The Republican Newspaper’s
2008-2009 Stock Market Challenge
General Rules and Guidelines:
1. The Republican Stock Market Challenge is open to grades 5-8 & 9-12.
2. The game will run from Nov. 3, 2008 to April 7, 2009.
3. Each team has an imaginary $1,000,000 to invest. Investment totals must come as
close as possible, without exceeding this $1,000,000. Any money not invested at the
beginning of the game will be forfeited.
4. Teams will be provided with a list of approved corporations. They may invest only in
the stocks of these corporations.
5. There will be two opportunities to trade stocks during the Challenge. The first will
likely be in December, and the second in February or March. Dates for the trades will be
made available later.
6. At all times during the Challenge, each team must have a minimum of five stocks in
their portfolio and a maximum of ten.
7. Teams may not make any purchases that would result in their having more than 20% of
their portfolio's total value tied up in one company’s stock. (see the Additional Resources
section for more details on the 20% rule).
8. Excel spreadsheets will be provided to each team for use in submitting their stock
purchases and trades. Teams are free to track their portfolio’s progress in any manner
they wish, but all transactions must be made using the Excel sheets provided.
9. Newspaper delivery – each team is eligible to receive 25 newspapers per week. You
may receive all 25 on one day or divide them across multiple days (minimum delivery is
5 copies for any day ordered). We recommend receiving at least some copies on
Tuesdays, since teams will need to use the prices published on selected Tuesdays (i.e.
Monday’s closing prices)in choosing their stocks and making trades.
10. Each Stock Market Challenge team will be charged a $50.00 flat fee. Fee must be
paid in advance by check, cash or charge. Purchase orders will also be accepted,
provided that copies are sent to us before the start of the Challenge.
11. All Initial Investments sheets and Trades Sheets must be turned in by the stated
deadline dates. Teachers and team leaders are asked to carefully check the
calculation on all sheets before they are submitted. Errors will result in our inability
to submit the trade.
12. In this game, dividends and brokerage commissions are excluded. Stock splits
will automatically be included when portfolios are calculated.
13. Team standing reports will be sent periodically by email in Excel format. If you
wish to have a hard copy mailed to you, or have other questions or concerns, please
notify Challenge Headquarters at
413-788-1073 or by email at email@example.com
TO BEGIN THE GAME:
1. Teams will purchase stock of no more than ten corporations and no less than
five from the list provided. Remember that teams may not have make any
purchases that would result in their having more than 20% of your portfolio's
total value tied up in one company’s stock. (For example, your portfolio value
should be approximately $1,000,000, so just make sure not to invest more
than $200,000 in any one company).
2. Stock purchases may not exceed $1,000,000, and any unused monies will be
3. Stock market closing figures of Mon., Nov. 3, appearing in The Republican on
Tues., Nov. 4, must be used by all teams for their initial purchases.
4. Each team must complete their “Initial Investment Sheet” using the Excel
sheet provided and email it to Challenge Headquarters at The Republican by
Wednesday, November 5, 2008.
5. There will be two opportunities to sell off stock and buy stock in other
companies during the course of the Challenge. The dates will be finalized
soon, but the trades are typically scheduled in December and February.
The Republican Newspaper’s
2008-2009 Stock Market Challenge
FIGURING OUT THE 20% RULE
As stated in the rules, “teams may not make any purchases that would result in their
having more than 20% of their portfolio's total value tied up in one company’s stock.”
The primary reason for this rule is to underscore the importance of maintaining a diverse
portfolio. Here are a few tips on staying clear of this rule:
1. Initial Stock Purchase: Since the 20% rule is based on the total value of your
portfolio, staying under the limit at the start of the Challenge is easy – simply make sure
that you do not purchase more than $200,000.00 in any one company.
2. Stock Trades: You will have two opportunities to trade stocks during the challenge.
You just need to make sure that any purchase of new stocks does not cause your holdings
in that company to exceed 20% of the total value of your portfolio before the trade..
Total portfolio value at time of trade = $1,250,000.00
20% of that total = $250,000.00
This means that your holdings in any 1 company cannot exceed $250,000.00 at
the completion of this trade.
So, if you owned $150,000.00 worth of shares of Company X before the trade, the
most that you could spend to buy more shares of Company X would be
Important note: During the course of the Challenge, a rise in the price of one of your
stocks might create a situation where more than 20% of your portfolio’s value is now tied
up in one company. This is OK, because the change was due to the natural fluctuation of
stock prices, rather than any action on your part. We certainly don’t want to penalize a
team for making a timely business decision! Just remember not to try and buy MORE of
that company’s stock at trade time .
What Are Stocks?
In order to raise money to grow – to buy new machinery, to build factories, to do
research, etc. – a business can become a corporation, entitled to sell shares of stock.
Stock is a share, or part ownership, in such a corporation. The stockholders, the people
who bought these shares, are the owners.
Imagine that you have invented a new snack that is so delicious all of your friends
love it! You would like to make enough of the snack to sell, but you don’t have enough
money to buy the ingredients in large amounts.
Some of your friends and relatives are willing to invest some money in your new
business. They are buying stock in your new company, and in return, they will share
some of the money you make. Of course, if your business doesn’t do well, they may lose
the money they invested, but they have confidence in you, and they are willing to take the
On a much larger scale, the stock market works in the same way. A corporation is
like an enormous pie cut into hundreds of pieces, or shares. The ability to sell these
shares gives the company a big advantage in raising capital, or money to grow. It is also a
form of investment for the stockholders who can profit in several ways. First, an investor
may be able to sell his stock for more than he paid for it, thus making a profit called a
“capital gain”. Second, some corporations pay stockholders dividends, or part of their
profits. By owning stock in a successful company, a person’s investment should increase
as that company grows.
Of course, investing in the stock market involves risks as well as rewards. Stock
prices can fall as well as rise, and a stockholder might not be able to sell his stocks for as
much as he paid for them. At worst, a company could fail, and an investor could lose all
of the money he originally paid for the shares.
The ups and downs of the stock market are popularly described by the terms
“bear” and “bull”. If more people want to sell stock than buy it, prices fall, and the
market is referred to as “bearish”. In a “bullish” market, prices rise because more people
want to buy than sell. The expression bear and bull as they describe the stock market are
thought to come from the way these animals attack. A bear’s paws swing downwards
when attacking, while a bull tosses its horns upwards.
1. Look through the Business section of The Republican. This section is largely devoted
to stock market reports. What corporations on the NYSE, AMEX and NASDAQ
most active lists can you identify?
2. As a class, invent a new product that should be a great success. Give your product a
name, and create a corporation to produce it. How much money might your
corporation need to start production? How could you raise this money?
3. Look for articles in the newspaper that discuss the fluctuations – the ups and downs –
of the stock market. Do any indicate that the current market is bullish or bearish? Or,
use the stock market listings to decide for yourself if the market is a bear or bull
Investing in the Stock Market
Most stock market investors seek advice from a stock market broker before they
choose their stocks. A broker is an expert on trading stock. His job is to bring together
the people who want to buy and sell stock. His value to his customers is his training and
his up-to-date knowledge of what’s going on in the stock market. In return for his
services, a broker is paid a commission, or a percentage of the value of the stocks that he
helps to buy and sell.
Using computers, a broker can find out a particular stock’s price at its last sale,
the highest price at which anyone will buy this stock, and the lowest price at which
anyone will sell it. This information helps the customer decide whether to buy or sell a
When an investor decides to buy or sell a stock, the broker wires the transaction
information to his representative on one of the several stock exchanges located around
the country. This representative bargains with other brokers until a bid and an offer meet
and a sale is made. Seconds after the transaction is reported, it flashes onto computer
screens in stock brokers’ offices throughout the world.
The New York Stock Exchange, NYSE, in New York City is by far the largest
stock exchange, followed by the American Stock Exchange, also in New York City.
There are also a number of smaller exchanges in other cities, which usually handle
businesses in their own regions. All of these exchanges, and the corporations and brokers
who trade on them, are regulated by the Securities and Exchange Commission, or SEC.
The SEC was established by Congress in 1934 to ensure that stock is fairly offered, that
strict rules for stock transactions are followed, and that companies that sell stock provide
truthful information to interested investors.
Besides the companies listed on the major stock exchanges, many more sell their
stock without an exchange. Such stocks are sold in the over-the-counter market, and are
known as OTC stock. There are thousands of stocks listed on the OTC market, ranging
in size from small shops to huge corporations. Brokers who deal with OTC stock rely on
the National Association of Securities Dealers Automated Quotation System, or
NASDAQ, to provide the prices of such stock and the dealers from whom they can be
Investors interested in opportunities abroad may make investments through major
stock exchanges in Amsterdam, Brussels, Buenos Aires, Johannesburg, London,
Melbourne, Sydney, Mexico City, Milan, Paris, Rio de Janiero, Tokyo, Montreal and
1. On a U.S. map, locate the following cities where regional stock exchanges are found:
Chicago, San Francisco, Philadelphia, Boston, and Cincinnati.
2. Name the countries in which the major international stock exchanges are located.
Can you find each of them on a world map or globe?
3. Discuss the role of the stockbroker. What qualifications and skills would a broker
need? Write an imaginary classified ad to find the perfect stockbroker to help your
team win The Republican Stock Market Challenge?
The Beginnings of the Stock Market
Until the Revolutionary War, most American businesses were small. The owners
worked alone, or perhaps with only a few employees. The Industrial Revolution of the
1800’s changed all of this. New sources of power, such as coal and steam, many new
inventions, including power-driven machinery, and faster forms of transportation,
especially the railroad, made it possible for businesses to grow, to produce greater
amounts of goods, and to deliver them more quickly to markets everywhere.
As these businesses grew, they needed new buildings, more modern and efficient
equipment, and more workers. All of these changed required large amounts of money.
This need to raise money led to the beginning of the stock market.
The people who bought and sold stocks needed a marketplace in which to conduct
their business, and in 1792 a group of 24 businessmen began meeting regularly under a
sycamore tree on Wall Street in New York City to buy and sell stock and to encourage
others to do the same. In this informal marketplace, people could trade stock directly with
The group soon moved to a restaurant, but as more businesses began to sell stock,
it needed more room – and also more formal rules and regulations. The marketplace was
moved again to a meetinghouse on Wall Street, and the New York Stock Exchange,
NYSE, was begun. The center of the United States’ financial activity is still on Wall
Street in New York City today.
Indexes and Average Reports
Investors usually pay attention to stocks other than their own as a measure of the
general level of confidence in the stock market. Rather than try to keep track of all stock,
readers of the Business pages often follow stock average reports, which show the general
trend of the market. Each day, the closing price of certain key stocks in various fields are
recorded and averaged. The results are compared to the averages of the previous trading
day. Changes are shown with a plus or minus sign. A change of –1.25 means that the
market in general is $1.25 lower than the day before.
There are many of these averages in existence, but the Dow Jones Industrials
Average is the most well known and most important of these average reports. It consists
of 30 specially selected stocks representative of American industry. Stocks currently
included in the Dow Jones Industrial Average are:
MMM 3M Corporation
AXP American Express
BAC Bank of America
KO Coca Cola
DD E.I. DuPont de Nemours
XOM Exxon Mobil
GE General Electric
GM General Motors
HD Home Depot
IBM International Business Machines
JPM JP Morgan Chase
JNJ Johnson & Johnson
KFT Kraft Foods
PFE Pfizer, Inc.
PG Proctor and Gamble
UTX United Technologies
VZ Verizon Communications
WMT Wal-Mart Stores
DIS Walt Disney
In addition to the Industrial Average, Dow Jones also reports on 15 utility companies, 20
transportation stocks, and an average of all 65 industrial, utility, and transportation
Other indexes important to investors include the Standard and Poor’s Index, and
the Index of Leading Economic Indicators and the Gross National Product (GNP), both of
which are determined by the U.S. Department of Commerce.
The Stock Market and the News
Stock market prices rise and fall according to the economic theory of supply and
demand. A corporation only has a certain number of shares to be traded, so prices
depend on whether people want to buy shares or sell them. If more people want to buy
stocks on a given day, the price of each share will go up; if more people want to sell, the
prices will go down.
The daily news has an affect on how people feel about the stability of the
economy, and it has a big influence on investors and their decisions regarding the stock
market. News that makes people worry can also make them decide to sell stock, causing
prices to fall. News that makes people confident may also makes them more willing to
invest, so that prices would rise. Investors, for example, who think that the election of a
particular president will bring prosperity are more likely to purchase stock. If they fear
the effect of a labor dispute within a major industry, they would be more inclined to sell
The value of an individual company’s stock varies depending on how well the
company does, how people feel about it, and its reputation. Has it lost money or been in
the news because of problems? These are questions that investors will consider before
buying this company’s stock.
If a company has a good name, more people are willing to buy its stock at higher
prices than if its reputation is poor. If a company is profitable, it is more valuable to
other people, who are anxious to buy its shares, driving prices up. If, on the other hand, a
business is losing money, the value of its stock falls as people sell them.
As an example, suppose that at the end of the trading day on Monday, one share
of the Acme Pharmaceutical Company, a small and newly incorporated business, is
selling for 2.50 ($2.50). The next morning, newspapers around the country report
findings that a new lotion manufactured by Acme Pharmaceutical has been found to
reverse baldness, stop wrinkles, and prevent acne. By Wednesday, everyone is buying
this “miracle” product, and the price of its stock soars to 20.25 ($20.25).
On Thursday morning, however, a news story reports a mistake in the medical
research; the value of this product is being questioned, and soon fewer people are buying
it. Acme Pharmaceutical Company’s value begins to slip, and by Friday the value of its
stock has dipped to 10.13 ($10.13). Whether the value of its stock continues to fall or
bounces back depends largely on what people feel about the worth of the new product,
and this is often determined by news reports.
Today, millions of people own shares of stock in American corporations. These
stockholders actually own the corporations, and although they rarely operate the
businesses themselves, they do have a stake in them, and in the future of our whole
economy. Buying stock is a sign of confidence in this future. Stockholders believe that
the companies they invest in will grow, and their investments are helping them, and our
whole entire economy, to do just that.
Stock Market Listings
1. Look through the list of corporations provided with this game. Find some of them in
the stock market report. On which exchanges are they listed? What was their closing
price and net charge? As a class, begin discussion of the corporations in which you
2. Choose 5 companies included in the stock market listings. For each, write the last, or
closing price and the net change in dollars and cents.
The Stock Market and the News
1. Look through the stock market listings and find a company whose stock has
made a significant gain or loss. Try to find a news item that might help to
explain this change.
2. During the next few days, make a list of major news stories. Identify the
industries which this news might affect. Use the stock market listings to see if
the news did have an effect on these industries, or on the stock market in
3. Many factors influence the stock market, especially events reported in the
news. Look for the following types of news reports. Check the Dow Jones
Average to see if there is a resulting shift in prices:
A government report about rising or declining interest rates
A report that indicates a change in employment rates
A political event of national importance
A political event of international importance