1. MARK GRAVENSTEIN, PROGRAM DIRECTOR
MISSOURI COUNCIL ON ECONOMIC EDUCATION

2. What is the Stock Market GameTM Program?
A 10 week Internet educational simulation the encourages student to learn about stock markets, personal finance and the American economic system.
Over 1 million students participate nationally.
Over 12,000 students annually participate statewide.
Produced by the Missouri Council on Economic Education & the Foundation for Investor Education.

3. Basic Information Up to 5 students per team $200,000.00 Purchase Power
Able to trade stocks and mutual funds on the NYSE, AMEX or NASDAQ markets
Real Time Market Prices (5 minute delay)
Real Portfolio that generate interest and dividends
Website Supported by IBM
Local Help Desk
Team Fees
Based on number of teams each teacher enrolls
1 – 4 teams: $25.00 a team
5 or more teams: $15.00 a team

5. StockTalk newsletters provide students with an understanding of stock market terms.
In The News connects stock market concepts to the classroom through current events.

6. Basics - Every student registered in SMG is eligible
- Write an essay for your grade division
- Each topic (different for every division) relates to investment principles linked to the SMG Program
- Both teachers and students have a chance to win gift certificates, laptop computers, trips to Disney World or New York City
-Grades 4, 5: You really want to save up to buy your first car. Explain why and how you can use the stock market to save more money
-Grades 6, 7, 8: Pick a real-world publicly-traded company you are interested in and give three reasons that could increase the price of the stock, and three that could decrease the price of its stock over the next year
-Grades 9, 10, 11, 12: Show how the “news” affects stock prices. Choose any company within your portfolio and discuss three internal events and three external events, and explain how share prices will either go up or down due to each of these events

7. Let’s take the Stock Market Quiz

8. Stock Market IQ Quiz
False
True
True
False

9. What is a Stock? Stock: Ownership in corporation.
Share: A unit of stock owned by an investor.
Shareholder: A person who owns the shares of stock.
Portfolio: A collection of investments owned by an investor.

10. What is a Mutual Fund?
A mutual fund is a collection of stocks, bonds and other securities owned by a group of investors and managed by a professional investment advisory firm. This investment advisor (also called the mutual fund’s manager) collects money from many investors and invests the pool of money for all of them.

11. What Advantages Are There to Investing in Mutual Funds?
Mutual funds provide professional management. The fund’s manager makes the buy and sell decisions, based on the fund’s management philosophy.
Mutual funds offer diversification. A mutual fund often invests in one hundred or more securities.

12. Bond Basics
Bonds are a loan made by an investor to a government or company with the promise that the principal amount borrowed will be repaid, usually with interest, at a specific time. Usually a year or more in the future.
Over 3 Million domestic options
Government
Municipals
Corporate
Government or treasury bonds are backed by full faith & credit of the US Govt. They are considered “bulletproof” and thus un-rated
Par value = amount repaid to investor when the bond matures (similar to principal)

13. Bond Terminology
Face Value: the amount of money borrowed by the issuer.
Maturity Date: date by which the issuer must repay the principal amount borrowed
Coupons: interest payments made by the bond issuer to the bond holder.
Accrued Interest: the interest that has accumulated since the principal investment, or since the previous interest payment.
Yield: the market rate of interest on the bond.
For all SELL Transactions the SEC Fee of 5.6 cents per $10,000 trading amount is always added.

14. Bond Pricing Bonds are priced per $100 of bond principal
A $4,000 bond with a price of $99.50/$100 will cost you:
(40 x = $3,980) + accrued interest + 2% commission
If you sell a $4,000 bond you will receive:
(40 x = $3,980) + accrued interest – 2% commission – SEC fee
Buying a bond you will pay accrued interest + commission (2%)
Selling a bond you get accrued interest – commission (2%) – SEC fee
If bond is resold (secondary market) it can be done:
At a discount = < par
At a premium = > par
This fluctuates based on interest rates.

15. Increase Your Bond Investment
There are two ways to increase your
bond investment:
Interest Payments
Increase in the resale price of the bond

16. How to Select Bonds for the SMG
Buy early in the game
Look for highest current yield
Select bonds with an interest payment:
close to the game end date
Frequent payment schedules
Fed rate cuts indicate a good bond buying time

17. How to Read a Bonds Chart
Face Amount
Date of Purchase
Coupon Rate
Maturity Date
Total Interest Earned
$5,000.00
5/30/2000
7.50%
5/30/2010
$3,562.00
$1,000.00
5/30/2001
6.80%
5/30/2011
$646.00

18. Bonds vs Stocks BONDS STOCKS What you get… IOU Ownership in company
How you trade…
$ value
shares
How to find…
Cusip
Ticker Symbol

19. Bond Information Information for:C419C.166.87 Trade CUSIP12189TAB0
ISSUER DESCRIPTION BURLINGTON NORTHN SANTA FE COR
ISSUING DESCRIPTIONDEB
DATED(ISSUE) DATE 02/15/1996
MATURITY DATE 02/15/2016
PREVIOUS PAYMENT DATE 08/15/2008
NEXT PAYMENT DATE 02/15/2009
INTEREST RATE (%) 6.875
INTEREST PAY FREQ SA
SP RATINGBBB+MDY RATINGN/Rl FTH RATINGN/Rl
CURRENT PRICE/100 ($)
CURRENT YIELD (%)

20. InvestinginBonds.com

21. How do I find a Stock, Mutual Fund or Bonds?
Newspapers
Internet
Stockbrokers

22. How do I find a Stock, Mutual Fund or Bonds?
Brands: a name that sets apart a product.
Public Company: a company with shares that can be purchased by anyone.
Parent Company: a business that controls another company by owning most or all of its stock.
Subsidiaries: a company that has at least half of its stock owned by another company.
Private Company: a company that doesn't sell shares to the public.
Stock Symbol: a grouping of one to four letters used in place of a company’s full name.

23. How do I find a Stock, Mutual Fund or Bonds?
RESEARCH, RESEARCH, RESEARCH!
Annual reports
Company profiles
Analysts’ reports (ask a broker)
Reference books
Value Line
Standard & Poor’s
Moody’s
Newspapers

24. How do I find a Stock, Mutual Fund or Bonds??
Search the INTERNET!
Company web sites
Investment advice sites
(The Motley Fool)

25. What am I looking for? COMPANY PERFORMANCE Profit history
Growth potential
Good management?
What do you think of their products?

26. What I am looking for? THE BIG PICTURE Is this a growth industry?
Impact of world events?
Does a recession hurt or help the company?

27. What Determines a Stock’s Price?
SUPPLY AND DEMAND
The stock market is like an auction . . .
When more people REALLY want to buy, a stock’s price rises
Rosy profit picture
Company’s growing
Popular products

28. Shareholders “win” when…
A company grows
Stock becomes more valuable
The firm is profitable
Management may send investors a share of the profits
DIVIDEND

29. NO! Is a win guaranteed? Stock prices can fall or fluctuate.
No/low profits
Must consider your risk tolerance.

30. Diversification
Due to the risks associated with investing, you should avoid putting “all your eggs in one basket.”
By diversifying your portfolio you can reduce the risk of experiencing serious financial loss.
Example: An investor might purchase a variety of stocks, bonds and mutual funds to minimize their risk.

31. Don’t forget Commissions
The fee paid to have your stock purchase or sale executed.
Brokers Fee in the SMG is 2% for all transactions.

32. Important Concepts Parent Companies Finding the Correct Ticker Symbol
Financial Risk
How to read a stock table
Buying on margin
Short Selling
Maximum Percent Equity

33. Parent Companies
A parent company is a company that controls other companies by owning an influential amount of voting stock.
Companies can become parent companies by many different means. The two most common ways are through (1) acquisitions of the smaller companies and (2) the spin-off or creation of subsidiaries.
Examples:
Proctor & Gamble (PG / NYSE) owns: Gillette, Clairol, Pringles and Pepto Bismol (to name a few).
PepsiCo (PEP / NYSE) owns: Pepsi Cola, Quaker Brands, Frito-Lay, Lipton and Gatorade.

34. How to Read a Stock Table1 2 3 4 5 6 7 8 9
Open
YTD % Change
52 Week
HI / LO
Stock (Symbol)
DIV
Yld % PE
VOL 100s
Close
Net Chg
56.38 11
59.85
Yum! Brands (YUM)
1.1
2.0 37
15863
55.50
-0.88

35. Buying on Margin
Buying on Margin means using the stock in your portfolio as collateral for borrowing money from your broker. In the SMG the maintenance requirement is a minimum of 30% after borrowing on margin.
Therefore, if the Total Equity in your portfolio falls below 30% of the value of your long and short positions, your team will receive a margin call.

36. Finding the correct Ticker Symbol
What do you think the symbol for General Electric might be?
(GE)
General Motors?
(GM)
Dell Inc.?
(DELL)

37. Finding the correct Ticker Symbol
Coca Cola Company
Coke
CCE KO
2) Kellogg
TONY KG K

38. Financial Risk
Risk: The Likelihood of suffering losses or earning less than expected on financial investments.
Investors must consider how much money they can afford to lose and the minimum amount of return they can stand to earn on an investment.

39. Types of Trades Long Position Buy Sell Short Position Short Sell
Short Cover

40. Short Selling
Short selling is the reverse of the standard investment process. Investors sell a stock and then buy back the stock.
1st step - Short Sell:
Investor “Borrows” stock from a broker to sell on the market.
2nd step – Short Cover
Investor buys back stock and returns it to broker. This is done this in hopes of buying it back at a later date for a lower price than sold to earn a profit.

41. 10 Investing Tips from Warren Buffet
Be frugal
Wait for the 'fat pitch'
Be a contrarian
Stick with what you know
Don't depend on others to say you're right
Buy companies cheap
Look for companies with economic moats
Buy big, concentrated positions
Hold for life
Believe in America

42. Important Rules
May only transact common stock on the NYSE and NASDAQ markets
Minimum purchase order of 100 shares
$5.00 per share price limit minimum
2% broker’s fee on all transaction
7% interest

43. Missouri 33% Rule
In the Fall of 2003, a new Stock Market Game rule was established in as an enforceable reminder that diversity in a portfolio reduces both short and long term risk, the new rule is called the Missouri 33% Rule. This rule is enforced in addition to the above rules in the State of Missouri. The rule is stated below.
"In order to qualify and be recognized as a regional or state-wide winner (first or second place), a team may invest no more than 33% of their total equity in any one company. If a stock in which a team has invested increases in value above the 33%, the team will be able to maintain that position but will be unable to purchase additional shares of that company."

44. Calculating Maximum Percent Equity
Total Equity on Account Summary Page.
Multiply Total Equity by 2. (This accounts for the ability to buy on margin.)
Multiply by 33%.
Answer is how much you can purchase / hold in one stock that day.
Total Equity = $100,000
Multiply by 2 = $200,000
Multiply by 33% = $66,000 can be spent on one
individual stock the first day of SMG session.

46. Sample Team IDs & Passwords
Please DO NOT change the passwords.
Teacher ID: SIA_80_T Password RIF10027
Team IDs: SIA_80_A135 Password SMGTRADE
SIA_80_A SMGTRADE
SIA_80_A SMGTRADE

47. Team Welcome Page
Students in Grades 4-12 do not have access to the Learning Resource Center.

48. Account Summary

49. Account Holdings

50. Enter a Trade - Step One

51. Enter a Trade - Step Two

52. Trade Order Preview

53. Pending Transactions

54. Transaction Notes

55. Transaction History

56. Rankings (Page 1)

57. Regional Rankings (Grade level & Location)

58. Coordinator Rankings (State-wide Rankings)

59. http://www.stockmarketgame.org MARK GRAVENSTEIN, PROGRAM DIRECTOR
MISSOURI COUNCIL ON ECONOMIC EDUCATION