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Stock Market Game

Background:

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Overview: In order to gain an understanding of how the stock market works, you will be participating in a stock market simulation. In this game, you will be able to build a portfolio (collection) of stocks by investing a hypothetical $100,000. The simulation will run through our unit on the Great Depression (and possibly longer). You will be graded on your responses to prompts (questions) throughout the simulation, and possibly with an additional assessment at the end.

What is the my main goal for this stock market simulation?

Believe it or not, my goal for you regarding this activity is NOT to see who can earn the most money in the shortest period time. That may the goal in other classes, but it is not for this one. That goal leads to overly risky behavior in the market, which is not what we, as a society, need. Stock market crashes have been caused by such behavior. My goal is to help prevent a repeat of those things, not to make them more likely to happen again.

My goal is simply that you become knowledgeable about the stock market, what it is, why it exists, how it generally operates, and the risks and rewards associated with it (they can both be very considerable). Finally, I want you to know how to get involved in it and, if you choose to actually do so, to do so with some level of comfort and confidence.

Again, this is NOT a competition to see who can earn the most money in the shortest period of time. I cannot stop you for approaching it that way if that is what you want to do. I do, however, hope you understand why it is not my goal for you.

What are the 4 basic kinds of investments that investors can make?

Stocks:

A stock is a type of investment that shows you have ownership in a single corporation (company).

Having it means you have a claim to part of that company’s profits and property.

For example, “Apple” is a corporation in which you could buy stock. Its symbol is “AAPL”.

Mutual Funds:

Think of a mutual fund as being like a box. That box is stacked full of stocks that are from many different

companies. Someone working at the mutual fund company has done research and they believe they

have put together a package of stocks that will, overall, go up in value and make you, the investor that

buys the mutual fund, money. An example of a mutual fund is one that I own. It is called “Davis New

York Venture Fund” and its symbol is “NYVTX”. Feel free to check it out. The fact that someone is

actively working on putting these funds together – and making changes to them if they believe it is

necessary – makes them “actively managed” investments.

Exchange Traded Funds (ETF’s):

“ETF” stands for “Exchange Traded Fund”, which is exactly how it sounds; they are like mutual funds in many ways, but they trade on a normal stock exchange like a stock. ETF funds are not usually actively managed, instead they work like an index; the fund is established to track a basket of stocks or other assets in a certain pre-existing class. An example is the Spider SPY ETF: this fund is based on the S&P 500. This means that all shares of the SPY ETF represents a small piece of shares in the 500 companies in the S&P 500.

Bonds (apparently not done in this simulation):

Bonds are loans. Bonds can be sold by companies, like General Motors, or by the government (local,

state and federal levels). Bonds have certain amounts of time associated with them, as well as an

interest rate that must be paid to whoever has the bond. For instance, you can buy a U.S. Treasury Bond

that might be a 10 year bond that pays 2% interest. If you spent $100 on the bond, every year you

have the bond you will get $2 in interest, for a total of $20 overall. At the end of the 10 years you will

get your original $100 back. In the end, you have made your $100 grow into $120.

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How To Read A Stock Table

If you are new to investing, or considering investing in individual stocks for the first time, then one of the basic things you will need to do is follow and learn how to read a stock table.

Source:

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If you are looking for resources on stocks to purchase or ticker names follow the links shown below. Good luck, investors!

Links to Suggestions for Stock and Mutual Fund Picks:

(1) Money Magazine’s Best Mutual Funds and ETF’s (their top picks for mutual funds and ETF’s)



(2) Kiplinger's 25 Favorite No-Load Mutual Funds



(3) “10 Best Stocks to Buy for the Next Decade” (Kiplinger’s)



(4) 7 Stocks to Buy in Case the Bull Market Stalls (Kiplinger’s)



(5) Best Stocks to Buy in 2019 (U.S. News and World Report)



MSN’s stock screener



Other Useful Links (for general research and education):

(5) Money Essentials



- Pick a topic under “Starting to Invest”.

(6) Links To The Major Stock Indexes”

Dow Jones Industrial Average:

(30 major stocks)

NASDAQ:

(thousands of stocks)

S&P 500: (500 major stocks)

Stocks 1-250:

Stocks 251-500:

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