Download New Hampshire High Schooler is Capital Markets

Press Release
EMBARGOED UNTIL: April 12, 2016 9:15 AM ET
Contact: Liz Pierce, 212-313-1173, [email protected]
New Hampshire High Schooler is Capital Markets Genius and
SIFMA Foundation’s InvestWrite® Winner
17-year-old Alexander Rhodes Pens Award-Winning Capital Markets Essay and is
Declared Among Best-in-Nation for SIFMA Foundation’s Fall 2015 InvestWrite® Competition
Concord, NH, April 12, 2016– The global financial markets aren’t easy to analyze but that is exactly how
one 17-year-old from New Hampshire just became a national winner of the SIFMA Foundation’s Fall 2015
InvestWrite® competition. Alexander Rhodes, a senior at Concord High School, won second place nationally
and first place for New Hampshire in the high school division of InvestWrite. The program challenges
students to consider an investing scenario and make recommendations that incorporate short- and long-term
goals.
“Alexander’s innovative ideas and remarkable essay earned him the SIFMA Foundation’s ‘InvestWrite
Genius’ title this year,” said Melanie Mortimer, President of the SIFMA Foundation. “We commend
Alexander and his teacher, William Crowley, for this achievement. Helping students better understand our
economy, our markets, the role of investors, and how to make good investments will pay dividends for the
students, their education, and the New Hampshire economy.”
InvestWrite serves as a culminating activity for 600,000 4th-12th graders nationwide who compete each year in
the SIFMA Foundation’s Stock Market Game™, an online simulation of the global capital markets that
reinforces STEM learning, 21st Century skills, economics, investing and personal finance. Since InvestWrite’s
inception in 2004, more than 185,000 students have submitted essays. Alexander Rhodes is among 20,000
students this school year taking the InvestWrite challenge, which bridges classroom learning in mathematics,
social studies, and language arts with the practical research and knowledge required for long-term personal
financial planning.
In his essay, Rhodes was asked to research the job responsibilities of a capital markets analyst and then, with a
focus on long-term goals, select two investments, explain why these investments were chosen and describe
how the national and global economic environment would affect them. Rhodes chose Netflix and Vanguard
Health Care Fund, advising, “There are many types of diversity in the market. The first way a portfolio can be
diverse is to be divided among different types of companies. This means that not all one's investments are in
a certain industry such as technology or entertainment. If an investor is in this situation where all his or her
investments are linked in the same genre of companies, the risk factor is extremely high. While investing in
one specific industry may be an excellent short-term, rapid buying and selling strategy, it is by no means an
ideal long-term strategy.”
InvestWrite enables students like Rhodes to develop the personal financial savvy needed to make practical
financial decisions with confidence and gain a deeper understanding of economic opportunities,
consequences, and benefits. Students consider real-world events and news, conduct research online, and
develop investment recommendations. They work in groups during the Stock Market Game program and
then write their InvestWrite essays individually to reflect their critical thinking, analysis and creative talents.
Rhodes participates in varsity track and diving and is a student leader. He is also a musician and has
performed cello at Carnegie Hall. His teacher, William Crowley, commented that Concord High School is the
home of our beloved astronaut Christa McAuliffe who encouraged us to “Reach for the stars”. Crowley
added, “We help students reach for the stars through InvestWrite.”
Winning InvestWrite essays are chosen through rigorous judging by thousands of teachers and industry
professionals who evaluate students’ understanding of long-term investing, diversification, the capital
markets, and factors that drive investments as well as their expression of investment ideas in essay form.
An independent study by Learning Point Associates found that students who participated in the SIFMA
Foundation’s Stock Market Game scored significantly higher on mathematics and financial literacy tests than
their peers who did not participate. They also found that teachers who taught The Stock Market Game
reported that the program motivated them to better plan for their own financial futures. The Stock Market
Game has been named the only program that successfully increased scores on the Jumpstart Coalition’s test
of high school students’ financial literacy.
Rhodes and Crowley will be honored at an event to be held at Concord High School, 170 Warren Street,
Concord, NH on April 12, 2016 at 9:15 AM ET.
Winning Essay by Alexander Rhodes: The Most Important Elements of a Long-term Investment Strategy
The stock market is extremely volatile and can often be daunting to new investors. With prices constantly changing and occurrences
in the world affecting the market on a day-to-day basis, it can appear that the only way to invest is through guessing and short-term
buying and selling of stocks. However, all successful investors know this to be false and have long-term investing strategies so they
are protected no matter what happens in the market. The most important elements of these long-term investment strategies are to
be well diversified among industries, companies of varying sizes, and different risk levels of investments.
There are many types of diversity in the market. The first way a portfolio can be diverse is to be divided among different types of
companies. This means that not all one's investments are in a certain industry such as technology or entertainment. If an investor is
in this situation where all his or her investments are linked in the same genre of companies, the risk factor is extremely high. An
incident could occur overnight affecting this entire industry and thus cause all the investments tied into the industry to plummet.
Someone solely invested in that type of business will suffer much larger consequences than someone who is diversified among
types of companies and has investments to fall back on if several plummet. While investing in one specific industry may be an
excellent short-term, rapid buying and selling strategy, it is by no means an ideal long-term strategy.
For the same reasons that it is imprudent to own stock in one field of the market, it is also rash to only invest in similarly sized
companies. The market is filled with businesses of various sizes. Many are in the development stages and can potentially turn into
mass money makers if stock is purchased in the early stages while they are relatively cheap to own. These smaller companies are
typically under-evaluated and have potential to become thriving corporations. Other companies are much larger, and, though their
stock is more expensive, tend to see slow yet steady growth. By investing in all different sizes of companies, a trader decreases risk
the same way it would decrease if said person was invested in different industries. A government regulation may be imposed or
fiscal or monetary policy could be changed making it more difficult for certain sized businesses to thrive and thus decrease the value
of those size businesses' stocks. Massive companies are also typically subjected to harsh media criticism and their stock can suffer
devastating blows based on negative publicity. Relatively smaller companies don't often suffer as consequential coverage by the
press. If such an incident does occur, an investor who owns stock in various different sized businesses will have a safety net to rely
on in case certain stocks do crash.
One final, important factor to diversification is to own investments of different risk levels. All stocks are at a high risk level. Although
steps can be taken to decrease the risk level in the stock market, the risk is still relatively high. This is why it is important for
someone creating a long-term investment strategy to put their money into other investments of lower risk such as mutual funds,
bonds, or CDs. A mutual fund is essentially a collection of different stocks, typically in one industry, and is managed by
professionals. Since it is already a diverse array of stocks, it has a lower risk factor associated with it. A Certificate of Deposit (CD)
and a bond are low-risk investments as well. An investor buys one with a promise from a bank or the U.S. Government to pay him or
her back a certain amount of time later with a fixed interest rate. By investing in each risk category, the investor increases the
amount of protection available to him and is less likely to lose money in the long-term because his money is spread out. Even if one
category does poorly, he has the other categories to substantiate the loss of one. When all these types of diversification coalesce
into one, a strong long-term investment strategy is formed.
Considering all this, two investments that I would add to my long-term portfolio are Netflix Stock (NFLX), and the Vanguard Health
Care Fund (VGHCX). Netflix is undoubtedly a large conglomerate corporation and although it is expensive, it is not an unreasonably
priced stock. Over the past several years, Netflix has been progressively growing and is a strong company that shows no sign of
disappearing any time soon. It is a wise, large company stock to own and is an excellent stock to have in a long-term investing
portfolio. Possible occurrences that could affect Netflix's success are entertainment companies that offer similar deals to Netflix
rising in popularity. There are many companies in the TV entertainment business, and, in the constantly changing world of
entertainment, it is possible that other companies suddenly rise in popularity. However, Netflix is a firmly established, well-known
company and it is unlikely that it suffers any terrific blows in the near future. Vanguard Health Care Fund is also an excellent
investment to have in a portfolio because it is a mutual fund which makes it low risk, it is in a different industry than Netflix, and it is
one of the top rated mutual funds in America. One way that this fund could be affected is through the changing of the president. The
new president may implement a new law affecting health care and cause the stocks in the fund to suffer a loss. However, it is
unlikely that any new law will be enacted soon and have a large impact on health care. Because these two investments fit the
criteria for a long-term investment strategy of being diversified in risk level, size of company, and type of company, NFLX and
VGHCX are excellent additions to a long-term investment strategy.
-30About the SIFMA Foundation for Investor Education
The SIFMA Foundation is dedicated to fostering knowledge and understanding of the financial markets for
individuals of all backgrounds, with a focus on youth. Drawing on the support and expertise of the financial
industry, the SIFMA Foundation provides financial education programs and tools that strengthen economic
opportunities across communities and increase individuals’ access to the benefits of the global marketplace.
Notable Foundation programs include the Stock Market Game, which has served nearly 16 million students
since it began in 1977, the InvestWrite national essay competition, www.investwrite.org, the Capitol Hill
Challenge, and Invest It Forward. For more information on the work of the SIFMA Foundation, visit
www.sifma.org/foundation.
About SIFMA
SIFMA is the voice of the U.S. securities industry. We represent the broker-dealers, banks and asset managers
whose nearly 1 million employees provide access to the capital markets, raising over $2.5 trillion for
businesses and municipalities in the U.S., serving clients with over $20 trillion in assets and managing more
than $67 trillion in assets for individual and institutional clients including mutual funds and retirement plans.
SIFMA, with offices in New York and Washington, D.C., is the U.S. regional member of the Global Financial
Markets Association (GFMA). For more information, visit www.sifma.org.
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