STOCK MARKET SIMULATION

1

• STOCK MARKET SIMULATION
• AND
• CCEE CAPITAL MARKETS CONTEST
• Greg Fisher, California Academy of Mathematics
  and Science
• Steve Eggert, Fountain Valley High School

2
Introduction

• Stock Market Simulation (SMS) vs. CCEE Capital
  Markets Contest (CMC)
• Stocks vs. Bonds
• SMS- why participate
• Highly efficient and cost effective application
  of supply and demand using the stock of a company
  as a proxy for its products.
• Two levels of demand, supply and price
  equilibrium
• Investment
• Product
• CMC- why participate
• Application of Macroeconomic theory taught to
  product market intrinsics and theory of the firm.
  

3
STOCK MARKET SIMULATION UNIT PLANhttp//www.cap
italmarketscontest.blogspot.com/

• Dont teach personal finance, stock picking or
  financial management teach the application of
  supply and demand.
• While lessons in personal finance are learned
  throughout this unit, they are secondary to the
  Economic theory reinforced thru student
  participation in the CMC

4
SMS Unit Sequence

• I. Familiarize yourself with the SMS Home Page
• II. Become familiar with the SMS trading site
• a) review SMS Basics http//www.csusms.com/ca_ba
  sics.shtml
• b) print out the Contest trading rules at
   http//www.csusms.com/ca_rules.shtml
• c) review the trading tutorials at
  http//www.nationalsms.com/flash/tutorialcontrol.h
  tml
• d) visit the FAQ's page for additional
  assistance with questions you might have about
  the contest http//www.csusms.com/ca_basics.shtml
  
• e) using your dummy account, make a few trades
  (buy and sell) to get the hang of it.

5
Sequence Contd

• II. Correlate to your text
• a) Prentice Hall Ch. 11
• III. Choose main ancillary to supplement text
• a) The SMS aligns well with several popular
  texts and NCEE personal finance units, which can
  serve as supplements that the typical text does
  not cover in sufficient detail
• for those who use the Learning, Earning and
  Investing Curriculum (highly recommended), see my
  online unit posting for a sequence of essential
  lessons to cover
• Financial Fitness for Life
• If you are using the Learning From the Market
  curriculum, see my online unit posting for a
  sequence of essential lessons to cover

6
Ancillaries Contd

• b) There are also several supplements you can use
  from the National SMS site
• http//www.nationalsms.com/lessons.html
• http//www.nationalsms.com/resources.html
• Other Understanding Investment and The Stock
  Market by Biedenwig
• c) Find a good video/DVD
• Stock Market Basics DVD by www.learningseed.com
• How Wall Street Works by Nightly Business Report
• Demystifying The Stock Market

7
Sequence Contd

• IV. Create your Contest Structure your rules,
  procedures, and how you are going to run the
  contest in your class- feel free to use mine
  http//www.fvhs.com/ecs/dsp.subpage.cfm?uid67id
  2332
• I include a rubric in my Structure which outlines
  how the students will receive their individual
  grade and how that relates to their team grade.
• Click here to go to the spreadsheet I use to
  calculate team and individual grades.

8
First Session

• V) Think about where you want to be in your
  syllabus before you begin
• Typically Ive just finished elasticity by the
  time trading begins.
• VI) Begin your SMS Unit with a kick-off
  presentation
• a) review your rules/procedures, including
  Trading Diary sheets and Essay requirement
• b) walk students thru CCEE SMS Home Page and
  SMS Home Page (briefly explain the difference)
• c) walk them thru the Rules
• d) finish by watching the trading tutorials
• e) have students choose teams/ collect team
  info.
• f) make a demo trade using your dummy account

9
Team Registrations

• VII) Register your students at
• If participating in SMS, register thru your local
  center for Orange County, register thru CSUF
• If participating in CMC, register at
• http//www.ccee.org/ContactUs/Reg_Capital.html

10
On-Going

• VIII. What to do after the first session
• Give CMC pre-test (if participating in CMC)
• Show DVD/Video
• Pick a team and use them to demo a few trades
• Start 1st ancillary activity
• IX. Sessions 3-10
• Continue with ancillary activities
• Demo a stock sale
• Demo how to fill out a trading diary sheet
• Intersperse discussions on the ethical downsides
  to investing, ie. greed,insider trading, etc.
• Videos Boiler Room, Wall Street, anything with
  Martha Stewarts face on it.

11
On-Going/What to Do During The Contest

• X. Thru the course of this unit, schedule weekly
  class sessions in your school's computer lab
  (only internet access is necessary) to ensure
  your students are continually trading.
• XI. End the unit with the CMC post test.
• XII. Most importantly, continually use student
  trading activities within the SMS to
• reinforce the economic way of thinking and
  product market topics that you have covered/are
  covering (Demand, Supply, Equilibrium,
  Elasticity, etc.)
• Help explain macroeconomic topics that you will
  be introducing as the contest continues.
• Reach a deeper understanding of the impact of
  economic indicators.

12
CCEE CAPITAL MARKETS CONTEST

• Tying it All Together With The Essay
• Tips for Market Watching
• Stocks and their relationship to inflation

13
Tying it All Together Contd

• Tips for Market Watching (Contd)
• What happens to an indicator is not important.
  The relationship between what happens and what
  was expected (the consensus forecast) is what
  moves the markets.
• The impact of movements in the indicators affects
  the markets differently depending on the stage of
  the business cycle.
• The impact of movements in the indicators on Wall
  Street (the financial markets) may differ from
  the impact of the movements on Main Street
  (households).

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Tying it All Together Contd

• Tips for Market Watching (Contd)
• Adjustments in certain indicators and other less
  widely understood indicators often have more
  influence that the indicators themselves
• (rate of change of core PPI CPI, real GDP vs.
  nominal GDP, final revision or real GDP growth,
  changes in non-farm payroll employment vs.
  changes in the employment rate, durable goods
  orders minus transportation and defense).
• Seasonal adjustments are important.
• When looking at indicators, relate them to what
  is happening in real world (put into context)
• Use the Stock Market Simulation as a vehicle for
  engaging students to attain a deeper
  understanding of the macro economy and how its
  conditions affect the aggregate markets.

15
Essay Research Tools

• I. Macroeconomic Indicator Sites
• www.ingrimayne.saintjoe.edu/econ/Financial/Overvie
  w8ma.html
• www.treas.gov/topics/financial-markets/
• www.gpoaccess.gov/indicators/index.html
• www.economicindicators.gov/
• www.economic-indicators.com/
• www.economy.com/dismal/
• www.whitehouse.gov/fsbr/esbr.html
• www.bos.frb.org/economic/neei/neei.htm
• www.bls.gov/bls/newsrels.htm
• II. Finance Sites
• www.fmcenter.org/
• www.bloomberg.com/
• www.money.cnn.com/data/markets/index.html
• www.wsj.com
• www.online.wsj.com
• www.cbs.marketwatch.com
• www.thestreet.com

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Essay, PowerPoint, Presentation

• Essay
• 2 pages maximum
• categorize indicators as recessionary vs.
  inflationary
• divide up groups members with specialized roles
• input from others (volunteers with
  financial/economic/business backgrounds, English
  Economics teachers) to check content, style,
  grammar
• revisions
• current to the day of the deadline

17
Essay, PowerPoint, Presentation

• PowerPoint
• accompanies oral presentation
• simple yet engaging slides
• not too much text
• creative unique slides that makes group stand
  out
• easily discernable graphs
• a slide for every concept and main point
  presented
• should reflect and mirror the essay

18
Essay, PowerPoint, Presentation

• Oral Presentation
• divide up parts of essay/PowerPoint equally among
  group
• decide who is best suited for introduction, body,
  and conclusion
• several trial runs in front of audience for
  critique and feedback
• make current to the day of the presentation
• emphasize role of teamwork and cooperation
• delivery addressed (eye contact, projection,
  brevity, etc.)