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Stock Market Game of Pennsylvania Advisor Training Workshop STOCK MARKET GAME WORKSHOP.

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Presentation on theme: "Stock Market Game of Pennsylvania Advisor Training Workshop STOCK MARKET GAME WORKSHOP."— Presentation transcript:

1 Stock Market Game of Pennsylvania Advisor Training Workshop STOCK MARKET GAME WORKSHOP

2 Stock Market Game of Pennsylvania Advisor Training Workshop WORKSHOP SPONSORS The Pennsylvania Partnership for Economic Education and Safeguard Scientifics Center for Economic Education at Temple University

3 Stock Market Game of Pennsylvania Advisor Training Workshop What is the Stock Market Game ?

4 Stock Market Game of Pennsylvania Advisor Training Workshop Connection to Economics 1. People make choices based on self-interested behavior 2. Incentives matter when people make choices 3. Consumer sovereignty fuels competition among buyers and sellers 4. Trade based on voluntary exchange occurs when people specialize in producing that good or service in which they have the lowest opportunity cost. 5. There is a limited role for government in a market economy, especially in the area of clearly defined and enforced property rights.

5 Stock Market Game of Pennsylvania Advisor Training Workshop History of the Game Started in the late 1970s by a University of Buffalo professor Over 500,000 students nationally compete each year. PA was ranked #1nationally in number of students who participated in the SMG. Sponsored by the Securities Industry Foundation for Economic Education nationally PPEE is the licensed distributor of the SMG in PA

6 Stock Market Game of Pennsylvania Advisor Training Workshop Stock Market Game Basics

7 Stock Market Game of Pennsylvania Advisor Training Workshop Stock Market Game Basics The game runs for ten weeks in the Fall and ten weeks in the Spring. Each team begins with a hypothetical $100,000. Teams may buy, sell, short sell, or short cover their stocks. Teams should have three to five players. Only common stocks listed on the American, New York, and NASDAQ Stock Exchanges may be traded.

8 Stock Market Game of Pennsylvania Advisor Training Workshop Stock Market Game Basics A 2% brokers fee is charged for each transaction. Stocks valued at less than $5.00 per share may not be bought. Teams may borrow up to $100,000 to purchase stocks on margin. Interest is charged.

9 Stock Market Game of Pennsylvania Advisor Training Workshop Stock Market Game Basics To generate a portfolio, teams must enter a valid order (i.e. a scan sheet with no errors). The team with the highest portfolio equity at the end of the game wins. Portfolios are not liquidated at the end of the game. Portfolio equity in the tenth week is used for final rankings.

10 Stock Market Game of Pennsylvania Advisor Training Workshop What purpose does the Stock Market Game play in the classroom?

11 Stock Market Game of Pennsylvania Advisor Training Workshop Interdisciplinary Benefits of the Stock Market Game Social Studies History of our Economy Current Events Economic Concepts Government Policy Cultural Issues Language Arts Research Vocabulary Presentations Reading Comprehension

12 Stock Market Game of Pennsylvania Advisor Training Workshop Interdisciplinary Benefits of the Stock Market Game Mathematics Fractions Decimals Percentages Ratios Basic Computation Business Education Consumer Spending Decision Making Record Keeping Financial Planning

13 Stock Market Game of Pennsylvania Advisor Training Workshop Interdisciplinary Benefits of the Stock Market Game Technology Spreadsheets On-line Research Presentations Word Processing

14 Stock Market Game of Pennsylvania Advisor Training Workshop How does the competition work? Teams compete within a geographic region and on six levels. Levels of Competition Grades 4-6 Grades 7-8 Grades 9-12 Post-Secondary Youth Groups Adult

15 Stock Market Game of Pennsylvania Advisor Training Workshop Geographic Regions

16 Stock Market Game of Pennsylvania Advisor Training Workshop SMG World Wide Advisors need a working address and Internet access to play. Transactions are made at the SMG World Wide site at: Trades operate on a minute delay depending on how much activity is on the system. Players, however, get the price of the stock at the time the transaction is made. Game week runs Monday through Friday.

17 Stock Market Game of Pennsylvania Advisor Training Workshop SMG World Wide Stock and cash dividends are automatically computed into team portfolios. Portfolios are updated and available on a daily basis. Some transactions, however, may take up to 36 hours to appear on the portfolio. Stock ticker symbols are used instead of code numbers and can be looked up on the game pages.

18 Stock Market Game of Pennsylvania Advisor Training Workshop Investment Basics

19 Stock Market Game of Pennsylvania Advisor Training Workshop Stock Market Quiz

20 Stock Market Game of Pennsylvania Advisor Training Workshop Stock Market IQ Quiz (TRUE / FALSE) 1. Stocks are items found in the storeroom of a grocery store. 2.Only rich people invest in the stock market. 3.Most stocks on the stock market are sold by the United States Government. 4.If the stock market goes up 30 percent one year, it will fall by 30 percent in the next year. 5.Any stock that goes up in price must ventually come back down.

21 Stock Market Game of Pennsylvania Advisor Training Workshop Stock Market IQ Quiz (TRUE / FALSE) 6. Bears, Bulls, and Pigs are found in the stock market. 7.Stock prices are set by the Securities and Exchange Commission, a regulatory agency of the U.S. government. 8.Stock markets are open on business days around the clock, around the world. 9.Sometimes companies buy their own stocks on the stock market. 10.It is hard to buy a good stock today because all the good ones have already been purchased.

22 Stock Market Game of Pennsylvania Advisor Training Workshop Stock Market IQ Quiz (TRUE / FALSE) 11. Buying stocks is a sure way to make money. 12. Corporations sell new issues of stock on the New York Stock Exchange. 13. Insider stock trading means that trading stocks takes place inside a building. 14. People can buy stocks on the internet. 15. When the stock market goes up, it causes the economy to grow. From Learning from the Market, © National Council on Economic Education, New York, NY

23 Stock Market Game of Pennsylvania Advisor Training Workshop Different Types of Investments Insured Savings Accounts Savings Bonds Certificates of Deposit Treasury Bonds Corporate Bonds Mutual Funds Stocks Collectibles Commodities

24 Stock Market Game of Pennsylvania Advisor Training Workshop The Riskier the Investment - The Higher the Return The Risk to Return Relationship

25 Stock Market Game of Pennsylvania Advisor Training Workshop Why Is Long Term Investing the Best Route

26 Stock Market Game of Pennsylvania Advisor Training Workshop The Difference Between Stocks, Bonds, and Mutual Funds Stocks: You own a piece of the company You make money if the company does well Bonds: You loan money to a corporation or government You earn the interest Mutual Funds: You own one portion of a collection of stocks, bonds, or other securities

27 Stock Market Game of Pennsylvania Advisor Training Workshop The Three Main Markets NYSE New York Stock Exchange Oldest, Largest, Best-Known Stocks NASDAQ Large, Mid-Sized and Small Growth Companies AMEX American Stock Exchange Mid-sized Growth Companies

28 Stock Market Game of Pennsylvania Advisor Training Workshop The Difference Between Large and Small Companies Large often have high prices low risk of failure usually pay regular dividends Small potential for growth is greater than for larger companies

29 Stock Market Game of Pennsylvania Advisor Training Workshop UMPS FWAT

30 Stock Market Game of Pennsylvania Advisor Training Workshop Common Stock vs. Preferred Stock Common Stock pay dividends based on performance of the company have higher risk but may have higher reward dividend amount is preset Preferred Stock dividends are paid on preferred stocks before common stocks have lower risk but may limit reward

31 Stock Market Game of Pennsylvania Advisor Training Workshop The DOW Jones Industrial Average: Intel Corp(INTC) International Paper (IP) J.P. Morgan & Co. (JPM) Johnson & Johnson (JNJ) McDonalds (MCD) Merck (MRK) Microsoft (MSFT) Minnesota Mining & Manufacturing (MMM) Philip Morris (MO) Proctor & Gamble (PG) SBC Communications(SBC) United Technologies (UTX) Wal-Mart Stores Inc. (WMT) Walt Disney Co. (DIS) ALCOA (AA) American Express Co. (AXP) AT&T (T) Boeing (BA) Caterpillar Inc. (CAT) Citigroup Inc. (C) Coca-Cola (KO) DuPont Co. (DD) Eastman Kodak (EK) Exxon-Mobile Corp. (XON) General ElectricCo. (GE) General Motors Corp. (GM) Home Depot Inc.(HD) Honeywell International Inc.(HON) Hewlett-Packard (HWP) International Business Machines (IBM).

32 Stock Market Game of Pennsylvania Advisor Training Workshop Stock Splits More shares are created at a lower price per share Stockholders profit if stocks go up Indicated with an (s) in the paper Ex: Dell $109 $54

33 Stock Market Game of Pennsylvania Advisor Training Workshop Other Terminology Blue Chips the largest and most profitable stocks Bull Market a market that is rising Bear Market a market that is falling

34 Stock Market Game of Pennsylvania Advisor Training Workshop Why Diversify ?

35 Stock Market Game of Pennsylvania Advisor Training Workshop The Investment Game

36 Stock Market Game of Pennsylvania Advisor Training Workshop The Details

37 Stock Market Game of Pennsylvania Advisor Training Workshop Buying Must be a stock available online Must be for a minimum of 100 shares Must have a closing price of at least $5.00 per share May set a maximum purchase price limit

38 Stock Market Game of Pennsylvania Advisor Training Workshop Selling Must already own the stock Must be for a minimum of 100 shares (unless selling the only remaining shares) ex: If you bought 120 shares, then sold 100, you may then sell the remaining 20. May set a minimum selling price limit

39 Stock Market Game of Pennsylvania Advisor Training Workshop Short Selling Short selling starts with borrowing a stock from your broker. You sell the borrowed stock hoping to buy it back at a lower price and return (short cover) it to your broker for a profit. All rules for selling still apply.

40 Stock Market Game of Pennsylvania Advisor Training Workshop Short Covering Must have already short sold the stock May set a maximum price limit All other rules for selling apply

41 Stock Market Game of Pennsylvania Advisor Training Workshop Long Positions A Long Position is a stock you own. Ex: If a team owns 100 shares of McDonalds, their long position is 100 shares. The Value of the Long Position equals # of shares X current price per share

42 Stock Market Game of Pennsylvania Advisor Training Workshop : Short Positions A Short Position is a stock you borrowed from the broker and sold The Value of the Short Position equals # of shares X current price per share Equity Cash Balance + Total Value of Long and Short Positions

43 Stock Market Game of Pennsylvania Advisor Training Workshop Buying on Margin You may borrow part of the required funds using the stock in your portfolio as collateral for the loan. Interest charged at 7% Margin call must be satisfied by 3rd week Initial Margin Requirement = 50% Maintenance Margin Requirement = 30% Requirements are calculated as % of total value of long and short positions

44 Stock Market Game of Pennsylvania Advisor Training Workshop HELPFUL HINTS

45 Stock Market Game of Pennsylvania Advisor Training Workshop Alternative Assessment Ideas Having SMG participants establish and maintain a portfolio provides an opportunity to evaluate the extent of involvement of each student. The following list of items have proven to be useful components of a students SMG portfolio. 1) ARTICLES from newspapers or magazines on corporations that the player either considered for purchase or purchased 2) NOTES that state the reasons or explain why the player purchased or did not purchase stocks that were researched 3) GLOSSARY of terms with definitions 4) LETTER (or copy) to a corporation requesting an Annual Report and/or other information

46 Stock Market Game of Pennsylvania Advisor Training Workshop Alternative Assessment Ideas 5) GRAPH showing changes in the value of a stock for each day owned 6) HEADLINES with a brief paragraph explaining the impact the story will have on the market 7) JOURNAL OF TV coverage of stock market activities with one or two brief items for each entry of what was gained from the viewing 8) BIBLIOGRAPHY of readings from magazines with a brief summary of what the student learned from each

47 Stock Market Game of Pennsylvania Advisor Training Workshop Alternative Assessment Ideas 9) BASIC DATA about corporation in which the team invested - i.e., 52-week high and low, P-E ratio, location, amount of debt, number of shares trading daily on average, company plans for the future, S&P ranking, etc. 10) WORKSHEETS that track the initial purchase, price, brokers fee, selling price, and profit or loss. Note: If you have additional ideas that could be shared with others, please send them to SMG of PA Headquarters.

48 Stock Market Game of Pennsylvania Advisor Training Workshop Entire Team Research all holdings Identify possible stocks Collect company information Give rationale for making a trade Captain Conduct team meetings Determine consensus Correctly enter transactions on game site Treasurer Keep accurate record of all transactions Balance portfolio account Suggested Team Roles

49 Stock Market Game of Pennsylvania Advisor Training Workshop Secretary Set up file system for research Write to companies for annual reports Submit scan sheets to advisor (paper game only) Historian Record the Dow Jones closing average on a line graph Provide reports to team Recorder Track the prices of all stocks owned by the team Keep a file of all transactions Suggested Team Roles

50 Stock Market Game of Pennsylvania Advisor Training Workshop So, how much does this cost ?

51 Stock Market Game of Pennsylvania Advisor Training Workshop Games Fees New Advisor Fee: $25 -(one time only) receive Learning From the Market curriculum, video & a Free Adult Game Team Fees Grades 4-12 $15 College $15 Youth Groups $18 Adult $25

52 Stock Market Game of Pennsylvania Advisor Training Workshop Registering Teams SMG World Wide Register online at Complete and mail the payment form to SMG of PA Headquarters: Stock Market Game of Pennsylvania Safeguard Scientifics Center for Economic Education Department of Economics Temple University Philadelphia, PA 19122

53 Stock Market Game of Pennsylvania Advisor Training Workshop What if I need help during the game ?

54 Stock Market Game of Pennsylvania Advisor Training Workshop Call-In Time 7:30 a.m. - 9:00 a.m. Monday - Friday If we are unable to answer in person, please leave a number and the best time to call. We will return calls in the evening, if necessary.


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