School Stock Market Games Reward the Luckiest Bet

Picture a seventh-grade classroom at the end of a 13-week stock market game. One team put its $100,000 into an index fund on day one and left it alone. It finished up 2% and placed somewhere in the middle of the pack. The winning team borrowed to put everything into a single volatile stock that happened to jump 50% the month before the game ended. The winners get a certificate and their names on the morning announcements. Nobody mentions the teams that bought the same kind of stock and lost a third of their money.

The SIFMA Foundation’s Stock Market Game, the best known of these programs, reaches more than 700,000 students a year.¹ Teams start with $100,000 of hypothetical cash and $150,000 of buying power, can borrow at 7% a year, can sell short, and pay a $5 commission per trade. Winners are ranked on total equity or on percentage return above or below the S&P 500.²³ Those rules turn a lesson about investing into a short tournament, and a short tournament rewards a different strategy than a lifetime of saving does.

The short version

A contest that ranks teams by return over a few months pays off for variance. Concentrated, volatile, and leveraged portfolios win most contests, even when they have the same expected return as an index fund, because first place goes to the luckiest outcome. Frequent trading is not required to win and tends to hurt. The games do teach market vocabulary and some math: a randomized trial found gains in both. No study has tracked whether the winners become worse adult investors. Keep the simulation and change the scoring: cap position sizes, turn off margin, grade a written plan and a reflection, and show students the full distribution of outcomes instead of only the winner. Spend most of the financial education time on earning, spending, saving, borrowing, and insurance, where the research on what works is stronger.

What the scoreboard rewards

Stock market games differ by sponsor, state, and teacher settings. The rules matter more than the brand name, so here are two real versions side by side.

Rule	Stock Market Game (national rules)	Capitol Hill Challenge 2026
Starting money	$100,000, buying power $150,000	$100,000, no margin
Short selling	Allowed (10-share minimum, nothing under $3)	Not allowed
Leveraged or inverse ETFs	No explicit rule; “extremely volatile stocks” may be liquidated	Not allowed
Position limit	None	20% of equity per security at purchase
Diversification requirement	None	At least $10,000 each in stocks, bonds, and mutual funds
Length	Several weeks to a school year	About 14 weeks (Jan 26 to May 1)
Ranking	Total equity or return vs. S&P 500	Return vs. S&P 500

Sources: SMG rules and Teacher’s Guide²³, Capitol Hill Challenge 2026 rules⁴.

State coordinators add their own rules. Mississippi’s fall 2026 session runs from September 8 to December 4 and requires each team to make three trades by November 30.⁵

The Capitol Hill Challenge shows that sponsors already know how to limit the worst incentives. It bans margin, short sales, and leveraged or inverse ETFs, caps any one security at 20% of the portfolio, and forces a minimum stake in bonds and mutual funds.⁴ Commercial platforms leave the choice to the teacher: HowTheMarketWorks lets a contest creator switch margin on (a loan equal to the starting cash at 8% interest) and allow short selling.⁶ Even with the guardrails, the ranking itself stays the same: highest return at the deadline wins.

Why a riskier portfolio wins more often

Economists call this kind of contest a rank-order tournament: the prize depends on where you finish relative to everyone else, and nothing else.⁷ A student who wants to win is no longer trying to make the most money on average. The goal becomes beating the best of 29 other teams, and finishing second by a hair pays the same as finishing last.

With a simple normal approximation, the chance that a portfolio with expected return $\mu$ and volatility $\sigma$ beats a winning threshold $c$ is

P(R > c) = 1 - \Phi\!\left(\frac{c - \mu}{\sigma}\right)

When the threshold sits well above the expected return, which it always does for first place, raising $\sigma$ raises the chance of clearing it. Take a 13-week contest where the winner needs a 30% gain. An index fund with 16% annual volatility has a 13-week standard deviation near 8%, so with a 2% expected gain its chance of clearing 30% is about 0.02%. A single stock with about 43% annual volatility has a 13-week standard deviation near 22%, and the same expected gain gives it roughly a 10% chance. Same expected return, roughly 400 times the odds of first place. These are illustrative assumptions; the point is the direction, which holds for any threshold above the expected return.

Professional money managers respond to the same incentive. Brown, Harlow, and Starks studied 334 growth funds from 1976 to 1991 and found that funds trailing at midyear raised their portfolio volatility in the second half more than funds that were ahead.⁸ Chevalier and Ellison found funds adjusting risk near year-end in response to how investor money chases performance.⁹

Students may respond less than professionals do. Kirchler, Lindner, and Weitzel ran experiments with 657 finance professionals and 432 students: rankings increased risk-taking among underperforming professionals and had no effect on the students.¹⁰ So the case here rests on what the scoring rule rewards, which is arithmetic, more than on any claim that every middle schooler games the incentive. Some teams pick stocks they like and hold them. The problem is that when those teams win, the classroom attributes the win to their picks.

Run the contest yourself

The simulator below splits a class evenly into four strategies and gives none of them any skill: every stock has the same expected return as the market. Only the amount of risk differs. It runs 1,000 contests, then holds the same four strategies for 30 years.

With the default settings (30 teams, 13 weeks, 40% stock-specific volatility), the seven teams holding one stock on margin are 23% of the class and win about 69% of the contests. The nine index teams win none. Held for 30 years, the index strategy’s median result is about 7.4 times the starting money. The margin strategy’s median is about 0.17 times, and 87% of its paths end below where they started, mostly through margin calls during drawdowns. The model sets every strategy’s expected contest return equal; the ranking alone produces the gap in wins.

Two settings change the picture in instructive ways. In a bigger contest (100 teams), the margin teams take about 82% of wins, because the more entrants there are, the more extreme the winning outcome has to be. In a tiny class of 8 teams, the index fund occasionally wins, because there are fewer lucky draws to beat. Lowering stock-specific volatility to 25% narrows the 30-year gap but leaves the contest result almost unchanged. The model is stylized: no skill, no taxes, no commissions, and immediate liquidation on a margin call, where the real game gives teams days to respond.

What a first-place finish says about skill

Very little, unless the margin of victory is enormous relative to the number of entrants. A study of the M6 forecasting and investment competition, which drew professional and academic teams, found that the winners’ extreme results were no larger than chance would produce from that many entrants. The same study showed that a team with no ability to earn abnormal returns could still raise its odds of first place by setting its portfolio against the current leaderboard.¹¹ A school contest has more entrants, a shorter window, and less skill to detect.

The real-world record explains why the lesson a winner takes away is risky. Bessembinder found that 57.4% of U.S. common stocks from 1926 to 2016 had lifetime buy-and-hold returns below one-month Treasury bills, and that about 4% of companies accounted for all of the stock market’s net wealth creation.¹² A follow-up on 64,000 global stocks from 1990 to 2020 found that 55.2% of U.S. and 57.4% of non-U.S. stocks trailed T-bills and that 2.4% of firms created all of the net wealth.¹³ A single-stock portfolio is more likely to hold one of the majority that trail cash than one of the rare winners, which is the pattern in the simulator’s 30-year column. An index fund owns the rare winners without needing to find them.

Trading more does not help either. Barber and Odean studied 66,465 brokerage households from 1991 to 1996: the fifth that traded most earned 11.4% a year after costs, against 16.4% for the average household and 17.9% for the market.¹⁴ In Taiwan, fewer than 1% of day traders could predictably earn positive returns after fees.¹⁵ In Brazil, 97% of people who day traded futures for more than 300 days lost money.¹⁶ Professionals fare little better against an index: in 2025, 79% of actively managed U.S. large-cap funds trailed the S&P 500, and over 20 years the figure was 93%.¹⁷

Classroom research points the same way. In a study of 133 university students in a ranked intraday trading simulation with a top-three reward, the most active traders tended to finish lower, while staying near the top required keeping enough money invested in the market.¹⁸ The authors concluded that visible rankings and tournament rewards are design choices that can raise engagement and also encourage overtrading. A randomized experiment on trading app design found that game-like features raised trading volume by about 5% and that people with lower financial literacy preferred the gamified platforms.¹⁹

What the games do well

The strongest evidence on stock market games is favorable. A randomized trial funded by the FINRA Investor Education Foundation assigned 823 classrooms in grades 4 through 10 to play the 15-week Stock Market Game or not during the 2008–09 school year.²⁰ Students who played scored higher on investor knowledge by 0.39 to 0.45 standard deviations depending on grade, and higher in math by 0.25 standard deviations in grades 4 through 6 and 0.17 in grades 7 through 10. The knowledge gains are larger than the 0.15 to 0.33 averages for school financial education reported in the meta-analysis below.

The caveats are worth knowing. The headline numbers estimate the effect on classrooms that actually played, a treatment-on-the-treated estimate, which is larger than the effect of assigning a class to play. The grades 7 through 10 math gain was not statistically significant in the intent-to-treat analysis. The researchers wrote the tests, about 30% of assigned classrooms dropped out, and the control classrooms were teachers who had signed up for the game. A separate study by Harter and Harter found that students who played the game alongside a set of classroom lessons scored higher on a financial literacy test than a comparison group.²¹

Neither study measured what students do with real money later. No research we found follows Stock Market Game players into adulthood to check whether they trade more, concentrate more, or save less. The incentive problem described above is a strong theoretical concern with indirect evidence behind it; long-run harm to students remains unmeasured.

Financial education works, modestly

The broader research on financial education gives a useful sense of scale. A meta-analysis of 37 school-based studies found average gains of 0.33 standard deviations in financial knowledge and 0.07 in financial behavior; restricted to the 18 randomized experiments, the knowledge gain was about 0.15.²² A larger meta-analysis of 76 randomized experiments with more than 160,000 people found positive effects on both knowledge and behavior that held up after correcting for publication bias.²³ An earlier meta-analysis was more pessimistic: interventions explained about 0.1% of the variation in financial behavior, and effects faded within about 20 months, which led the authors to favor teaching close to the moment of a decision.²⁴

State graduation requirements offer evidence from real policy changes. After Georgia, Idaho, and Texas required personal finance instruction, young adults in those states had higher credit scores and fewer delinquencies than comparable young adults elsewhere.²⁵ A study of many state requirements found that personal finance and math mandates slightly reduced delinquency, while economics course mandates were followed by worse debt outcomes.²⁶ Personal finance mandates were also followed by lower payday loan use.²⁷ The type of course matters. As of October 2026, 30 states guarantee a standalone personal finance course before high school graduation.²⁸

What to teach, by age

The national standards from the Council for Economic Education and the Jump$tart Coalition organize personal finance into six areas: earning income, spending, saving, investing, managing credit, and managing risk, with benchmarks at grades 4, 8, and 12.²⁹ Investing is one of six. The Consumer Financial Protection Bureau’s research on how financial capability develops gives a matching sequence: executive function (patience, planning, self-control) develops fastest at ages 3 to 5, financial habits and norms form at ages 6 to 12, and financial knowledge and decision-making skills come at ages 13 to 21.³⁰

Age	Focus	Classroom or kitchen-table activity
3 to 7	Waiting, choosing, saving for a goal	A clear jar for a toy they want; spend some now or wait for the bigger one
8 to 12	Budgets, interest, the difference between saving and investing	A monthly allowance budget with a surprise expense; show interest added each month
13 to 15	Paychecks, credit card interest, what a stock and a fund are	Read a real pay stub; compare paying a credit card in full to paying the minimum
16 to 18	Retirement accounts, index funds, insurance, student loans	A simulated household over 30 years with job changes, emergencies, and market crashes

For investing in particular, five ideas matter more than picking stocks: a share is part ownership of a business; diversification removes the risk of any one company failing but leaves market risk; the amount saved usually matters more than the investment chosen; costs and taxes compound like returns do; and a good decision can have a bad outcome in any single year. That last idea is the one a ranked contest teaches backwards.

How to fix the classroom game

Teachers who already run a stock market game can keep the engagement and change what it rewards.

Turn off margin and short selling where the platform allows it, and cap any one holding near 20% of the portfolio, as the Capitol Hill Challenge does.⁴
Enter an index team. Have the class (or the teacher) hold a total-market fund for the whole session and compare every team to it at the end. Most teams will trail it, which is the lesson.
Show the whole distribution. Plot every team’s final return, then ask which teams took the most risk. The winner and the last-place team often held the same kind of portfolio.
Grade the plan. Require a short written investment plan at the start (goal, time horizon, why each holding) and grade how well the team explained and followed it, regardless of return.
Finish with a reflection. SIFMA’s own InvestWrite essay contest asks students which investment taught them the biggest lesson and how they would use it to build a long-term, diversified portfolio.³¹ That question is a better final exam than the leaderboard.
Rerun the contest. Use the simulator above, or replay last semester’s portfolios over a different 13 weeks, to show how often the winner would have won again.

When the stock game is still worth playing

A stock market game is a good way to teach what a ticker symbol is, how orders and commissions work, why prices move on news, and how percentages compound, and the randomized trial suggests it helps with math. Students who find it fun may pay attention to the rest of the course. Run it with a capped, unleveraged setup, pair it with the lessons on saving, credit, and insurance, and score it on reasoning. The incentive problem matters most when the winning return is the whole grade and the class concludes that its best investor is whoever finished first.

Frequently asked questions

Do you need to day trade to win a school stock market game?

No. The research on classroom simulations and on real investors finds that frequent trading tends to lower returns. What wins a short contest is variance: a few concentrated, volatile holdings, and borrowed money if the rules allow it. A team can buy one stock and never trade again and still have far better odds of first place than an index fund.

Is the Stock Market Game bad for kids?

The evidence does not support that. A randomized trial found that playing raised investor knowledge and math scores. The concern is narrower: ranking teams by short-term return rewards risk-taking that would be a poor choice with real savings, and students may draw the wrong conclusion about what made the winner win.

What should a teacher use instead?

Keep the game if students enjoy it, but disable margin and short selling, cap position sizes, add an index team as a benchmark, and grade a written plan and reflection. For the rest of the course, follow the national standards, which give equal weight to earning, spending, saving, investing, credit, and risk.

At what age should kids start learning about investing?

Saving and delayed gratification can start before kindergarten. Interest and the difference between saving and investing fit ages 8 to 12. Index funds, retirement accounts, and how to behave in a market crash fit high school, ideally alongside a real account such as a custodial Roth IRA if the teen has earned income.

My child’s team won. Does that mean they are good at picking stocks?

Probably not on that evidence alone. With dozens of teams and a few months of returns, the winner is usually the team whose risky bet paid off. Ask what they bought, how much they would have lost if it had gone the other way, and whether they would put their own savings into it.

Key takeaways

Ranking teams by return over a few months rewards concentrated, volatile, and leveraged portfolios, even when their expected return equals an index fund’s.
In our simulator’s default 30-team, 13-week contest with no skill anywhere, single-stock margin teams win about 69% of contests; held 30 years, the same strategy’s median ends at 0.17 times the starting money against 7.4 times for the index.
Frequent trading is not the winning strategy; it lowers rank in classroom studies and returns in real accounts.
A randomized trial found the Stock Market Game improves investor knowledge and math scores. No study has measured its effect on adult investing behavior.
The Capitol Hill Challenge already bans margin, short selling, and leveraged ETFs and caps positions at 20%. Teachers can go further by grading a written plan instead of the final return.
Investing is one of six national personal finance standards. Earning, spending, saving, credit, and insurance deserve at least as much class time.

Related guides

Most Stocks Lose to T-Bills. The Market Still Wins. why a single stock usually trails the index that contains it.
Five Stocks Are Not Safer Than an Index Fund, Even If You Know Them the arithmetic of concentration for adults who believe their research removes risk.
Sports Betting vs. Investing where expected returns come from, and why a game can have a negative one.
Position Sizing how much to bet matters more than which bet to make.
How to Start Investing the sequence we would hand a teenager with a first paycheck.
Trump Accounts for Children how the new child accounts compare with custodial and 529 accounts.

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