The Stock Market Day 3

Outside Expectations Partner Check: Reading Stock Prices Ask about any problems related to completing Fiscal Reports. Does everybody have a current balance they think is correct? Is anybody missing any information they need to assure their balance is correct?

Today’s Lesson: Making $ With Stocks Piggy Bank Initial amount of money stays the same. Ex. I put $5 in, I can take $5 out. Savings Account Earn interest (usually between 2-5%) Ex. I put $100 in savings, and in a year it’s worth $105. Stock Market More risky because you could lose money or make money. No guarantees. Potential of making a lot more money than a savings account.

Real Life Example Between 1926 and 1993 stock values increased an average of 10% a year. If you had invested $1 in the stock market in 1926, it would have been worth $800 in 1993.

How to Make Money with Your Stocks People make money from their stock ownership by getting dividends (which are usually paid quarterly, but for the sake of our project, they will be paid on Week 4 and Week 7). Companies can, however, choose not to distribute the profits if the board of directors feels that it needs to keep the money in the business for some reason. You can also make money by selling the stock when the price is higher than it was when you bought it. Ex. If a stock was originally $2 when you bought it and the price goes up to $5 a share, and you own 100 shares, you’d make $3 a share if sold it. The saying for this is “Buy Low, Sell High.”

How to Make Money with Your Stocks In the real world, you should also be prepared to hang on to your stocks for a long time. A company’s stock price usually changes slowly over a long period of time. Prices won’t usually jump significantly up or down over the period of a few days or months, and sometimes even years. Real Life Example: If you’d bought 10 shares of McDonald’s stock in 1965, they were $22.50 each, but by 1993 the stock had split 10 times and was worth about $96,000.

Doing the Math: Step 1: Figure out how much your shares cost you initially. Step 2: Add up any dividends you earned. Step 3: Add up the money you receive from selling your stock. Step 4: Subtract the original cost from the money you made through dividends and your selling price. If the number is positive, you have made a profit. If the number is negative, you have a loss.

Stock Value Updates OUTSIDE EXPECTATIONS: Share value changes Draw 3 Fate Cards Allow students who want to purchase or sell stock to “set up an appointment” with the stockbroker (aka Ms. Drake). Students will read Wall Street or work on their 2 practice sheets: “Making Money with Stocks” and “Buy or Sell?” while appointments are being held. OUTSIDE EXPECTATIONS: Finish both sides of worksheet or finish reading Wall Street Select a real life corporation you are interested in following.

Vocabulary Dividends: money from profits of a company that is paid to the stockholders. Payment can be in cash or in stock shares and is usually paid quarterly. Quarterly: once every 3 months Stock Split: when a company divides its stocks into smaller, more economical shares. If a stock splits 2 for 1, it means that the stockholders get 2 shares for every one that they own. The price of the new stock would be adjusted downward. Profit: money that is gained as a result of an investment