Download The Stock Market Game

The Stock Market Game
LaMarca
SMG Team Roles
DIRECTOR The Director is in charge of the team. It is his responsibility to coordinate the efforts of entire
team and ensure that activities are being completed successfully and that everyone on the team is being treated
fairly. If the occasion arises, he is responsible for summarizing his team’s activities and reporting them to the
teacher and other teams.
LEAD RESEARCHER Everyone on the team is responsible for gathering and sharing research on potential
investments and trades. The Lead Researcher is responsible for coordinating all of his teammate’s findings and
summarizing them.
LEAD PORTFOLIO COORDINATOR The Lead Portfolio Coordinator may not have much to do at first but a week
into the game, he will be busy monitoring his team’s portfolio transactions. He keeps a record of all transactions
made by his team to verify portfolio data being displayed is correct. He reviews his team portfolio’s Transaction
History, Account Summary, Account Holdings, and Gains & Losses reports for accuracy. LEAD DATA ENTRY
COORDINATOR All of the team members should have a chance to logon and enter trades. The Lead Data Entry
Coordinator is responsible for the transactions entered into his team’s portfolio. He checks their portfolio’s
Pending Transactions and Transaction Notes sections for error messages. LEAD REPORTER The Lead Reporter
is in charge of compiling his team members’ meeting notes. His job is to maintain a current journal of his team’s
activities and the status of their portfolio.
Consensus Building Building consensus means coming to an agreement about something. You will be building
consensus when you come together as a team to decide which stocks, bonds, and mutual funds you wish to
include in your portfolio.
Stages of Consensus
1. LISTEN Be sure that each team member has a full understanding of what other team members are saying.
2. CONTRIBUTE Share all relevant information even if it conflicts with personal interests.
3. INCLUSION Ensure that everyone is included in the decision-making process.
4. EVALUATE Determine what points team members agree on and what points they disagree on. Spend time
evaluating the differences.
5. TIME Don’t waste time discussing those points that team members already agree on.
6. VIEW Conflict about ideas, solutions, rationales, and predictions helps ensure that all sides of an issue are explored
to the satisfaction of all team members.
7. LOOK Observation of both verbal and non-verbal signs from team members will help determine when consensus has
occurred. In many cases a formal vote on an issue is not necessary.
8. COMPROMISE It doesn’t mean that a team member gives up a position. It means that the opinions of all team
members are equally important, that each member will discuss an issue with an open mind, and is willing to fully
support a decision made by the entire team.
Consensus Practice Let’s practice consensus building by agreeing on a name for your Stock Market Game
team.
First:B R A I N S T O R M Everyone on the team creates a list of names. Don’t think too much about it, just get
all the ideas you can on paper as fast as you can.
Second:E V A L U A T E Each team member chooses their top two choices for names and provides a reason why
they are good names.
Third: D I S C U S S The team Director asks each person to give a reason why particular name is a good name
and why that same name might not be a good name.
Fourth:D E C I D E After discussing the pros and cons of the names the team votes on a name, if a consensus has
not yet been reached.
Rules of The Stock Market Game Program
1.
Each team begins the simulation with $100,000 in cash. Daily Interest = Cash x Appropriate Interest
Rate (as a decimal)
2.
You may trade only stocks listed on the NASDAQ Stock Market and the New York Stock Exchange.
3.
End-of-Day Game transactions are priced at market daily closing prices. These prices can be found in
the next day's newspaper or by using the price quote facilities of SMG.
4.
All Stock buy orders must be a minimum of 10 shares. Sell orders for less than 10 shares are
permitted.
5.
The minimum market capitalization for stocks in the Stock Market Game is $25 million. This rule
supports the trading of highly liquid and stable stocks with low volatility.
6.
SMG does not permit buying stocks or mutual funds that trade below $3 per share the day before and
the day of execution. Such orders will be rejected.
7.
A 1% broker's fee is charged for all transactions. For example, if you buy 100 shares of a stock at $10
per share, you must pay the 1% of $1000 or $10. On Sell transactions an SEC fee is also charged.
8.
The Game is run Monday through Friday. Teams may trade on any day the participating stock markets
are open.
9.
Stock trades entered after close of market (4:00 PM ET) will be priced at next day's closing price.
What Is a Company?
What is the name of this candy?
How do you know?
How many of you recognized it without reading the tag?
Who makes it?•
How does this all happen?
Who makes it happen?
A company is a person or group that makes something for other people to buy. Companies try to earn a profit or make
money from the sale of their products or services. Very often a company makes several products.
Vocabulary
Brand: A trademark or distinctive name identifying a product or a company setting it aside from rival products or
company.
Company: A business or association usually formed to manufacture or supply products or services for profit
Corporation: A company legally separate from stockholders who own it and the managers who run it.
What do these things have in common?
The items are different brands all made by the same company – PepsiCo.
Investors often invest in companies they know own popular products and brands.
What are some of their favorite brands?
Names of your favorite brands
Tally
In your SMG teams. Select five companies from the cumulative brands list and then choose five brands of their own.
Team Name
1
2
3
4
5
6
5 brands
from the
class list
1Brand
2 Brand
3 Brand
4 Brand
5 Brand
What is a Stock?
Five friends want to chip in to purchase the latest Xbox game system. They have agreed to keep it in one friend’s
basement and play it together every day. It cost $360.00. If they each pay an equal share how much would each friend
pay?
Ask What rights and responsibilities should each friend have as part owners of this game system?
How can they each prove they are part owners in the game system?
Explain Stock ownership allows an investor to be part owner in a company they believe is going to be successful. Just
like the friends, a stock owner has rights and responsibilities when they buy share or a piece of a public company.
What is a stock?
Ronald Dahl’s Charlie and the Chocolate Factory:
The secret and reclusive candy maker, Willy Wonka, offers five children the chance to see his world-famous chocolate
factory. To have this opportunity the children must each find one of five golden tickets hidden in Willy Wonka’s
chocolate candy bars. Charlie Bucket, an earnest boy from a very poor family, finds the final ticket. Once inside the
factory, the five children go on a marvelous, yet dangerous tour led by Mr. Wonka. They find that Mr. Wonka makes all
the decisions in the factory. One by one the children break the rules except for Charlie Bucket. Because Charlie is the
only child who makes it to the end of the adventure without breaking any serious rules, Willy Wonka decides to give
Charlie his chocolate factory.
Vocabulary:
A private company is owned by a person, family, or small group of investors that does not sell stock to the company.
They make all the decisions for the company.
●
What evidence in the story is there that let’s you know Willy Wonka’s company is owned privately?
Unlike the Wonka Chocolate Factory most companies are public companies that sell shares of the company called
stock to people called investors. Stock allows investors to share ownership in a company with others. In a publicly
traded company, an investor will choose to buy stock in a particular company because he or she thinks the company
will make money, the stock price will increase and the investor will make money on his or her investment. There is
always a risk, however that they will lose money.
If an investor wanted to purchase 50 share of the Chocolate Company at $20 a
share how much would that cost in total?
If the price of one share of stock went to $10 a share a month later, would the
investor make or lose money?
Prove your answer mathematically.
If the price of one share of stock went to $30 a share two month later, would the
investor make or lose money?
Prove your answer mathematically.
You purchased 100 shares of Willy Wonka Chocolates for $10.00 per share. A
year later you sell your 100 shares for $20 per share.
Did you make a profit or lose money?
How much money did you make or lose?
Explain your results mathematically
You purchased 100 shares of Willy Wonka Chocolates for $12 per share. Two years
later you sell your 155 shares for $23 per share.
Did you make or lose money?
How much did you make or lose?
Explain your results mathematically.
You purchased 200 shares of Willy Wonka Chocolates for $20.76 per share. Six
months later you sell half your shares for $23.67 per share. A year later you sell the
other half for $19.21.
Did you make a profit or lose money?
How much did you make or lose?
Explain your results mathematically.
What is a Ticker Symbols?
How many of you have nicknames?
some nicknames are short versions of the student’s official name like Jenny for
Jennifer; others are initials like JP for John Paul and still others are completely
different like Jack for John.
Companies have a variety of nicknames that have developed over time called
ticker symbols.
Ticker Symbols make it easier to locate company information because they are unique and
short (usually only one to five characters).
To purchase stock in companies you must learn how to find the ticker symbol or nickname for the
company.
Parent Companies:
We are going to play Company bingo. As I call out the brand, you will locate the company ticker
symbol or abbreviation. The team that quickly answers the most questions wins.
Brands and Subsidiaries:
We are going to play bingo activity.
What is the difference among a Brand? Subsidiary? Company?
Explain that locating companies on a website will take some searching, too. It is the company, not the
brand or subsidiary that has the ticker symbol.
Vocabulary
Brand: A trademark or distinctive name identifying a product or a company setting it aside from rival
products or company.
Subsidiary: a company that is partly or completely owned by another company that holds a controlling
interest.
Company: A business or association usually formed to manufacture or supply products or services for
profit Corporation: A company legally separate from stockholders who own it and the managers who
run it.
What is an Exchange?
The NYSE Euronext uses an auction platform (buying and selling takes place on a physical trading
floor).
The NASDAQ is the largest electronic stock market in the US. When it began trading in 1971, it was
the world’s first electronic marketplace. Transactions take place on a virtual platform. Investors at
remote locations all over the world buy and sell shares on a virtual platform.
Both the NASDAQ and the NYSE Euronext have their own rules. For example, the NYSE Euronext
requires companies to have a higher market cap than the NASDAQ in order to be listed.
One reason a company’s stock is traded on one exchange and not another is because of its size. A
company’s size and history can give investors some insight into its reliability, future performance, and
stock price.
Another reason a company lists on one exchange and not the other is because the company has
chosen to do so. Some of the things a company considers are the fees associated with listing and the
customer service provided by the exchange.
As your SMG team builds it portfolio, they will often have to decide between two
very similar companies.
SMG teams will discuss which of the two companies in each set they feel are a
better investment:
Dunkin Donuts (DNKN)
or
Krispy Kreme (KKD) Copyright © 2013 SIFMA Foundation.
Home Depot (HD)
or
Lowes (LOW)
Burger King (BKW)
or
McDonald’s (MCD)
share their answers and the criteria you used to arrive at your selections. Create three to five rules for determining
whether a company was a good investment or not.
SMG teams to complete
Activity Sheet 1: The NASDAQ and NYSE.
What they think makes a company choose one
exchange over another?
Do they believe the exchange a company is
listed on impacts its stock performance?
Is where a company is listed important to you
when you do your stock research?
Homework
You will look up three stocks on each of the
exchanges.From the information collected
about each stock, explain why each is traded
on the exchange on which it is listed.