Two Arkansas School for Mathematics, Sciences and the Arts students proved their financial prowess in The Stock Market Game during the 2020-21 academic school year.
Alec Gatewood, a member of the Class of 2021, and Connor Bailey, a junior, took top honors in this year’s Afterschool semester and yearlong sessions. The contest is sponsored by Economics Arkansas and is a national program of the SIFMA Foundation. It allows students and teachers the opportunity to invest a virtual $100,000 in stocks, bonds and mutual funds throughout a 13-week simulation each school semester. The yearlong session begins in September and ends in April.
Gatewood of Smackover, who will attend New York University Shanghai this fall, won the Fall 2021 and the 2020-21 Yearlong sessions. Gatewood also won top honors in all three 2019-2020 sessions — Fall, Spring and Yearlong. He said he did not expect to win the competition as many times as he did.
“I never would have expected to win five of the six SIFMA Arkansas Economics Stock Market Game competitions during my ASMSA journey,” Gatewood said. “ I have always had an interest in global markets and how events interact with the stock market itself. I remember walking through the hallways of my homeschool and reading articles on various stocks while constantly reviewing the indexes.”
The only session Gatewood did not win while participating as an ASMSA student was the Spring 2021 session. That’s because a fellow ASMSA student was setting records.
Bailey of Paragould won the Spring 2021 session. It was the first time that Bailey had competed in the competition. He said he’s always been interested in the stock market and wanted to try his luck to see if he could master it.
One might say he did. He turned the virtual $100,000 he started with into a more than $1 million portfolio during the session. It was the first time that a student had topped the $1 million-mark in the state competition, said Carl Frank, an ASMSA computer science instructor who serves as the students’ advisor for the competition.
Bailey said he didn’t expect to do as well as he did.
“At the start of the game, I didn’t think reaching the $1 million would even be feasible,” Bailey said. “Once I improved my trading strategy and made a few good trades in a row, my goal became to reach $1 million. I was elated to reach $1 million, and it wouldn’t have been possible without the other people participating in the game setting the bar high from the beginning. I hope my achievement will set new standards for the game to continuously push other traders to be their best in the Stock Market Game.”
Bailey said his strategy changed throughout the game. He initially tried planning long-term investments in different sectors while trying to buy low and sell high. He targeted healthcare, technology and automotive sectors.
“My growth for about the first month was slow and steady, and then Gamestop made me change the way I approached the game,” he said.
Gamestop is a video game, consumer electronics and gaming merchandise retailer. The company’s stock was low as the company’s business had slowed. In January 2021, Gamestop along with several other companies became the focus of an online community of small investors who decided to put a heavy buy into their stock forcing the stock price to quickly rise even as the valuation of the company remained the same. This kind of investment is now called a meme stock for the hype placed on the stock in social media and online forums such as Reddit.
“I first saw Gamestop when it was around $40, but trying to be a conservative investor, I decided to pass on it as I didn’t believe that it was sustainable. It steadily climbed for the next couple of days, and I decided to break from my strategy and buy into it. I sold it the same day I bought into it after the price climbed to almost $50 per share,” Bailey said.
He said the experiment taught him a lot about how drastically stock prices could change in a short period of time. Particularly with the meme stocks, certain stocks would get a lot of build-up on the internet causing it to rise hundreds of percent in a single day.
“I would target these big gainers and determine if they were overvalued or not. If I deemed them to be overvalued, I would then short-sell the stock (borrowing stock and selling it at a higher price with the thought of buying it back at a lower price later). This strategy was where I had most of my success. I often looked at stocks for around an hour per day to try to find new stocks to add to my portfolio,” Bailey said.
Gatewood said he would try to invest in stocks he thought would bear out success in the markets. He would do some speculative investing, but eventually avoided that tactic as it was more volatile.
“To consistently and successfully compete, I constantly reviewed and researched stocks and made educated guesses on how the markets would turn,” Gatewood said. “For instance, during the times of Covid-19, I hedged my bets on a particular vaccine company that I thought would be successful. I was right.
“Also, I chose to invest in innovative and speculative stocks as a method as quick gains. Along the journey, I learned no to put too much money in speculative high beta stocks. I had some huge losses that almost jeopardized winning.”
Gatewood said he has made real investments in the stock market beginning during his freshman year in high school. He said he has doubled his initial investment.
Bailey said he would like to try his luck in the actual stock market. “My strategy was somewhat risky, but I would try to use the same methods as I did in the game as they brought me great success, but I would take fewer risks and invest more in blue-chip stocks.”
To learn more about Economics Arkansas and The Stock Market Game, visit https://www.economicsarkansas.org/for_teachers/stock_market_game.html.