Pupils polish trading skills

SOME of the youngest, brightest minds from across the kingdom are putting their trading skills to the test in a pioneering investment programme which is now in its 14th consecutive year.

TradeQuest - The Investment Trading Challenge, hosted by the Bahrain Bourse, is a business-education partnership.

It was piloted by Bahrain School in 1996 and was designed to give its high school economics students a glimpse of the realities and challenges of investing in the real world.

It has since expanded to now include seven teams from private schools and one team representing the government schools.

Each team is coached by investment advisors from financial institutions in Bahrain. TradeQuest teams are each given a virtual capital of $4,000,000 to invest in scrips listed on the New York Stock Exchange and BD500,000 on stocks listed on the Bahrain Bourse. This programme brings together some of the youngest, brightest minds from across the kingdom.

The Bahrain School TradeQuest Team's motto is 'Working together for a better tomorrow.'

Their trading portfolio is based on socially responsible investing (SRI) - an investment strategy which seeks to maximise financial returns bearing in mind the welfare of society.

While researching stocks, team members use a well defined criteria to ensure that companies in which they invest follow corporate practices that promote good governance, care for the environment, human rights, donations, and are not embroiled in controversies, lawsuits or inappropriate business practices.

This is in addition to the strong focus on the analysis and selection of stocks, risk management, compliance with TradeQuest rules and regulations and more importantly, teamwork.

The SRI criteria is in addition to the students' traditional methodology of analysing scrips, a temporary document that represents a portion of a share of stock, often issued after a stock split or spin-off, based on industry prospects, the firms' financial strength and performance, the capital, the quality of assets, management, equity and liquidity.

It is an innovative approach in this post-crisis economy. After all, the underlying causes of the recent financial crisis can be attributed to infectious greed, reckless leveraging and a lack of understanding of the inherent risks in the financial sector and its products.

The students have a lot to say about their ability to be socially responsible AND profitable.

Minna Jaffery, 17, the team leader, has been part of the TradeQuest Programme for two consecutive years. Her responsibility in the role is heavy, but she enjoys the experience. She said: "Although our strategy requires more research, it's worth the time and the effort, because overall, we're helping to make a difference."

Minna bought into the unique strategy because it pays out! "Socially responsible investing not only ensures sustainability, it also works in the long run. In the past two years, Bahrain School has used its SRI-based strategy in TradeQuest, and we have made positive returns."

Vance Austin, 17, team risk manager for the Bahrain Bourse, has learned economics from the team. "I have learned more about economics in the last several months than in my entire student career. I have learned how to manage money in the stock market.

"It has made me realise just how important team work is in the business world. The word team did not make much sense to me in the past but because of this activity I have had to re-evaluate what the word 'team' means and how it can be a blessing."

Zenith Taskin, 18, is team dealer and portfolio manager for the NYSE. She confessed to a steep learning curve since September. "I didn't know what in the world a 'portfolio manager' meant. I didn't know anything about stock markets except that most of the investment committee is fascinated with them."

She has come a long way since then. "From being completely clueless about stock markets, I now find myself addicted to monitoring the movements of sectors and stocks, doing my homework while constantly checking the little dot that keeps moving up and down every minute!" she explaned. "Our best advantage in this competition is definitely the fact that we always help and guide each other, making sure to pick up one another or commend one another at every success."

Deepa Chandrasekhar, senior vice president, chief compliance officer of United Gulf Bank Bahrain (UGB), and Bahrain School's investment advisor for 2010-2011 is delighted at the enthusiasm and diligence of the Bahrain School team.

"This is a fantastic way for students to have the opportunity to learn the principles of investing, without losing real money," she said. "Students are introduced to the concepts of risk vs. reward, as their performance is judged on the Sharpe ratios of their portfolio. They hence realise that it is irrelevant if they earn high returns from their pool of stocks if the volatility of the underlying scrips is high.

"The TradeQuest programme also teaches them some of the softer skills, like the importance of teamwork, delegation of responsibilities and presentation skills."

Randy McCord, Social Studies Department chair at Bahrain School, has co-ordinated the Bahrain School TradeQuest teams since 2003. "It is an effective and authentic learning strategy as well as a powerful unifying force among members. It's better than school!" he said. "I am encouraged to see the students choose responsibility over reckless greed."

TradeQuest director Azam Haq - vice president, Gulf International Bank - has been associated with the programme for 10 years. He acknowledges that although the Bahrain School's team strategy places a disadvantage and an extra burden on them as they are required to give the best performance with a limited number of stocks they can trade in, they have made it 'work like a charm' over the past two years.

It may be a challenging five months with certain nerve-racking trading sessions, but there is no doubt that participants of all teams will come out more knowledgeable and richer with this experience.