The Stock Market Game Program

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The Stock Market Game Program
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The Stock Market Game Helps Students Learn
Introduction of financial markets and institu
tions How to choose and buy stocks How sup
ply and demand operate in real markets
Connection between current events and the
economy The role of Wisconsin and the US in th
e world economy Key economic events of history
Personal finance and budgeting skills Valu
e of investing for the future
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NAEP Findings

• The National Assessment for Educational Progress
  was established by Congress in 1969 to provide
  objective information on student achievement in a
  variety of subject areas.
• Recently NAEP tested twelfth graders economic
  literacy for the first time.
  
• Students participating in The Stock Market Game
  for class scored an average scale score of 159,
  nine points above the national average of 150.

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How does it work?
Students work as teams to invest a hypothetical
100,000 in stocks, bonds, and/or mutual
funds Simulation portfolio mirrors on-line tradi
ng accounts All trades are placed on the
SMG website Students can trade from any computer
with internet access - even after the
market closes
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How much time does it take? Flexible program
You choose The amount of time you spend Some
use it every day, others once a week
Choose from a 10 week, 15 week, or seven month
game Learning doesnt stop when the trading s
tops
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Competitions

• School Age Competition
• Elem. School - Grades 4-5
• Middle School - Grades 6-8
• High School - Grades 9-12
• Other Competitions
• Post-Secondary
• Adult
• DOC

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Awards

• Top team are invited to an awards banquet
• Medals
• Certificates
• T-shirts

Top team in the state wins a trip to NYC to tour
the NYSE
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Rules of The Stock Market Game

• Each team begins the simulation with 100,000 in
  cash and may borrow additional funds. How much
  you may borrow is dependent upon the equity in
  your account. (25 equity rule)
• Real Time Game transactions for stocks are priced
  at the market price at the time of entry
  
• All Stock and Mutual Fund buy orders must be a
  minimum of 100 shares.
  
• SMG does not permit buying stocks or mutual funds
  that trade below 5 per share.
  
• A 2 broker's fee is charged for all
  transactions. For example, if you buy 100 shares
  of a stock at 10 per share, you must pay the 2
  of 1000 or 20.
• Interest is charged weekly on negative cash
  balances at an annual rate of 7.00Positive
  balances earn at an annual rate of 2.00.
  
• Stock and cash dividends and stock splits are
  automatically computed into portfolios.
  
• These are just a few of the rules.
  Complete rules are available on the SMG website.

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Student Portfolio
Always check the Team Information box to be sure
you are in the right Region and Region Trade Type.
Student Teams have access to a simulated real
world online trading portfolio.
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Placing a Trade
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Account Holdings
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Account Summary
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Rankings
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Help!!!

• Click on the ?

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Teacher Support Center Provides

• Online teacher training and technical assistance
• Lesson plans and teaching resources
• Team management tools
• Up-to-date SMG program news

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InvestWrite

• Critical thinking component to SMG.
• Builds a bridge between classroom learning and
  the real world
  
• A method of assessing individual student
  performance through writing.
  
• Provides incentives for student achievement
  through awards and prizes.
  
• Available only to registered SMG teachers and
  their teams.
  
• Learn more at www.investwrite.info.

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Getting Started

• What is a Stock?
• Types of stocks
• How to read a stock table/quote
• P/E Ratio
• How to research a stock

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What is a stock?

• Private ownership is fundamental to the operation
  of a market economy.
  
• Individuals can become owners of a business by
  purchasing stock.
  
• People who buy stock in corporations are owners
  of that corporation. They risk their money
  (personal wealth) on the success of the business.
  
• Any business is risky because the future is
  uncertain. The owners of the business bear that
  risk. If the business succeeds, the owners
  benefit.

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Types of Stocks

• Common Stock
• When people talk about stocks they are usually
  referring to this type.
  
• The majority of stock is issued is in this form.
• Common shares represent ownership in a company
  and a claim (dividends) on a portion of profits.
  
  
• Investors get one vote per share to elect the
  board members, who oversee the major decisions
  made by management.

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Types of Stocks, cont.

• Preferred Stock
• Preferred stock represents some degree of
  ownership in a company but usually doesn't come
  with the same voting rights.
  
• Investors are usually guaranteed a fixed dividend
  forever.
  
• In the event of liquidation, preferred
  shareholders are paid off before the common
  shareholder (but still after debt holders).
  
• Preferred stock may also be callable, meaning
  that the company has the option to purchase the
  shares from shareholders at anytime for any
  reason (usually for a premium).

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How To Read a Stock Table/Quote
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P/E Ratio

• The P/E looks at the relationship between the
  stock price and the companys earnings.
  
• The P/E is the most popular metric of stock
  analysis, although it is far from the only one
  you should consider
  
• You calculate the P/E by taking the share price
  and dividing it by the companys EPS
  
• P/E Stock Price / EPS
• For example, a company with a share price of 40
  and an EPS of 8 would have a P/E of 5 (40 / 8
  5).
  

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What does a P/E ratio tell you?

• The P/E gives you an idea of what the market is
  willing to pay for the companys earnings.
  
• The higher the P/E the more the market is willing
  to pay for the companys earnings.
  
• What is the right P/E? There is no correct
  answer to this question, because part of the
  answer depends on your willingness to pay for
  earnings.

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Researching Stocks

• Get Ideas from Everyday Life
• Look at the companies around you. 
• Is there something that really stands out to you
  as a great product idea? 
  
• Is there a particular company that's doing very
  well? 
  
• Is there a market that you think is being
  underserved and has room for a lot of growth? 
  
• Follow up with research.

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Researching Stocks, Cont.

• Form an Investment Opinion
• Simply locating companies that are doing well
  isn't enough. You have to be careful not to pay
  too much.
  
• Learn more about the company and the risks it
  faces. 
  
• Read a few news articles to hear what journalists
  are saying about the company. 
  
• Once you have a good sense of the quality of the
  business and the future going forward, compare it
  to some of its peers. Look up the P/E ratio. 
  
• Everyone has his or her own investing strategy,
  so you have to determine the value of the stock
  to you. 

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Researching Stocks, Cont.

• Once You Find a Stock, Keep up to Date
• Look for newly published news articles
• Track the price of the stock in your portfolio

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Registration

• You must first complete a teacher training
  workshop. Details at http//economicswisconsin.org
  /teach/stmkt_sim.htmworkshops