this game only lasts 12 weeks! you’ll be asked to “time” the market! you won’t be rewarded...
TRANSCRIPT
BASIC STOCK TRADING?
How the stock market game is NOT like investing
This game only lasts 12 weeks!
You’ll be asked to “TIME” the market!
You won’t be rewarded for being a long-term investor!
Later we’ll teach you how to be a
long-term investor. Right now we’ll just
try our hands at trading stocks
short-term
What does it mean to own stock in a company?
•It means YOU are an OWNER of that company!
You get to vote on company decisions like the members of the board of directors!
I work for
you!
Larry Ellison, CEO, Oracle Corp.
How do shareholders get rewarded for owning stock?Two Ways---1. Rise in Share Price (this one everybody
knows)
2. Dividends (don’t forget these!)
What are dividends?When companies have earnings they often pay a portion of them back to their shareholders
These payments are called dividends
Also, don’t take your dividends in cash, but “reinvest” them in stock!!
How does P/E ratio help me pick a stock to buy?
Use the Price to Earnings ratio to pick a cheap or overvalued stock!!
P/E Ratio = Price per share/earnings per share
Stocks with High P/E’s considered overvalued.
Stocks with low P/E’s undervalued
Charles Schwab Client Centerhttps://client.schwab.com/secure/cc/research/stocks/stocks.html?path=/research/Client/Stocks/Summary&symbol=AAPLScreen clipping taken: 3/31/2014, 3:59 PM
What are the risks in stock ownership?
1. Companies can go bankrupt.
2. You can buy stocks really high and possible never recover.
How do you protect yourself from picking a really bad stock?
DIVERSIFY Buy A BUNCH OF STOCKS!You can even buy the entire stock market with one trade!!
How??
WITH ETF’s
A golden ETF “GLD”
Charles Schwab Client Centerhttps://client.schwab.com/secure/cc/research/etfs/etfs.html?path=/Research/Client/ETFs/Summary/&symbol=GLDScreen clipping taken: 3/31/2014, 4:26 PM
Diversify with Mutual Funds and ETF’s Eliminates the
risk of holding too few assets
Eliminates the risk of picking stocks.
You get to “buy the whole market” with one trade.
You can even diversify across regions and assets
You can even bet against the whole market with one trade.
SDS = double SHORT the stock market
This “stock” goes up when the market goes down. (or vice versa)
Join the trading game by clicking on this assignment and following the link to YOUR CLASS’ game.