National Council of Economic Education Carolyn Shirk Community Resource Manager 123 North Market St Selinsgrove, PA 17870 ...
Sponsored By:
<ul><li>Who we are…. </li></ul><ul><ul><li>ECONOMICSPennsylvania at  www.economicspa.org </li></ul></ul><ul><ul><li>NCEE a...
Omega Bank Center for Economic Education
Stock Market Game Program
Teacher Survey Findings <ul><ul><li>90% said that students were encouraged to  learn more  about the curriculum being taug...
Teacher Survey Findings <ul><ul><li>96% agree that the SMG Program  increases students’ ability to  apply basic skills to ...
What Teachers like about SMG <ul><li>generates enthusiasm in hard-to-motivate students </li></ul><ul><li>helps meet educat...
<ul><li>teaches economic concepts </li></ul><ul><li>sharpens skills in mathematics, especially in fractions and basic comp...
What is the Stock Market Game Program (SMGP) ?
<ul><ul><li>Started in the late 1970’s by a University of Buffalo professor </li></ul></ul><ul><ul><li>Over 500,000 studen...
<ul><li>EconomicsPennsylvania  is the licensed distributor of the Stock Market Game Program in PA Administrative offices a...
Stock Market Game Interdisciplinary Applications
SMG Interdisciplinary Benefits Language Arts:   Research, Vocabulary, Presentations, Reading Comprehension Social Studies:...
SMG Interdisciplinary Benefits Business Education:   Consumer Spending, Decision Making, Record Keeping, Financial Plannin...
Stock Market Game Basics
SMG Basics <ul><li>Real-time stock market simulation </li></ul><ul><li>Played on the internet from any computer </li></ul>...
<ul><li>The game runs for  ten weeks in the Fall  and  ten weeks in the Spring </li></ul><ul><li>Each team begins with a  ...
<ul><li>Teams should have one to five players </li></ul><ul><li>Only  common   stocks  listed on the  American ,  New York...
<ul><li>Mutual funds may be traded </li></ul><ul><ul><li>Closed-ended funds may be traded just like the stocks traded on t...
<ul><li>A  2%   brokers   fee  is charged for each transaction </li></ul><ul><li>Stocks valued at less than  $5.00  per sh...
<ul><li>The team with the highest portfolio  equity  at the end of the game wins </li></ul><ul><li>Portfolios are  not  li...
How Does the Competition Work?
Teams compete within a  geographic region  and on  six levels
<ul><li>Grades 4-6 </li></ul><ul><li>Grades 7-8 </li></ul><ul><li>Grades 9-12 </li></ul><ul><li>Post-Secondary </li></ul><...
 
Rules of the  Stock Market Game
<ul><li>Advisors need a  working Email address  and  Internet access  to play </li></ul><ul><li>Transactions are made at t...
<ul><li>Stock and cash  dividends  are automatically computed into team portfolios </li></ul><ul><li>5% interest  is earne...
<ul><li>Trades entered after 4:00 p.m. will be processed at 9:35 a.m. the following day. </li></ul><ul><li>ROGUE STOCK RUL...
General  In formation
<ul><li>Buying: </li></ul><ul><li>Must be for a minimum of  100 shares </li></ul><ul><li>Must have a closing price of at l...
<ul><li>Selling: </li></ul><ul><li>Must already own the stock </li></ul><ul><li>Must be for a minimum of  100 shares  (unl...
Please Note:  For real time trading price limits are generally not needed except for trades entered after the market close...
<ul><li>Short Selling: </li></ul><ul><li>Short selling starts with borrowing a stock from your broker </li></ul><ul><li>Yo...
<ul><li>Short Covering: </li></ul><ul><li>Must have already short sold the stock </li></ul><ul><li>May set a maximum price...
Example: Short Selling and Covering <ul><ul><li>I am borrowing the stock from the broker (2%  brokerage fee) and selling i...
<ul><ul><li>When stock price is at its lowest, I  short cover  by buying the stock back in the stock exchange at the low p...
Long Positions: A  Long Position   is   a stock you own.   Ex : If a team  owns 100 shares  of McDonalds, their  long posi...
Short Positions: A  Short Position   is a  stock  you  borrowed  from the broker and  sold General Information #  of share...
Equity: Total Value of Long Position +   Cash Balance =  Equity General Information
<ul><li>Buying on Margin: </li></ul><ul><li>You may  borrow  funds using the stock in your portfolio as collateral for the...
Borrowing on Margin <ul><li>30% of value of long and short position is required as collateral (margin requirement) </li></...
Good Ideas
<ul><li>SMG Assessment Ideas: </li></ul><ul><li>ARTICLES   from web, newspapers or magazines on corporations  </li></ul><u...
<ul><li>HEADLINES   with a brief paragraph explaining the impact the story will have on the market </li></ul><ul><li>JOURN...
SMG Assessment Ideas: <ul><li>BASIC DATA  about a corporation </li></ul><ul><ul><li>52-week high and low </li></ul></ul><u...
Suggested Team Roles <ul><li>Entire Team </li></ul><ul><li>Research all holdings </li></ul><ul><li>Identify possible stock...
<ul><li>Economic Research Coordinator </li></ul><ul><li>Researches fundamental economic data: current events, overall econ...
$ $ SMG Costs
Team Fees: 10 Week Games: Grades 4-12  $15 College  $15 Youth Groups  $18 Adult  $25 Team Fees: Year Long Game: All groups...
<ul><li>New advisors receive: </li></ul><ul><li>Learning From the Market </li></ul><ul><li>Your Guide to Understanding Inv...
 
Investment Basics
Stock Market IQ Quiz Investment Basics
<ul><li>True or False </li></ul><ul><li>Stocks are items found in the storeroom of a grocery store. </li></ul><ul><li>Only...
<ul><li>Any stock that goes up in price must eventually come back down. </li></ul><ul><li>Bears, Bulls, and Pigs are found...
<ul><li>Sometimes companies buy their own stocks on the stock market. </li></ul><ul><li>It is hard to buy a good stock tod...
<ul><li>“ Insider” stock trading means that trading stocks takes place inside a building. </li></ul><ul><li>People can buy...
<ul><li>Insured Savings Accounts </li></ul><ul><li>Savings Bonds </li></ul><ul><li>Certificates of Deposit </li></ul><ul><...
The  RISK  to  RETURN  Relationship: The  RISKIER  the Investment - The  HIGHER  the Return Investment Basics
The Difference Between   Stocks,   Bonds,   and   Mutual Funds Stocks: You own a piece of the company You make money if th...
The Three Main Markets: NYSE :   N ew  Y ork  S tock  E xchange  Oldest, largest, best-known  stocks NASDAQ :  Large, mid-...
<ul><li>Large : </li></ul><ul><li>Often have high prices </li></ul><ul><li>Low risk of failure </li></ul><ul><li>Usually p...
<ul><li>Common Stocks: </li></ul><ul><li>Pay dividends based on performance of the company </li></ul><ul><li>Have higher r...
<ul><li>Stock Splits: </li></ul><ul><li>More shares are created at a lower price per share </li></ul><ul><li>Stockholders ...
Other Terminology: Blue Chips the largest and most  profitable stocks Bull Market a market that is rising Bear Market a ma...
Why long term investing is the best route? Investment Basics
DJIA over last 33+ years :
PE Ratio <ul><li>Price-to-earnings ratio. </li></ul><ul><li>Earnings = earnings per share or firm profit divided by number...
Where to get more information <ul><ul><li>American Stock Exchange-  www.amex.com </li></ul></ul><ul><ul><li>NASDAQ-  www.n...
Economics and the Stock Market <ul><li>Micro vs. Macro economics </li></ul><ul><li>Going from a good idea to a corporation...
Microeconomics <ul><ul><li>Scarcity and choice </li></ul></ul><ul><ul><li>Utility and profit maximization </li></ul></ul><...
Micro and the Stock Market <ul><li>Look at one company: </li></ul><ul><ul><li>How does this company make its product? </li...
Macroeconomics Macroeconomics studies the economy as a whole or as aggregates and attempts to predict or forecast changes ...
Macro & the Stock Market <ul><li>Look at the whole economy: </li></ul><ul><ul><li>Inflation: Producer and Consumer Price I...
When is the news good? <ul><li>Example : decrease in the unemployment rate: </li></ul><ul><ul><li>Good : sign of a growing...
U.S. Department of Labor Bureau of Labor Statistics “ Economy at a Glance”  http://www.bls.gov
<ul><li>Product idea: on-line financial services including banking, investments, retirement planning, estate planning, leg...
<ul><li>Suppose the company is doing well.  You need more money - go public, “ initial public offering ”  </li></ul><ul><l...
 
Stock Market Game  Team Registration Online Pre-registration
Login into SMG WORLDWIDE www.smgww.org
<ul><li>Click on “PREREGISTER NOW” </li></ul>Payment Form
Choose this option when you are ready to pre-register your teams.
For Free Promo, complete all fields in bold. FREE
Pre-registration Reminders <ul><li>You can print out the payment form ( www.economics pa.org ) to use for obtaining a PO #...
<ul><li>Registering Teams SMG WorldWide </li></ul><ul><li>Register online at www.smgww.org </li></ul><ul><li>Complete and ...
<ul><li>Registering Teams SMG WorldWide </li></ul><ul><li>Register online at www.smgww.org </li></ul><ul><li>Complete and ...
 
PE Ratio <ul><li>Price-to-earnings ratio. </li></ul><ul><li>Earnings = earnings per share or firm profit divided by number...
<ul><li>Beta = % change in stock return / % change in market return. </li></ul>Apple Inc. <ul><li>Beta = 1 means that the ...
Playing the  Stock Market Game Online Demo
Inside SMG WORLDWIDE (Teams) Playing SMG Sample portfolio pages <ul><li>The blue Trading tab contains all the functions ne...
Account Summary Playing SMG New portfolios start with $100,000. Sample portfolio pages
Sample portfolio pages Includes 2% broker’s fee charged for every transaction.
Enter a Trade & Pending Transactions <ul><li>It is a good idea to use the Validate Ticker option to ensure you are buying ...
Sample portfolio pages
Sample portfolio pages
This is the actual price of the trade. Sortable database of all transactions made
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National Council of Economic Education

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  • SMG WORLDWIDE Pre-Registration SMG WORLDWIDE, The Stock Market Game (SMG) is a national program. Find your local SMG coordinator by clicking on “Pre-Registration Information” at the SMG homepage and then selecting your appropriate Country and Location. Technical requirements for SMG WORLDWIDE include an active Internet connection and email account, the latest version of Microsoft Internet Explorer or Netscape Communicator version 4.7, and the latest version of Adobe Acrobat Reader. DO NOT use Netscape Communicator 6.0 with the SMG WORLDWIDE site. Rules and registration requirements vary from state to state. Contact your local SMG coordinator for clarification about the requirements. Begin the registration process by selecting your Registration Type at the bottom of your coordinator’s Pre-Registration Information page. Click the Pre-Registration Information button to access the information page for your local SMG Coordinator. Make sure you have selected the appropriate country and location for your state. Your local SMG Coordinator’s page includes information about the organization administering the SMG program, session dates, teacher training dates, and other relevant content about your state SMG program.
  • The Registration Form Be sure you check the box after the disclaimer. Your registration will not be processed unless you do so. Check that you have selected the desired trading session. Your local coordinator cannot make any changes to the session date once you have submitted your registration. In most cases, to change your session date, will require you to re-register with the desired session date selected. Please inform your local coordinator of any changes you desire. You must enter a valid email address for your registration to be processed. IDs and passwords and other relevant information is sent to you via email. In most cases, registrations with bad email addresses will be deleted. There is a differentiation between Classes and Teams. A Team is usually 3-5 participants or students. Teams usually make up the Class (eg. A class of 25 can be divided into 5 teams). Login IDs and passwords are usually emailed two weeks to a month prior to the start of the trading session. If you have not received your ID and password, please contact your local coordinator immediately.
  • National Council of Economic Education

    1. 1. National Council of Economic Education Carolyn Shirk Community Resource Manager 123 North Market St Selinsgrove, PA 17870 Cell: 570-975-5149 717-703-4059 570-374-9467
    2. 2. Sponsored By:
    3. 3. <ul><li>Who we are…. </li></ul><ul><ul><li>ECONOMICSPennsylvania at www.economicspa.org </li></ul></ul><ul><ul><li>NCEE at www.ncee.net </li></ul></ul><ul><ul><li>SMG Advisors </li></ul></ul>Welcome & Introductions
    4. 4. Omega Bank Center for Economic Education
    5. 5. Stock Market Game Program
    6. 6. Teacher Survey Findings <ul><ul><li>90% said that students were encouraged to learn more about the curriculum being taught with the SMG Program. </li></ul></ul><ul><ul><li>94% agree that the SMG Program helps them teach basic academic skills such as math, language arts, and social studies, in exciting ways. </li></ul></ul>
    7. 7. Teacher Survey Findings <ul><ul><li>96% agree that the SMG Program increases students’ ability to apply basic skills to life decisions. </li></ul></ul><ul><ul><li>98% found that their students’ understanding of the importance of saving and investing improved using the SMG Program. </li></ul></ul>
    8. 8. What Teachers like about SMG <ul><li>generates enthusiasm in hard-to-motivate students </li></ul><ul><li>helps meet educational standards across many required disciplines </li></ul><ul><li>combines the spirit of competition with learning </li></ul><ul><li>promotes cooperation and group autonomy among students </li></ul><ul><li>creates interest in current events </li></ul>
    9. 9. <ul><li>teaches economic concepts </li></ul><ul><li>sharpens skills in mathematics, especially in fractions and basic computations </li></ul><ul><li>incorporates easily into most classes </li></ul><ul><li>Is FUN! </li></ul>What Teachers like about SMG
    10. 10. What is the Stock Market Game Program (SMGP) ?
    11. 11. <ul><ul><li>Started in the late 1970’s by a University of Buffalo professor </li></ul></ul><ul><ul><li>Over 500,000 students compete nationally each year and over 40,000 students in Pennsylvania compete each year </li></ul></ul><ul><ul><li>Nationally sponsored by the Foundation for Investor Education </li></ul></ul>History of the Game
    12. 12. <ul><li>EconomicsPennsylvania is the licensed distributor of the Stock Market Game Program in PA Administrative offices and support of SMGP of PA provided by Temple University Fox School of Business and Management </li></ul>
    13. 13. Stock Market Game Interdisciplinary Applications
    14. 14. SMG Interdisciplinary Benefits Language Arts: Research, Vocabulary, Presentations, Reading Comprehension Social Studies: Current Events, Government Policy, Economic Concepts, Cultural Issues, History of our Economy
    15. 15. SMG Interdisciplinary Benefits Business Education: Consumer Spending, Decision Making, Record Keeping, Financial Planning Mathematics: Fractions, Decimals, Percentages, Ratios, Basic Computation Technology: Spreadsheets, On-line Research, Presentations, Word Processing
    16. 16. Stock Market Game Basics
    17. 17. SMG Basics <ul><li>Real-time stock market simulation </li></ul><ul><li>Played on the internet from any computer </li></ul><ul><li>Invest in most stocks and mutual funds traded in the three major US exchanges </li></ul>
    18. 18. <ul><li>The game runs for ten weeks in the Fall and ten weeks in the Spring </li></ul><ul><li>Each team begins with a hypothetical $100,000 </li></ul><ul><li>Teams may buy , sell , short sell , or short cover their stocks </li></ul>SMG Basics
    19. 19. <ul><li>Teams should have one to five players </li></ul><ul><li>Only common stocks listed on the American , New York , and NASDAQ Stock Exchanges may be traded </li></ul>SMG Basics
    20. 20. <ul><li>Mutual funds may be traded </li></ul><ul><ul><li>Closed-ended funds may be traded just like the stocks traded on the NYSE, NASDAQ and American Stock Exchanges. </li></ul></ul><ul><ul><li>Open-ended mutual funds can also be traded but cannot be short sold or short covered. </li></ul></ul>
    21. 21. <ul><li>A 2% brokers fee is charged for each transaction </li></ul><ul><li>Stocks valued at less than $5.00 per share may not be bought </li></ul><ul><li>Teams may borrow up to $100,000 to purchase stocks on margin -- interest is charged </li></ul>SMG Basics
    22. 22. <ul><li>The team with the highest portfolio equity at the end of the game wins </li></ul><ul><li>Portfolios are not liquidated at the end of the game </li></ul><ul><li>Portfolio equity in the tenth week is used for final rankings </li></ul><ul><li>Game week runs Monday through Friday. </li></ul>SMG Basics
    23. 23. How Does the Competition Work?
    24. 24. Teams compete within a geographic region and on six levels
    25. 25. <ul><li>Grades 4-6 </li></ul><ul><li>Grades 7-8 </li></ul><ul><li>Grades 9-12 </li></ul><ul><li>Post-Secondary </li></ul><ul><li>Youth Groups </li></ul><ul><li>Adult </li></ul>SMG Levels
    26. 27. Rules of the Stock Market Game
    27. 28. <ul><li>Advisors need a working Email address and Internet access to play </li></ul><ul><li>Transactions are made at the SMG WorldWide site at: www.smgww.org or http://stockmarketgame.org/ login.html </li></ul><ul><li>SMG of PA operates on ‘real time’ trading </li></ul><ul><li>Trades are processed within 15 – 20 minutes </li></ul>SMG Rules
    28. 29. <ul><li>Stock and cash dividends are automatically computed into team portfolios </li></ul><ul><li>5% interest is earned on cash balance </li></ul><ul><li>Portfolios are updated and available on a daily basis </li></ul><ul><li>Rankings are updated every weekend </li></ul><ul><li>Stock ticker symbols are used and can be looked up on the game pages </li></ul>SMG Rules
    29. 30. <ul><li>Trades entered after 4:00 p.m. will be processed at 9:35 a.m. the following day. </li></ul><ul><li>ROGUE STOCK RULE – If a stock has not been traded for seven days it will not be accepted and will not be permitted to be traded even though it is on the three major stock exchanges . </li></ul>
    30. 31. General In formation
    31. 32. <ul><li>Buying: </li></ul><ul><li>Must be for a minimum of 100 shares </li></ul><ul><li>Must have a closing price of at least $5.00 per share </li></ul><ul><li>May set a maximum purchase price limit </li></ul>General Information
    32. 33. <ul><li>Selling: </li></ul><ul><li>Must already own the stock </li></ul><ul><li>Must be for a minimum of 100 shares (unless selling the only remaining shares) </li></ul><ul><li>ex : If you bought 120 shares, then sold 100, you may then sell the remaining 20. </li></ul><ul><li>May set a minimum selling price limit </li></ul>General Information
    33. 34. Please Note: For real time trading price limits are generally not needed except for trades entered after the market close. General Information
    34. 35. <ul><li>Short Selling: </li></ul><ul><li>Short selling starts with borrowing a stock from your broker </li></ul><ul><li>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 </li></ul><ul><li>All rules for buying still apply </li></ul>General Information
    35. 36. <ul><li>Short Covering: </li></ul><ul><li>Must have already short sold the stock </li></ul><ul><li>May set a maximum price limit </li></ul><ul><li>All other rules for selling apply </li></ul>General Information
    36. 37. Example: Short Selling and Covering <ul><ul><li>I am borrowing the stock from the broker (2% brokerage fee) and selling it. Now I’ve got cash. </li></ul></ul>I feel that IBM stock is going to go down and want to short sell the stock. General Information
    37. 38. <ul><ul><li>When stock price is at its lowest, I short cover by buying the stock back in the stock exchange at the low price and returning it to the broker (2% brokerage fee). I keep what I didn’t spend. </li></ul></ul><ul><ul><li>I get the difference between the high price and the low price minus the brokerage fees. </li></ul></ul>Example: Short Selling and Covering General Information Note: it’s important to remember that you borrow the stock from a broker and return the stock. You do not give the broker any money.
    38. 39. 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 . General Information = Value of Long Position # of shares X current price per share
    39. 40. Short Positions: A Short Position is a stock you borrowed from the broker and sold General Information # of shares X current price per share = Value of Short Position
    40. 41. Equity: Total Value of Long Position + Cash Balance = Equity General Information
    41. 42. <ul><li>Buying on Margin: </li></ul><ul><li>You may borrow funds using the stock in your portfolio as collateral for the loan </li></ul><ul><li>Interest charged at 7% </li></ul><ul><li>Initial Margin Requirement = 50% </li></ul>General Information
    42. 43. Borrowing on Margin <ul><li>30% of value of long and short position is required as collateral (margin requirement) </li></ul><ul><li>Purpose to limit the amount borrowed to purchase stocks (risky) and to protect the broker </li></ul>
    43. 44. Good Ideas
    44. 45. <ul><li>SMG Assessment Ideas: </li></ul><ul><li>ARTICLES from web, newspapers or magazines on corporations </li></ul><ul><li>NOTES that state why </li></ul><ul><li>GLOSSARY of terms with definitions </li></ul><ul><li>LETTER to corporations requesting information </li></ul>
    45. 46. <ul><li>HEADLINES with a brief paragraph explaining the impact the story will have on the market </li></ul><ul><li>JOURNAL of TV coverage of market activities </li></ul><ul><li>BIBLIOGRAPHY of readings </li></ul><ul><li>GRAPH showing changes in the value of a stock </li></ul>SMG Assessment Ideas:
    46. 47. SMG Assessment Ideas: <ul><li>BASIC DATA about a corporation </li></ul><ul><ul><li>52-week high and low </li></ul></ul><ul><ul><li>P-E ratio </li></ul></ul><ul><ul><li>Location </li></ul></ul><ul><ul><li>Amount of debt </li></ul></ul><ul><ul><li>Average number of shares trading daily </li></ul></ul><ul><ul><li>Company plans for the future </li></ul></ul><ul><ul><li>S&P ranking, etc </li></ul></ul><ul><li>WORKSHEETS that track the initial purchase, price, broker’s fee, selling price, and profit or loss </li></ul>
    47. 48. Suggested Team Roles <ul><li>Entire Team </li></ul><ul><li>Research all holdings </li></ul><ul><li>Identify possible stocks </li></ul><ul><li>Collect company information </li></ul><ul><li>Give rationale for making a trade </li></ul><ul><li>Captain </li></ul><ul><li>Conduct team meetings </li></ul><ul><li>Determine consensus </li></ul><ul><li>Enter transactions on game site </li></ul>
    48. 49. <ul><li>Economic Research Coordinator </li></ul><ul><li>Researches fundamental economic data: current events, overall economy... </li></ul><ul><li>News about industries </li></ul><ul><li>Provide reports to team </li></ul>Record Keeper, Transaction Reporter, Charter, and more.... Team Roles
    49. 50. $ $ SMG Costs
    50. 51. Team Fees: 10 Week Games: Grades 4-12 $15 College $15 Youth Groups $18 Adult $25 Team Fees: Year Long Game: All groups $25 New Advisor Fee: $25 First time registration only SMG Costs
    51. 52. <ul><li>New advisors receive: </li></ul><ul><li>Learning From the Market </li></ul><ul><li>Your Guide to Understanding Investing </li></ul><ul><li>Market Mechanics CD Rom </li></ul><ul><li>Classroom materials </li></ul><ul><li>A free adult team upon request </li></ul>
    52. 54. Investment Basics
    53. 55. Stock Market IQ Quiz Investment Basics
    54. 56. <ul><li>True or False </li></ul><ul><li>Stocks are items found in the storeroom of a grocery store. </li></ul><ul><li>Only rich people invest in the stock market. </li></ul><ul><li>Most stocks on the stock market are sold by the United States Government. </li></ul><ul><li>If the stock market goes up 30 percent one year, it will fall by 30 percent in the next year. </li></ul>Investment Basics
    55. 57. <ul><li>Any stock that goes up in price must eventually come back down. </li></ul><ul><li>Bears, Bulls, and Pigs are found in the stock market. </li></ul><ul><li>Stock prices are set by the Securities and Exchange Commission, a regulatory agency of the U.S. government. </li></ul><ul><li>Stock markets are open on business days around the clock, around the world. </li></ul>Investment Basics
    56. 58. <ul><li>Sometimes companies buy their own stocks on the stock market. </li></ul><ul><li>It is hard to buy a good stock today because all the good ones have already been purchased. </li></ul><ul><li>Buying stocks is a sure way to make money. </li></ul><ul><li>Corporations sell new issues of stock on the New York Stock Exchange. </li></ul>Investment Basics
    57. 59. <ul><li>“ Insider” stock trading means that trading stocks takes place inside a building. </li></ul><ul><li>People can buy stocks on the internet. </li></ul><ul><li>When the stock market goes up, it causes the economy to grow. </li></ul><ul><li>From Learning from the Market , © National Council on Economic Education, New York, NY </li></ul>Investment Basics
    58. 60. <ul><li>Insured Savings Accounts </li></ul><ul><li>Savings Bonds </li></ul><ul><li>Certificates of Deposit </li></ul><ul><li>Treasury Bonds </li></ul><ul><li>Corporate Bonds </li></ul><ul><li>Mutual Funds </li></ul><ul><li>Stocks </li></ul><ul><li>Collectibles </li></ul><ul><li>Commodities </li></ul>Different Types of Investments: Investment Basics
    59. 61. The RISK to RETURN Relationship: The RISKIER the Investment - The HIGHER the Return Investment Basics
    60. 62. The Difference Between Stocks, Bonds, and Mutual Funds Stocks: You own a piece of the company You make money if the company does well Bonds: You loan money to a corporation or government You earn the interest Mutual Funds: You own one portion of a collection of stocks, bonds, or other securities Investment Basics
    61. 63. The Three Main Markets: NYSE : N ew Y ork S tock E xchange Oldest, largest, best-known stocks NASDAQ : Large, mid-sized, and small growth companies AMEX : A merican S tock Ex change Mid-sized growth companies Investment Basics
    62. 64. <ul><li>Large : </li></ul><ul><li>Often have high prices </li></ul><ul><li>Low risk of failure </li></ul><ul><li>Usually pay regular dividends </li></ul><ul><li>Small : </li></ul><ul><li>Potential for growth is greater than for larger companies </li></ul><ul><li>Generally prices are lower </li></ul>The Difference Between Large and Small Companies: Investment Basics
    63. 65. <ul><li>Common Stocks: </li></ul><ul><li>Pay dividends based on performance of the company </li></ul><ul><li>Have higher risk but may have higher reward </li></ul><ul><li>Preferred Stocks: </li></ul><ul><li>Dividend amount is preset </li></ul><ul><li>Dividends are paid on preferred stocks before common stocks </li></ul><ul><li>Have lower risk but may limit reward </li></ul>Investment Basics
    64. 66. <ul><li>Stock Splits: </li></ul><ul><li>More shares are created at a lower price per share </li></ul><ul><li>Stockholders profit if stocks go up </li></ul><ul><li>Indicated with an (s) in the paper </li></ul><ul><li>Ex : Dell $109  $54 </li></ul>Investment Basics
    65. 67. Other Terminology: Blue Chips the largest and most profitable stocks Bull Market a market that is rising Bear Market a market that is falling Investment Basics
    66. 68. Why long term investing is the best route? Investment Basics
    67. 69. DJIA over last 33+ years :
    68. 70. PE Ratio <ul><li>Price-to-earnings ratio. </li></ul><ul><li>Earnings = earnings per share or firm profit divided by number of shares. </li></ul><ul><li>More earnings per share given stock price results in a lower PE ratio and a better buy. </li></ul><ul><li>Find PE ratios in the newspaper. </li></ul>What stocks should I buy? Investment Basics
    69. 71. Where to get more information <ul><ul><li>American Stock Exchange- www.amex.com </li></ul></ul><ul><ul><li>NASDAQ- www.nasdaq.com </li></ul></ul><ul><ul><li>NYSE- www.nyse.com </li></ul></ul><ul><ul><li>CNNfn- www.cnnfn.com </li></ul></ul><ul><ul><li>Google - http://finance.google.com/finance </li></ul></ul><ul><ul><li>Database of Corporate Information- www.sec.gov/edgarhp.htm </li></ul></ul><ul><ul><li>Yahoo! Finance- http://finance.yahoo.com </li></ul></ul>
    70. 72. Economics and the Stock Market <ul><li>Micro vs. Macro economics </li></ul><ul><li>Going from a good idea to a corporation </li></ul>
    71. 73. Microeconomics <ul><ul><li>Scarcity and choice </li></ul></ul><ul><ul><li>Utility and profit maximization </li></ul></ul><ul><ul><ul><li>How do we allocate our budget, time? </li></ul></ul></ul><ul><ul><ul><li>How do firms allocate resources to produce goods and services? </li></ul></ul></ul><ul><ul><li>Efficiency </li></ul></ul>Microeconomics studies the behavior of the consumer, household, or firm. Micro vs. Macro
    72. 74. Micro and the Stock Market <ul><li>Look at one company: </li></ul><ul><ul><li>How does this company make its product? </li></ul></ul><ul><ul><li>Who buys this product? </li></ul></ul><ul><ul><li>Does the company have good managers? </li></ul></ul><ul><li>Look at one industry: </li></ul><ul><ul><li>How much competition in the industry? </li></ul></ul><ul><ul><li>Is the industry young or old? </li></ul></ul>What stock brokers and mutual fund managers get paid to do! Micro vs. Macro
    73. 75. Macroeconomics Macroeconomics studies the economy as a whole or as aggregates and attempts to predict or forecast changes in national output, unemployment, and inflation. Micro vs. Macro
    74. 76. Macro & the Stock Market <ul><li>Look at the whole economy: </li></ul><ul><ul><li>Inflation: Producer and Consumer Price Indices (PPI & CPI) </li></ul></ul><ul><ul><li>Unemployment: Unemployment rate </li></ul></ul><ul><ul><li>Interest rates: actions of the Fed </li></ul></ul><ul><ul><li>Productivity </li></ul></ul><ul><li>Use information to estimate good times to buy and times to sell. </li></ul>Note: an “active” investor thinks about how these indicators will affect the economy in 3 months! Micro vs. Macro
    75. 77. When is the news good? <ul><li>Example : decrease in the unemployment rate: </li></ul><ul><ul><li>Good : sign of a growing economy  increased consumer spending  increased profits. </li></ul></ul><ul><ul><li>Bad : indication of future labor shortages  increasing wages  inflation  fed increases interest rates  decrease profits, slow growth. </li></ul></ul>
    76. 78. U.S. Department of Labor Bureau of Labor Statistics “ Economy at a Glance” http://www.bls.gov
    77. 79. <ul><li>Product idea: on-line financial services including banking, investments, retirement planning, estate planning, legal services, etc. </li></ul><ul><li>Need funds to start business - find investors “ venture capitalists. ” </li></ul><ul><li>Each investor owns a stake or “ share ” of the corporation and has limited liability. </li></ul>Going Public: From a Good Idea to a Corporation Going public
    78. 80. <ul><li>Suppose the company is doing well. You need more money - go public, “ initial public offering ” </li></ul><ul><li>Going public: investment bank creates a prospectus and buys all shares of stock and resells them at a set price to the public </li></ul><ul><li>A “ tombstone ” is the public notice of an IPO </li></ul>Going Public: From a Good Idea to a Corporation Going public
    79. 82. Stock Market Game Team Registration Online Pre-registration
    80. 83. Login into SMG WORLDWIDE www.smgww.org
    81. 84. <ul><li>Click on “PREREGISTER NOW” </li></ul>Payment Form
    82. 85. Choose this option when you are ready to pre-register your teams.
    83. 86. For Free Promo, complete all fields in bold. FREE
    84. 87. Pre-registration Reminders <ul><li>You can print out the payment form ( www.economics pa.org ) to use for obtaining a PO # from your school. </li></ul><ul><li>If you submit a PO# with your online pre-registration, team #s and passwords will be generated right away, otherwise SMG will wait for the check. </li></ul>
    85. 88. <ul><li>Registering Teams SMG WorldWide </li></ul><ul><li>Register online at www.smgww.org </li></ul><ul><li>Complete and mail the payment form (online PDF) to SMG of PA Headquarters </li></ul>
    86. 89. <ul><li>Registering Teams SMG WorldWide </li></ul><ul><li>Register online at www.smgww.org </li></ul><ul><li>Complete and mail the payment form (online PDF) to SMG of PA Headquarters </li></ul>
    87. 91. PE Ratio <ul><li>Price-to-earnings ratio. </li></ul><ul><li>Earnings = earnings per share or firm profit divided by number of shares. </li></ul><ul><li>More earnings per share given stock price results in a lower PE ratio and a better buy. </li></ul><ul><li>So, is Mattel or Apple the better buy? </li></ul>
    88. 92. <ul><li>Beta = % change in stock return / % change in market return. </li></ul>Apple Inc. <ul><li>Beta = 1 means that the stock and market change by the same percentage. </li></ul><ul><li>Larger beta means a larger change than the market on any given day. </li></ul>
    89. 93. Playing the Stock Market Game Online Demo
    90. 94. Inside SMG WORLDWIDE (Teams) Playing SMG Sample portfolio pages <ul><li>The blue Trading tab contains all the functions necessary to compile research and make trades. </li></ul>
    91. 95. Account Summary Playing SMG New portfolios start with $100,000. Sample portfolio pages
    92. 96. Sample portfolio pages Includes 2% broker’s fee charged for every transaction.
    93. 97. Enter a Trade & Pending Transactions <ul><li>It is a good idea to use the Validate Ticker option to ensure you are buying the correct stock. </li></ul>Playing SMG Click one of these four options.
    94. 98. Sample portfolio pages
    95. 99. Sample portfolio pages
    96. 100. This is the actual price of the trade. Sortable database of all transactions made

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