stock market game of pennsylvania advisor training workshop stock market game workshop
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Stock Market Game of PennsylvaniaAdvisor Training Workshop
STOCK MARKET GAME WORKSHOP
Stock Market Game of PennsylvaniaAdvisor Training Workshop
WORKSHOP SPONSORS
The Pennsylvania Partnership for Economic Education
and
Safeguard Scientifics Center for Economic Education
at Temple University
Stock Market Game of PennsylvaniaAdvisor Training Workshop
What is the Stock Market
Game ?
Stock Market Game of PennsylvaniaAdvisor 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.
Stock Market Game of PennsylvaniaAdvisor Training Workshop
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 of PennsylvaniaAdvisor Training Workshop
Stock Market Game Basics
Stock Market Game of PennsylvaniaAdvisor 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.
Stock Market Game of PennsylvaniaAdvisor 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.
Stock Market Game of PennsylvaniaAdvisor 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.
Stock Market Game of PennsylvaniaAdvisor Training Workshop
What purpose does the Stock
Market Game play in the classroom?
Stock Market Game of PennsylvaniaAdvisor 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
ResearchVocabulary
PresentationsReading Comprehension
Stock Market Game of PennsylvaniaAdvisor Training Workshop
Interdisciplinary Benefits of the Stock Market Game
Mathematics
Fractions
Decimals
Percentages
Ratios
Basic Computation
Business Education
Consumer SpendingDecision MakingRecord Keeping
Financial Planning
Stock Market Game of PennsylvaniaAdvisor Training Workshop
Interdisciplinary Benefits of the Stock Market Game
Technology
Spreadsheets
On-line Research
Presentations
Word Processing
Stock Market Game of PennsylvaniaAdvisor 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
Stock Market Game of PennsylvaniaAdvisor Training Workshop
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
Stock Market Game of PennsylvaniaAdvisor Training Workshop
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.
Stock Market Game of PennsylvaniaAdvisor 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.
Stock Market Game of PennsylvaniaAdvisor Training Workshop
Investment Basics
Stock Market Game of PennsylvaniaAdvisor Training Workshop
Stock Market Quiz
Stock Market Game of PennsylvaniaAdvisor 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.
Stock Market Game of PennsylvaniaAdvisor 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.
Stock Market Game of PennsylvaniaAdvisor 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
Stock Market Game of PennsylvaniaAdvisor Training Workshop
Different Types of Investments
• Insured Savings Accounts
• Savings Bonds• Certificates of
Deposit• Treasury Bonds
• Corporate Bonds• Mutual Funds• Stocks• Collectibles• Commodities
Stock Market Game of PennsylvaniaAdvisor Training Workshop
The Riskier the Investment -
The Higher the Return
The Risk to Return Relationship
Stock Market Game of PennsylvaniaAdvisor Training Workshop
Why Is Long Term Investingthe Best Route
Stock Market Game of PennsylvaniaAdvisor Training Workshop
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
Stock Market Game of PennsylvaniaAdvisor Training Workshop
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
Stock Market Game of PennsylvaniaAdvisor 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
Stock Market Game of PennsylvaniaAdvisor Training Workshop
UMP’SFWAT
Stock Market Game of PennsylvaniaAdvisor 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
Stock Market Game of PennsylvaniaAdvisor Training Workshop
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 Market Game of PennsylvaniaAdvisor 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
Stock Market Game of PennsylvaniaAdvisor Training Workshop
Other Terminology
Blue Chipsthe largest and most
profitable stocks
Bull Marketa market that is rising
Bear Marketa market that is falling
Stock Market Game of PennsylvaniaAdvisor Training Workshop
Why Diversify ?
Stock Market Game of PennsylvaniaAdvisor Training Workshop
The Details
Stock Market Game of PennsylvaniaAdvisor 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
Stock Market Game of PennsylvaniaAdvisor 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
Stock Market Game of PennsylvaniaAdvisor 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.
Stock Market Game of PennsylvaniaAdvisor Training Workshop
Short Covering
• Must have already short sold the stock
• May set a maximum price limit• All other rules for selling apply
Stock Market Game of PennsylvaniaAdvisor 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
Stock Market Game of PennsylvaniaAdvisor Training Workshop
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
Stock Market Game of PennsylvaniaAdvisor 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
Stock Market Game of PennsylvaniaAdvisor Training Workshop
HELPFULHINTS
Stock Market Game of PennsylvaniaAdvisor 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 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
Stock Market Game of PennsylvaniaAdvisor 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
Stock Market Game of PennsylvaniaAdvisor 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, 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.
Stock Market Game of PennsylvaniaAdvisor Training Workshop
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
Stock Market Game of PennsylvaniaAdvisor 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
Stock Market Game of PennsylvaniaAdvisor Training Workshop
So, how much does this cost ?
Stock Market Game of PennsylvaniaAdvisor Training Workshop
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
Stock Market Game of PennsylvaniaAdvisor Training Workshop
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
Stock Market Game of PennsylvaniaAdvisor Training Workshop
What if I need help during the game ?
Stock Market Game of PennsylvaniaAdvisor Training Workshop
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.