I have written about this many times.  It is also an issue the deeply resounds within my friend’s soul, who is very involved with an elite private school.

I don’t understand how my yeshiva, more than 6 decades ago, knew this was important.   (Remember- their focus was on religious instruction!)   That was despite that  thousands of public schools and elite private institutions ignored the pressing need.

It is how I became deeply interested in the stock market back when I was a tyke.  Our class was given $ 1000 (no, not in real money) and we were to buy and sell stocks- even options (puts and calls)- over the course of a few months.  The ones in class who had the most money at the end of the program would win an award.

Yes, our teacher also taught us what a put and a call was.  You know what they are right?

A put means we believe a stock is going to tank, it’s going to lose value.  And, buying a put meant we were spending a small amount of money (it was typically 10% of the price of the stock) to obtain the right to sell the stock at a specified price some time in the future.  A call was basically the opposite.  We spend a small amount of money (that 10% again) to buy the stock at certain price.  It meant we thought the value would rise.   (If we were right, we could keep the difference.  If we were wrong, we had to ante up the sale price in full.)

Now, that 10% wasn’t a hard and fast rule- it depended on how likely it would be that our guess was right.  If the world agreed with this premise, then the option (that’s what the puts and calls are called) are pretty expensive.  If we were considered looney birds, then the option price was pretty small (since the owner of the equity would get to keep the option price and we would get nothing, we’d just lose out option bid).

So, at least to us young kids, the game was pretty simple- we were charged a small fee for buying and selling the stock (I seem to remember it was 5%) and there was no minimum purchase or sale (it could be as little as 1 share or as many shares as we had funds to buy).  Two of us (me and my friend Carl) played the options part of the market, but held one or two stocks that we knew would hold value.  But, most of the kids bought and sold whole stocks.

The concept was we’d learn about the stock market, how to read stock market charts (back then they were encoded in eighths of a dollar, now it’s dollars and cents), how to compute percentages, and how to keep accurate records.

And, I don’t remember who else won.

But, over the next period, the stock market game was over.  Now,  it was our job to run a household.  We were provided a weekly salary (I don’t remember how much, but don’t forget, this was 1959 ) and we had to pay rent, buy food, pay for utilities, and transportation to our jobs (fuel, no service or car payments).

All of these games were arranged to teach us fiscal responsibility, as well as mathematics and record keeping.

It is this sort of program that my buddy has been trying to get his prep school (the one he went to decades and decades ago) to offer to their students.  And, while Andy has been willing to fund the program, the school has demurred.  (One could almost say refused…)

To be honest, I understand how well my school’s programs prepared me for life. I was able to handle credit cards, a paycheck, covering my household needs at a very early age.  I knew that the credit card- if used correctly- was an aid to extend my money.  Never spend more than I could afford, but I only needed to part with my money at the end of the statement cycle- so I always had money for an emergency.

These skills have clearly not been spread among our kids and our citizenry.  It’s one of the reasons why some 40% of all Americans don’t have $ 400 to cover them for an emergency.  And, why most Americans have no clue how the stock market works.

(When I was filling in, teaching  math at the University of the District of Columbia some three decades ago, I was amazed that my students had no clue how to deal with retail establishments, getting change figuring out taxes, where those purchases fit in their budget, etc.  College level folks!)

We’ll finish this discussion tomorrow.