposure.""The key really for us is early exposure," he adds. "A lot of adults don't know the ins and outs, since they haven't grown up practicing those disciplines, and it's a very tough change for them to make at this point in their life. Early exposure to a group of girls who are 12 to 18 gives them the practice now, before there is real financial impact to them. In far too many homes, especially in underserved areas, your first exposure to the checkbook is when you get your first job. Your parents don't sit you down and talk about it, so there is essentially no practice for you to have before your financial decisions have consequences."Thierry Yungenge, senior auditor for ING U.S. Corporate Audit Services, is a volunteer for a new Investment Challenge Team in Holyoke. He has been impressed by how the girls transform curiosity into strategy."They ask questions about what they read or hear on the radio," he says. "Investment becomes more involved and part of their daily life. If they hear something about unemployment, they ask me, 'How is that affecting our portfolio?' It has opened their eyes to investing and the economy and it will follow them in their lives into the future."
"We have always emphasized that we are long-term investors, we should do research, we should buy something we know, and with that they are not as worried about a stock going down," Yungenge says. "It can be nerve-racking when you see your portfolio and holdings going down. They know, however, that you do your research, don't worry about the daily or per-second changes in the value and think long term."Cathy is also optimistic that the lessons learned will keep the girls on a steady, profitable pace."This program gives them a chance to see how the money grows, as well as how it might be adversely impacted by market conditions," he says. "They key here is to let them see that these are not reasons to make a drastic move. Those are things you have to understand will happen in the market so that you don't miss out on a rebound or comeback opportunity because you were too quick to change your portfolio allocation. It is not about the short term, it is not about what you can see today, it is a lifelong practice in saving and investing."Alexis, 16, a junior in high school, is the president of the Denver-based investing team. While she doesn't think she will pursue financial services as a career path ("math isn't really my strong point," she says) she does think the experience has changed her for the better.Before the experience, she thought of investing as something for "older people." "But I'm 15 and I know all of this," she says. "Now I look at it as something that is really fun and it's like, 'Wow. I can learn all about this.' It does become fascinating to know about the S&P 500 and things like that. Once I got into it I realized it can be real fun, and it's something I know I'll keep with me."The key to her team's success, she says, lies in their very democratic approach to picking investments.
"As a team we have to come to an understanding on what to do with our portfolio," she says. "What's good about my team is that everybody respects everybody else's opinion. If two people don't agree, we are going to go back to it and debate the positives and the negatives. Then we'll move on and maybe come back to it. We try to have everybody at the same level of understanding."How have the portfolios done?Most have ranged between a 5% and 10% return. Loren says that over two years, the top team has even managed a 38% return.Don't go looking for any hot stock tips, however. Just like professional portfolio managers, the girls are hesitant to reveal too much about their specific buys."We don't give specifics because we try to keep the investments of the teams somewhat confidential from the other teams, so they don't try to piggyback," he says.There is one example he's willing to share, however. One of the teams, researching Starbucks(SBUX), learned of its expansion plans and, in response, made a play on Green Mountain Coffee Roasters(GMCR) well ahead of the two companies forging a partnership for Keurig brewing systems in March."They were ahead of the game," he says. "That's the kind of savvy we didn't expect upfront but are seeing from all the teams.">To contact the writer of this article, click here: Joe Mont. >To order reprints of this article, click here: Reprints
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