Rock crisis hits young investors

The school was hoping Northern Rock shares would bounce back

A shares club at a Cornish school has lost more than £250 following the collapse of Northern Rock shares.

Liskeard School and Community College invested £500 in the bank a month ago when shares had dropped to £2 each.

They were hoping they would bounce back, but instead they have dropped to less than £1.

The school's shares club invests £1,500 which was given to it by city investors five years ago as part of the national Shares 4 Schools competition.

We might be holding a car boot sale Business studies teacher Peter Pascoe

Business studies teacher Peter Pascoe said it had been a hard lesson for the children who have ended every year in profit and who were regional winners of the competition in 2005.

It is now bottom of a league of 85 schools in the competition run by the Shares Centre.

The 26 business studies students in the shares club now have until July to recoup their loss.

Mr Pascoe said: "Every school must have £1,500 to start the competition every year, so we might be holding a car boot sale."

The club also has shares in South West Water and Barclays, which are holding up.

'Dead cat'

Mr Pascoe said: "Every year up until now we have been in profit with a conservative and growth-based approach.

"We invested in mining firms and public utilities and made £300 last year.

"This year we decided to be more enterprising and decided to have a more risky strategy.

"We went for three firms with strong takeover rumours."

The club invested in Northern Rock, hoping for a "dead cat bounce", when shares recover from what is thought to be their lowest point.

But the shares carried on falling in value.

"It is very unlikely we shall see any profit," said Mr Pascoe.

"We have never been in this position before. But it has reminded pupils that shares can go down as well as up.

"They almost thought it was automatic that you made a profit, but they have had a good lesson in how the global economy works."