Posted at 20:46h
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Here is an excerpt from the SIFMA Foundation’s official release, along with the winning essay!
It takes years to build up the financial savvy to navigate the markets. But MaryAnn Rompf is decades ahead of the game. She just won distinction as the Rhode Island first place winner and the eighth place national winner in the SIFMA Foundation’s InvestWrite® essay competition with McGraw Hill Financial. Rompf, an 8th grader at St. Michael’s Country Day School, Newport, Rhode Island claims this recognition in the middle school division in the Spring 2013 competition.
InvestWrite invites students to develop the personal financial savvy needed to make real-world financial decisions with confidence and a deeper understanding of opportunities, consequences, and benefits. Students consider real-world economic events and trends, conduct research online, develop investment recommendations and, in the process, gain the skills to prepare for their own financial future. They work in groups during the Stock Market Game program but then write essays individually about their experience. Rompf is one of 20,000 students across the nation who take the InvestWrite challenge each year.
In her essay, Rompf was asked to write about a purchase or sale that her Stock Market Game team had agreed upon and what might have happened to their portfolio if they had taken the opposite action. Rompf’s team decided to short sell the stock of healthcare giant Johnson and Johnson. Due to the stock’s slow growth reputation, they believed it was at a high, but after a loss of $600 they realized they did not do their homework well enough. Rompf writes about her lessons learned, “The next time I choose to short sell a stock, I know that I will put a lot of my time into researching not only the single stock, but the entire sector as a whole. I have learned that to minimize risks I have to research thoroughly, find a stock that pays a dividend, diversify my entire portfolio, and perform in a good economic environment.”
The Spring 2013 winning InvestWrite essay composed by Rompf was chosen through rigorous judging by thousands of teachers and industry professionals who evaluate students’ understanding of asset allocation, the stock market, and factors that drive investments as well as their expression of investment ideas in essay form. Rompf will receive a $150 AMEX gift check, a trophy, and a certificate.
Rompf’s teachers, Kenneth Hileman and Megan Sullivan, say that in addition to her award-winning InvestWrite essay, Rompf also authored an essay on Gandhi that was awarded 2nd place in a Rhode Island middle school competition. Rompf is an accomplished junior tennis player ranked #2 in New England singles. Hileman, the school’s math teacher, says this is St. Michael’s second top 10 finish in the last three years.
Hileman, Sullivan, and Rompf were recognized at the SIFMA Foundation Stock Market Game Awards Ceremony at Salve Regina University on Thursday, May 30th.
Text of MaryAnn Rompf’s Winning Essay:
“It is extremely important to choose a good stock, mutual fund, or bond because depending on how it does determines the outcome of your portfolio. Most importantly it is best for your investments to be well diversified in several different ways. Your portfolio is completely based on your sales and purchases, and as sales and purchases are made the portfolio is altered. The essence of investing is purchasing investments that you believe will grow, and selling them when you think the time is right. In order to effectively make decisions on selling or purchasing specific stocks one must do some research. You must figure out the company’s competitors, market cap, recent activity, how the sector is doing and if the stock pays dividends. Market conditions can change any investment regardless of the research and planning. The performance of a stock, good or bad, can impact any portfolio because the portfolio is affected by each of its investments.
The stock that our group disagreed on short selling was Johnson and Johnson. Johnson and Johnson, part of the healthcare sector, is currently selling at $81.53 (Friday, March 29, 4:00 PM). Its average volume is 9.7 billion. Its market cap is 227.9 billion. Johnson and Johnson owns several companies that are part of research development, producing, and selling products in the healthcare area. This was a difficult decision because short selling is always risky especially in an up market. Johnson and Johnson has a reputation for slow growth. When we purchased the stock we thought it was at a high, but clearly we were wrong. We would’ve made 8.007% (Friday, March 29) on our 100 shares of Johnson and Johnson, that is equivalent to $604.40. Obviously, we shouldn’t have short sold this stock. We didn’t do enough research. The next time I choose to short sell a stock, I know that I will put a lot of my time into researching not only the single stock, but the entire sector as a whole.
The stock that our group agreed to buy the most is Hewlett Packard. Hewlett Packard, part of the technology sector (cyclical), is currently selling at $23.84 (Friday PM). Its average volume is 28 million, and its market cap is 46.3 billion. Hewlett Packard provides products, technologies, solutions, software, and services globally for individuals and small to large businesses. We agreed to buy Hewlett Packard because it was at one of its lowest points in the market during the stock market game. When we purchased it, it was only at $19.39 per share. We bought 150 shares of it. We did some research on some stocks that are competitors of Hewlett Packard in order to make our decision. Apple, being one of its major competitors, has been having some trouble lately. Once we knew that we couldn’t buy Apple because of its high price, we chose to purchase HPQ. If Apple wasn’t doing too well then we knew that we shouldn’t buy it. This was a good decision on on our part. To make our decision even more valuable, Hewlett Packard has been doing the best among others in the technology sector in the past three months. It has gone up 64.51% in the past three months. It has gone up 16.34% in the past month. This was a great choice for our team because it has helped our portfolio tremendously.
If we hadn’t agreed to buy Hewlett Packard, we would not have had the stock in our portfolio. That would’ve been bad for our portfolio because it has gained us a large percentage of our money. We have made 22.937% ($667.20) on it as of March 29, 2012. There are many factors that may have caused the stock to behave as it did. The entire market is coming back, and it has been positive for the last six months. As of January 2013, unemployment in the United States is around 7.9% according to Trading Economics. It has gone down tremendously since July 2011 when it was at 9.1%. Corporate profits have increased a lot. Hewlett Packard performed with the stock market as a whole.
I’ve learned that in this economy with historically low interest rates, making investments in the stock market is one of the only ways to make money in today’s financial environment. I have learned that to minimize risks I have to research thoroughly, find a stock that pays a dividend, diversify my entire portfolio, and perform in a good economic environment. There is never any guarantee, but by using this strategy, I decrease my risks and I increase my chance for making a good return on my investment.”