Good morning.

Last weekend's column, What Teenagers Really Learn from Stock-Market Games, struck a nerve.

These classroom investing simulations may encourage risk-taking and often permit students to use borrowed money, short-selling and risky leveraged funds over sessions lasting 10 weeks or so.

One of the most popular of these games urges children to set up an "active trading" portfolio, "where you can practice swing trading techniques and actively make trades at least once a week in response to market movements."

Dozens of students, parents and teachers emailed me about their experience with these "financial literacy" programs.

When the object is to achieve quick short-term gains, using fake money, the kids use lots of leverage and short-selling. They are smart enough to know that the only way to “win” is to take outsized risks and trade often. And why not? There’s no downside when it’s not their money. Come to think of it, this is great training for working on Wall Street, where traders and hedge funds use Other People’s Money, have little or no skin in the game, and get big rewards by swinging for the fences.
—Martin L. Standiford

You’re shorting the market on teen brains. You don’t give kids much credit for understanding the difference between funny money and real dollars.... The short-term nature of the game demands creative investing....Kids may even develop an interest in The Wall Street Journal as a result. Let kids learn and have fun and trust them to weigh the risks properly as they become actual investors.
—Dan Hemmer

If the "winners" ran a simulated tax return on their game...that would really teach them something long-lasting!
—Jim Naibert

My son won in Missouri when he was in 8th grade, with a minimum three-stock portfolio. When accepting the [award] he said, “Thank you, but this teaches the wrong thing as it encourages risky, small portfolios.”

—Robert Weagley

I stopped using these [games] about five years ago in my classroom as I...felt like I was doing a disservice to my students. Instead I had students create their own spreadsheet (an important skill not taught in most schools) and track five to seven stocks and two mutual funds focusing on the importance of building a savings account and a retirement account. At the end of the semester we would write a formula showing the percent change and do some analysis, charts, etc. Not quite as exciting as the games, but I knew it was better for their overall long-term success as an investor.
—Stacey Ryan

How did you learn how to invest? Did you take a class, play a stock-market game in school, have a friend or family member as a mentor? (I've described my own start as a teenage investor here.)

Just reply to this email to share your thoughts. Please remember to include your name and city. Replies may be lightly edited for brevity and clarity.

Earlier this month, Edward C. Johnson III, who built Fidelity Investments into a financial colossus, died at age 91.

Along with Charles Schwab and the late Jack Bogle of Vanguard, Ned Johnson was part of the pioneering triumvirate who offered ordinary people a seat at the investing table, where traditionally only the rich had been welcome.

Above all, he understood that three things would attract investors: people, performance and price.

Fidelity relentlessly promoted its fund managers by name and face: Peter Lynch in the 1980s, Jeff Vinik and a host of others in the 1990s were ubiquitous guests on financial TV and cover boys for personal-finance magazines.

For many years, beating the market seemed almost like a birthright for Fidelity investors. By launching dozens of sector funds and other niche portfolios, the firm almost always had something at the top of the charts.

In a marketing masterstroke, as interest rates were shooting up in 1974, Ned Johnson pushed cheap money-market mutual funds. They appealed to investors who were afraid of stocks but disgusted by the low rates on bank accounts.

Fidelity's Daily Income Trust paid upwards of 9% at a time when bank deposits yielded 5.25%.

That December, when the Federal Deposit Insurance Corp. said it would cover balances at the Fidelity fund, Ned Johnson was ready. The very next day, Fidelity ran this ad in The Wall Street Journal:

Money poured in, helping Fidelity survive the bear market in stocks that lasted into the early 1980s.

Mr. Johnson was obsessed with the Japanese principle of kaizen: continuous gradual improvement and attention to detail.

Not much escaped his attention: He even had the shrubs at one of Fidelity's facilities replanted in random clusters to look more natural.

I first met Ned Johnson when I was nine years old and he was a customer of my parents, who were antiques dealers specializing in 18th-century American furniture.

I remember a man with a warm handshake and courtly manners who drove a Saab and pronounced "car" as if it were spelled caaaaah. His taste was impeccable: He bought several pieces from my parents — never anything but the finest they had to offer.

He was also the opposite of ostentatious, as this homemade Christmas card he sent my parents — probably in the early 1970s — demonstrates:

I last saw him more than 20 years ago. We almost collided in a hallway at Fidelity's headquarters while I was meeting with other executives at the company.

Fidelity had declined to make Mr. Johnson available for an interview, but he promptly started interviewing me.

Clearly recalling that my father was no longer living, he asked how my mom was doing and reminisced about the pond in front of my childhood home, even though he hadn't been there in three decades. He asked me if I knew of an index that tracked short positions in technology stocks. He also wondered aloud whether the U.S. might turn out to be the next Japan.

Then he waved and, with his loping stride, took off down the hallway. Something, somewhere, needed improvement.

Ned Johnson's daughter Abigail is far from the first woman to run a major financial firm. But her forerunners had to overcome intense resistance.

In 1870, Victoria Claflin Woodhull and her sister Tennessee (Tennie C.) Claflin opened Wall Street's first brokerage firm run by women.

In men's eyes, women who chased money were indistinguishable from women who chased men. As the sisters set up their brokerage firm, innuendos were inevitable:

"On coming into the street, the lady brokers created a great sensation," Wall Street chronicler Matthew Hale Smith wrote in 1875. "All day long crowds were around the doors. Men flattened their noses against the plate glass, peeping in, and every imagined excuse was invented by parties who wanted to walk inside and look at the sights."

The industrial baron Cornelius Vanderbilt was rumored to be backing the women's brokerage. As Smith leered, "The sisters have been traced to Vanderbilt's house in Washington Place, repeatedly in the evenings, and gentlemen...have met them there."

This illustration from Smith's book says it all:

“Wall-Street Aroused,” the normally staid New York Times declared on Feb. 6, 1870. "The scene at their office yesterday beggars description. The place was thronged from early morning until late at night by a crowd of curiosity hunters, who gazed at the females and besieged them with questions."

The sisters had first set up shop in the financial district as "magnetic physicians" and clairvoyants, charging $25 (about $500 in today's money) per fortune-telling visit.

When that business began to fade, they simply switched over to trading stocks.

Then, as now, Wall Street was rife with people claiming to be able to forecast stock prices using an endless catalog of indicators. The first rule of being that kind of quack has always been to deny that it is quackery.

The Claflin sisters broke that honor code. Brazen and blunt, they openly linked their brokerage business to bogus ways of predicting the future.

The sisters were inspired by their upbringing: "Their mother advocated for the wildly popular quackery of healing through 'animal magnetism,' while their father was a fraudulent rural doctor," says literary historian Gayle Rogers of the University of Pittsburgh, author of the excellent book Speculation: A Cultural History from Aristotle to AI.

"Encouraged by their parents," Prof. Rogers tells me, "the sisters claimed to be able to communicate with the dead and with angels, and to magically heal all sorts of maladies."

No wonder customers flocked to their firm.

The Claflin sisters embarrassed Wall Street — and thrilled the public — by showing how much of Wall Street is voodoo.

To this day, investors try forecasting stock prices based on hemlines and "Hindenburg omens," sunspots, phases of the moon, whether it's Tuesday, what month it is, who wins the Super Bowl, and countless other spurious correlations.

Even with the ability to trade in milliseconds and the power of a supercomputer in their pockets, many investors might as well be living in 1870. 

Be well and invest well,

Jason

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Education consists mainly in what we have unlearned.
—Mark Twain