Don’t put your daughter on the trading floor, Mrs Worthington
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Who on earth thought that this was a good idea?
Wilbraham & Monson Academy, a boarding school in Massachusetts, will officially unveil a classroom that simulates a stock-market trading floor. “Students can use state-of-the-art financial-markets software to learn to research, analyze, and decipher patterns in the context of a financial trading environment,” the school said.
The key word here is “patterns”. But it doesn’t take a student of Nassim Taleb’s Fooled by Randomness to know that “researching patterns” is a mug’s game. What’s more, there’s a world of difference between financial literacy, which is a good thing, and teaching kids how to trade stocks, which is a stunningly bad idea doomed to result in vast amounts of wealth evaporating needlessly. As for the “state-of-the-art financial-markets software”, does anybody think that’s a good thing any more?
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Perhaps the purpose is to teach students about finance? Sure, technical trading is complete BS. However, few if any high school students are exposed to financial markets as part of their curriculum.
It certainly seems like a valid endeavor to me. If more people understood how financial markets work and don’t work perhaps we would have more effective regulators.
I thought some of the technical stuff worked, but only because people thought it worked. For example, if enough people think pattern X is followed by an increase in price, they\’ll buy the stock when pattern X appears, causing the price to go up.
Coming from an engineering background, such positive-feedback loops give me the shivers, but they seem to be built into the whole financial system.
I completely support the children of the wealthy learning how to day trade, or yet another example of educators completely missing the difference and relative importance of analysis and synthesis.
Growing up in small-town North Carolina, I created a model portfolio of stocks for a class project in third grade. It was simplified: we picked companies out of the newspaper that were present in our daily lives (and in the process learned just how prevalent companies like GE and ConAgra were), and we learned a bit about the seeming arbitrariness of the stock market. The early introduction to the market didn’t prompt me to day trade my allowance; rather, it instilled a healthy skepticism of prognostication that has left me more careful with my investments than I might otherwise have been.
I think it’s a bit foolhardy to latch on to the word “patterns” in the article and decry a useful example of financial literacy. There are a number of lessons to be learned from the absence of patterns in price trends, as well as their presence. Namely, there’s a great deal of research in behavioral economics about the creation and deflation of asset price bubbles in artificial trading environments. Software that can accurately simulate a trading environment ought to demonstrate very quickly how easy it is to lose your shirt; how exactly is that a bad thing?
One could argue that the more the kids learn about how the markets actually work, the better their decisions will be. Hopefully running their own market will tip them off to “hey, there’s no reason this racket will just print money!”
(Though that “researching patterns” phrase does look bad regarding their intents…)
Why when people talk about markets, they are almost exclusively talking about exchanges where financial instruments take place. You would be much better off teaching kids about real markets – the market for computers, cell phones, televisions, cars.
The financial economy only exists to the degree that it facilitates the real economy.
What, I read it as they were setting up an algo desk. Top notch, Wilbraham & Monson!
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