Cool Stocks Are Hot

American Demographics, Dec, 1999 by Jeff Brazil

Today's young people are more fiscally able-minded than their counterparts of just a few years ago, say the folks at the $1-billion Stein Roe Young Investor Fund, which has catered to kids since its inception in 1994. About 85 percent of the fund's 200,000 shareholders (up from 71,000 in 1996) are 18 or younger.

Shareholders (parents are the legal custodians of the accounts) receive a jazzy quarterly newsletter that features games, puzzles, and articles on some of the companies the fund invests in - the majority of which have something to do with kid-dom. One section of the newsletter, dubbed "One for the Money," allows kids to write in about how they have augmented their income, and it is stunningly popular. "Our fund managers get stock tips from kids all the time," says Wendy Rauch, spokesperson for Stein Roe. "They'll say, `I think you should buy Fila because it's cool.' One girl wrote in and said, `I don't think you should buy McDonald's because it's not cool and nobody hangs out there anymore.' Our fund manager actually wrote a letter back saying, `Well, here's why we invest in McDonald's.'"

Stein Roe's parent company, Liberty Financial Companies, also has a Web site for kids, younginvestor.com. Visitors choose from one of six on-site guides to help them learn about money and investing, including the straight-laced Webster who "considers the daily stock tables to be compelling nonfiction," surfer dude Slice, whose "favorite publication is Batman comics," and superhero Gnaz Dax (a play on Nasdaq), who "loves to protect the weak from tyranny and oppression, but can't stop worrying about his cholesterol."

"We have some kids who are really into this stuff," Rauch says. "They visit company Web sites, they watch CNBC. It's amazing."