Bell Ringer. List as many things that come to mind when you hear the words stock market or stocks.

Transcription

1 Bell Ringer List as many things that come to mind when you hear the words stock market or stocks.

2 Objectives 1. Define what a stock is. 2. Describe how stocks are traded. 3. Explain how stock performance is measured.

3 Introduction Investing Basics: Stocks

4 Introduction How does the stock market work? In order to raise money, corporations can sell stock in their company. Stock, or ownership shares in a company, are bought and sold on a stock market.

5 How Stocks are Traded If you want to buy stock, you would first contact a stockbroker to advise you on which stocks to buy (for a fee). The broker then buys stocks on a secondary market known as a stock exchange.

6 Stock Exchanges The New York Stock Exchange (NYSE) is the world s largest and most powerful exchange, handling stock and bond transactions for the top companies in the U.S. and around the world. The Nasdaq is the second largest exchange market and the largest electronic market. Most tech/electronic companies trade on Nasdaq (Apple, Google, Netflix, etc.)

7 Measuring Stock Performance The Dow Jones Industrial Average (DJIA) measures stock performance. It is an index that shows how 30 large publicly owned companies based in the United States have traded during a standard trading session in the stock market. Companies include Apple, Coca-Cola, General Electric, McDonald s, Verizon, Wal-Mart, Disney and others (aka, blue-chip stocks).

8

9 Guide To Stock Listings Price/share Volume 52 week high & low What do these indicate? Stock ticker symbol (NKE, AAPL, MSFT, etc.) Closing price (Close) & change %

10 Mr. Lange - Economics STOCK MARKET SIMULATION

11 INTRODUCTION Welcome to Mr. Lange s Stock Market Simulation! As members of an investment group, you will be competing against one another to see which group can increase their investment portfolios the most. The investment group with the greatest portfolio value at the end of the simulation wins.

12 RULES Each group (three to six members) must come up with an original name for their investment group and elect a team captain. Each team begins the simulation with $10,000 in cash.

13 RULES Teams may only trade stocks listed on Nasdaq or the NYSE. All stock values are priced at current market prices. Teams are not permitted to own stock in more than six companies at a time.

14 RULES Teams may not own more than three stocks priced under $5/share. Teams are not permitted to have more than $2,000 in cash at any time. To buy stock, each team must complete a purchase order form and have it initialed by the broker (Mr. Lange).

15 RULES A 2% broker s fee is charged for all transactions. (For example, if you buy 100 shares of a stock at $10/share, you must pay the 2% of $1000, or $20.) A team ledger (data on stock performance and cash on hand balance) and purchase orders/transactions must be maintained. The team with the greatest portfolio value at the end of the simulation (value of all stocks + cash onhand) wins.

16 HOW ARE YOU GRADED? Completion of all assignments Completion of all stock transactions and bookkeeping Final portfolio value Did you beat the market? Success will be rewarded with a higher grade! (Just like real life.)

17 FORMING YOUR INVESTMENT GROUP In your investment groups (3 to 6 members), complete the following tasks: Choose a name for your investment group. Select a team captain. Get a binder and make sure you obtain: Rules sheet Blank paper for your team name/logo Guide to Stock Listings

18 Bell Ringer What would you need to know about a company before you invest in it? How is your group going to decide on the stocks it will invest in? What are your preliminary choices for the stocks you will invest in? Which companies are you currently looking at? Remember, you can only invest in a maximum of six stocks.

19 Company Stock Research Your investment group will research four companies that you would like to invest in. Remember: You can t throw money at the stocks you have to know who you re investing in! Industry = What business sector? Apple = Technology; ExxonMobil = Energy; Wal-Mart = Retail History = financial and organizational history. How long has the company been around? Who are its biggest competitors? How has its stock performed historically? What is the current trend and financial forecast for the stock? What are the pros and cons of investing in the company?

20 Bell Ringer Get into your investment groups and get your binders. Turn in your Company Stock Research assignment into the black basket. Obtain a Purchase Order Form and Ledger On the Purchase Order Form, fill out the 1-6 companies you want to invest in by putting their trading symbols under the Symbol column. Await further instructions

21 How To Calculate Stocks Price of stock x Number of shares purchased = Total amount of purchase Total amount of purchase x 2% (0.02) = Broker s fee The same applies when you want to sell stocks as well

22 How To Calculate Stocks - EXAMPLE Your group wants to buy 50 shares of Nike stock, which is currently priced at $60/share. 50 shares x $60/share = $3000 Broker s fee = $3000 x 0.02 = $60

23

24 How To Chart Your Portfolio Your ledger has four columns: Date; Ending Cash on Hand; Total Stock Value; Total Portfolio Value Ending Cash on Hand is taken from the bottom of that day s purchase order form. Total Stock Value is the sum of the total value of all your stock investments. Total Portfolio Value is the sum of your cash-onhand plus your total stock value.

25

26 Checking Stock Prices Get into your stock market investment groups. Grab your portfolios and a Purchase Order Form from the front table. Fill in the Symbols and # Of Shares for the stocks you have already purchased.

27 Wrapping It Up Your portfolio needs to be arranged in the following order: Ledger P.O. forms in chronological order, from latest to earliest Company Stock Research form On your rubric, write your group members names, period number, and your final total portfolio value (cash on hand + stocks) at the top. Circle your portfolio s market performance score. Place your rubric in the inside front pocket of your portfolio.

28 Evaluation Which stocks performed the best? The worst? Were there any stocks that surprised you? For the groups that beat the market performance, what was your group s strategy? What would you have done differently?

29 Teenage Investors High Schooler Makes $300K Trading Stocks on His Phone 20 Top Stock Market Traders Under 20