1. STOCK MARKET SIMULATION
Mr. Lange - Economics
STOCK MARKET SIMULATION

2. INTRODUCTION Welcome to Mr. Lange’s Stock Market Simulation!
As members of an investment group, you will be competing against one another to see which group can increase their investment portfolios the most.
The investment group with the greatest portfolio value at the end of the simulation wins.

3. RULES
Each group (four to six members) must come up with an original name for their investment group and elect a team captain. All trades must only be performed by the captain of that team, with the approval of the majority of the team.
Each team begins the simulation with $10,000 in cash.

4. RULES Teams may only trade stocks listed on Nasdaq or the NYSE.
All stock values are priced at current market prices.
Teams are not permitted to own stock in more than six companies at a time.

5. RULES Teams may not own more than three stocks priced under $5/share.
Teams are not permitted to have more than $2,000 in cash at any time.
To buy stock, each team must complete a purchase order form and have it initialed by the broker (Mr. Lange).

6. RULES
A 2% broker’s fee is charged for all transactions. (For example, if you buy 100 shares of a stock at $10/share, you must pay the 2% of $1000, or $20.)
A team ledger (data on stock performance and cash on hand balance) and purchase orders/transactions must be maintained.
The team with the greatest portfolio value at the end of the simulation (value of all stocks + cash on-hand) wins.

7. HOW ARE YOU GRADED? Completion of all assignments
Completion of all stock transactions and bookkeeping
Final portfolio value
Did you “beat the market”?
Success will be rewarded with a higher grade! (Just like real life.)

8. FORMING YOUR INVESTMENT GROUP
In your investment groups (4 to 6 members), complete the following tasks:
Choose a name for your investment group.
Select a team captain.
Get a binder and make sure you obtain:
“Guide to Stock Listings”
Rules sheet
One ledger
One purchase order form
“Company Stock Research” packet

9. WHICH STOCKS TO CHOOSE? Brainstorm and discuss:
What would you need to know about a company before you invest in it?
How is your group going to decide on the stocks it will invest in?
On a piece of paper:
What are your preliminary choices for the stocks you will invest in? Which companies are you currently looking at? Remember, you can invest in a maximum of six stocks.

10. Bell Ringer
List as many things that come to mind when you hear the words “stock market” or “stocks.”

11. Objectives Define what a stock is. Describe how stocks are traded.
Explain how stock performance is measured.

12. Introduction https://www.youtube.com/watch?v=Snsapamg8CU
“Investing Basics: Stocks”

13. Introduction How does the stock market work?
In order to raise money, corporations can sell stock in their company.
Stock, or ownership shares in a company, are bought and sold on a stock market.

14. How Stocks are Traded
If you want to buy stock, you would first contact a stockbroker to advise you on which stocks to buy (for a fee).
The broker then buys stocks on a secondary market known as a stock exchange.

15. Stock Exchanges
The New York Stock Exchange (NYSE) is the world’s largest and most powerful exchange, handling stock and bond transactions for the top companies in the U.S. and around the world.
The Nasdaq is the second largest exchange market and the largest electronic market.
Most tech/electronic companies trade on Nasdaq (Apple, Google, Netflix, etc.)

16. Measuring Stock Performance
The Dow Jones Industrial Average (DJIA) measures stock performance.
It is an index that shows how 30 large publicly owned companies based in the United States have traded during a standard trading session in the stock market.
Companies include Apple, Coca-Cola, General Electric, McDonald’s, Verizon, Wal-Mart, Disney and others (aka, blue-chip stocks).

18. Guide To Stock Listings
Price/share
52 week high & low
What do these indicate?
Stock ticker symbol (NKE, AAPL, MSFT, etc.)
Closing price (Close) & change %

19. Summary Activity Find a partner.
Write a summary of what the stock market is and how it works in exactly 20 words.

20. Company Stock Research
Your investment group will research four companies that you would like to invest in.
Remember: You can’t throw money at the stocks… you have to know who you’re investing in!
Industry = What business sector?
Apple = Technology; ExxonMobil = Energy; Wal-Mart = Retail
History = financial and organizational history.
How long has the company been around?
Who are its biggest competitors?
How has its stock performed historically?
What is the current trend and financial forecast for the stock?
What are the pros and cons of investing in the company?

21. Bell Ringer Get into your investment groups.
Turn in your Company Stock Research assignment into the black basket.
Locate the Purchase Order Form. Fill out the 1-6 companies you want to invest in by putting their trading symbols under the “Symbol” column.
Await further instructions…

22. How To Calculate Stocks
Price of stock x Number of shares purchased = Total amount of purchase
Total amount of purchase x 2% (0.02) = Broker’s fee
The same applies when you want to sell stocks as well

23. How To Chart Your Portfolio
Your ledger has four columns:
Date; Ending Cash on Hand; Total Stock Value; Total Portfolio Value
“Ending Cash on Hand” is taken from the bottom of that day’s purchase order form.
“Total Stock Value” is the sum of the total value of all your stock investments.
“Total Portfolio Value” is the sum of your cash-on-hand and your stock value.

24. Teenage Investors
High Schooler Makes $300K Trading Stocks on His Phone
20 Top Stock Market Traders Under 20

25. Wrapping It Up
Your portfolio needs to be arranged in the following order:
Ledger
P.O. forms in chronological order, from latest to earliest
Research form
On your rubric, write your group members’ names, period number, and your final total portfolio value (cash on hand + stocks) at the top.
Circle your portfolio’s market performance score.
Place your rubric in the inside front pocket of your portfolio.

26. Evaluation Which stocks performed the best? The worst?
Were there any stocks that surprised you?
For the groups that beat the market performance, what was your group’s strategy?
What effect did the broker’s fee have on your strategy?
What would you have done differently?