stock market game of pennsylvania advisor training workshop stock market game workshop

Stock Market Game of PennsylvaniaAdvisor Training Workshop

STOCK MARKET GAME WORKSHOP


WORKSHOP SPONSORS

The Pennsylvania Partnership for Economic Education

and

Safeguard Scientifics Center for Economic Education

at Temple University


What is the Stock Market

Game ?


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.


History of the Game

• Started in the late 1970’s 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


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.



• 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.



• 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.


What purpose does the Stock

Market Game play in the classroom?


Interdisciplinary Benefits of the Stock Market Game

Social Studies

History of our Economy

Current Events

Economic Concepts

Government Policy

Cultural Issues

Language Arts

ResearchVocabulary

PresentationsReading Comprehension



Mathematics

Fractions

Decimals

Percentages

Ratios

Basic Computation

Business Education

Consumer SpendingDecision MakingRecord Keeping

Financial Planning



Technology

Spreadsheets

On-line Research

Presentations

Word Processing


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


Geographic Regions1. Intermediate Unit 1 Robert Morris College 16. Central Susquehanna Susquehanna University

2. Pittsburgh – Mount Oliver University of Pittsburgh 17. Blast Susquehanna University

3. Allegeny University of Pittsburgh 18. Luzerne University of Scranton

4. Midwestern Butler County CommunityCollege

19. Northeastern Educational University of Scranton

5. Northwest Tri-County Gannon University 20. Colonial Northampton Lehigh University

6. Riverview Clarion Univeristy 21. Carbon Lehigh Lehigh University

7. Westmoreland University of Pittsburgh 22. Bucks County Temple University

8. Appalachia Allegheny College ofMaryland

23. Montgomery County Villanova University

9. Seneca Highlands Clarion University 24. Chester County Villanova University

10. Central Susquehanna University 25. Delaware County Temple University

11. Tuscarora Allegany College of Maryland 26. Philadelphia Temple University

12. Lincoln Penn State Harrisburg 27. Beaver Valley Robert Morris

13. Lancaster-Lebanon Millersville University 28. Arin Indiana University of PA

14. Berks County Millersville - North 29. Schuylkill Penn State Harrisburg

15. Capital Area Penn State Harrisburg


SMG World Wide

• Advisors need a working Email address and Internet access to play.

• Transactions are made at the SMG World Wide site at: www.smgww.org

• Trades operate on a 15-20 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.


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.


Investment Basics


Stock Market Quiz


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.



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.



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


Different Types of Investments

• Insured Savings Accounts

• Savings Bonds• Certificates of

Deposit• Treasury Bonds

• Corporate Bonds• Mutual Funds• Stocks• Collectibles• Commodities


The Riskier the Investment -

The Higher the Return

The Risk to Return Relationship


Why Is Long Term Investingthe Best Route


The Difference Between Stocks, Bonds, and Mutual Funds

Stocks:You own a piece of the companyYou make money if the company does well

Bonds:You loan money to a corporation or governmentYou earn the interest

Mutual Funds:You own one portion of a collection of stocks, bonds, or other securities


The Three Main Markets

NYSENew York Stock ExchangeOldest, Largest, Best-Known Stocks

NASDAQLarge, Mid-Sized and Small Growth Companies

AMEXAmerican Stock ExchangeMid-sized Growth Companies


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


UMP’SFWAT


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


The DOW Jones Industrial Average:• Intel Corp(INTC)• International Paper (IP)• J.P. Morgan & Co. (JPM)• Johnson & Johnson (JNJ)• McDonald’s (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).


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


Other Terminology

Blue Chipsthe largest and most

profitable stocks

Bull Marketa market that is rising

Bear Marketa market that is falling


Why Diversify ?


The Details


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


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


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.


Short Covering

• Must have already short sold the stock

• May set a maximum price limit• All other rules for selling apply


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


Short Positions

A Short Position is a stock you borrowed from thebroker and sold

The Value of the Short Positionequals

# of shares X current price per share

EquityCash Balance +

Total Value of Long and Short Positions


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


HELPFULHINTS


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 student’s 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



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



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, broker’s 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.


Entire Team

Research all holdings

Identify possible stocks

Collect company information

Give rationale for making a tradeCaptain

Conduct team meetings

Determine consensus

Correctly enter transactions on game site

Treasurer

Keep accurate record of all transactions

Balance portfolio account

Suggested Team Roles


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


So, how much does this cost ?


Games Fees

New Advisor Fee: $25 -(one time only) receive Learning From the Market

curriculum, video & a Free Adult Game

Team FeesGrades 4-12 $15College $15Youth Groups $18Adult $25


Registering TeamsSMG World Wide

Register online at www.smgww.org

Complete and mail the payment form to SMG of PA Headquarters:

Stock Market Game of PennsylvaniaSafeguard Scientifics Center for Economic

EducationDepartment of Economics

Temple UniversityPhiladelphia, PA 19122


What if I need help during the game ?


1-800-722-6708Call-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.

stock market game of pennsylvania advisor training workshop stock market game workshop

Documents

stock market game play

market economy

game runs

game week

game wins

game pages

nasdaq stock exchanges

stock ticker symbols