Georgia Council on Economic Education w w w. g c e e. o r g

Georgia Council on Economic Education w w w. g c e e. o r g The Basics Stock- An ownership share, or shares of ownership, in a corporation.

Georgia Council on Economic Education w w w. g c e e. o r g Can You Buy Stock in or

Georgia Council on Economic Education w w w. g c e e. o r g The Different Markets New York Stock Exchange The oldest stock exchange in the United States, founded in 1792 and stocks are still traded on the floor. Traditionally for large corporations with large volumes of shares.

Georgia Council on Economic Education w w w. g c e e. o r g NASDAQ An electronic marketplace enabling buyers and sellers to get together via computer to trade stocks. Traditionally high-tech firms that are very active. Created in 1971.

Georgia Council on Economic Education w w w. g c e e. o r g American Stock Exchange (AMEX) Located in New York, handles about 10% of all securities exchange. Has mostly small-cap stocks, exchange-traded funds and derivatives.

Georgia Council on Economic Education w w w. g c e e. o r g National Rules $100,000 to Invest for 10 Weeks NYSE AMEX NASDAQ Must Purchase Minimum of 10 Shares Minimum Share Price of $3 4 pm Closing Price (not real-time)

Georgia Council on Economic Education w w w. g c e e. o r g Georgia 3x3x3 Rules Purchase a stock before end of third week Must purchase at least three stocks Must hold three stocks for 3 weeks

Georgia Council on Economic Education w w w. g c e e. o r g National Rules Hardest thing to do? Get teams to spend the $100,000!.75% Interest Earned on Unspent Cash 1% Transaction Fee (all transactions) 7% Interest Charged on Margin Loans

Georgia Council on Economic Education w w w. g c e e. o r g Teaching “Stuff” Student- “What stock should I buy?” Me- “If I knew the answer to that I would not be in this classroom with you. I would be living here and paying someone to count my money.”

Georgia Council on Economic Education w w w. g c e e. o r g

Georgia Council on Economic Education w w w. g c e e. o r g Teaching “Stuff” $7.00 per team fee No fee if you are a Title 1 school No fee for any school in Atlanta City, Decatur City, Fulton County, DeKalb County Teams of 3-5 students (suggested)

Georgia Council on Economic Education w w w. g c e e. o r g Teaching “Stuff” Teams of 3-5 (recommend friends) Do not liquidate portfolio on the last day Rankings posted weekly Grading activities, not profit/loss Awards by region and state – luncheon for all winners in May

Georgia Council on Economic Education w w w. g c e e. o r g Winning Team Highest Portfolio Value (total Equity) Regional Winners – school districts Carroll Co. - Carrollton City – Independent Students get T-Shirts Go to Atlanta (underground) winners lunch State Winner Team Trophy Teacher gets week in NYC

Georgia Council on Economic Education w w w. g c e e. o r g October 6 to December 12 Real World never invest for just 10 weeks Strategy to win the game Buy low cost & highly volatile stocks Not a strategy for retirement or LT investing Invest for 10 Weeks

Georgia Council on Economic Education w w w. g c e e. o r g How to Win Select stock kids are familiar with; NIKE Buy at $100/share 1000 shares with $100,000 Price rises to $102/share Account increases by $2,000 Select stock with a lot of volatility; XYZ Buy at $10/share 10,000 shares with with 100,000 Price rises to $12/share Account increases by $20,000

Georgia Council on Economic Education w w w. g c e e. o r g SMG Buy ↑ Sell [Long position] Short Sell ↓ Short Cover [Short position]

Georgia Council on Economic Education w w w. g c e e. o r g Your friend loans you this-

Georgia Council on Economic Education w w w. g c e e. o r g You immediately turn around and sell the thing for $ (the $ goes in your pocket)

Georgia Council on Economic Education w w w. g c e e. o r g What do you owe your friend at this point?

Georgia Council on Economic Education w w w. g c e e. o r g

Georgia Council on Economic Education w w w. g c e e. o r g You expect leather briefcases to be on clearance sale at Macy’s for $150.00

Georgia Council on Economic Education w w w. g c e e. o r g When they go on sale, you buy your friend a new briefcase for $ She gets her briefcase back and you just made $50.00!

Georgia Council on Economic Education w w w. g c e e. o r g Your broker loans you this-

Georgia Council on Economic Education w w w. g c e e. o r g You immediately turn around and sell it for $40.00/shr x 100 shrs or $4,000 (the $4,000 goes in your pocket)

Georgia Council on Economic Education w w w. g c e e. o r g What do you owe your broker at this point?

Georgia Council on Economic Education w w w. g c e e. o r g

Georgia Council on Economic Education w w w. g c e e. o r g You expect the CDC to announce that Coke causes cancer… …so you wait.

Georgia Council on Economic Education w w w. g c e e. o r g Instead, the CDC announces that Coke cures cancer! What happens to the price of Coke stock? Maybe goes up to $200/shr

Georgia Council on Economic Education w w w. g c e e. o r g The Risk of Short Selling? If the price of the stock goes up before you return the stock to your broker, you will loose money. (must buy back at $200/shr Therefore lose $160/shr (For 100sh that’s a $16,000 loss)

Georgia Council on Economic Education w w w. g c e e. o r g Buy on Margin Initial Margin is 67% Margin = Portfolio Value (PV) – Loan (L) Margin/PV = margin as a % of PV >= 67% Eg 200,000 pv PV – L >= ,000 loan PV 100,000 margin L <=.33 PV PV = Stock + Cash

Georgia Council on Economic Education w w w. g c e e. o r g Margin Call If your collateral (portfolio value) decreases your broker (lender) may want more collateral (will make you sell stock) Game Maintenance Margin (MMR) is 30% ie., Margin = (PV – L) > =.30 PV or LOAN<=.70PV This requires a minimum PV > 1.43 (Loan) If you fall be low the MMR you get a Margin Call Must then (within 3 weeks) sell stock

Georgia Council on Economic Education w w w. g c e e. o r g What are Your Questions?

To Login into the SMG: or gcee.org Georgia Council on Economic Education w w w. g c e e. o r g

Georgia Council on Economic Education w w w. g c e e. o r g SIA_2_A207

Georgia Council on Economic Education w w w. g c e e. o r g

Georgia Council on Economic Education w w w. g c e e. o r g

Georgia Council on Economic Education w w w. g c e e. o r g

Georgia Council on Economic Education w w w. g c e e. o r g Add number of classes Add number of teams within classes

Georgia Council on Economic Education w w w. g c e e. o r g For Teachers (gcee.org) Teacher Support Center FAQ – need 1 computer in room View Teacher Classroom Experience Grading Tip - Photo of each Team - - rank on wall by P.V. If Something Goes Wrong Call Barbara Futrell or

How to Find Good Stocks Screening For Stocks This site lists the largest 10 holdings of an untra small cap mutual fund that has had an average return of 26 % per year for 5 years ending in Feb This site lists the top % price gainers from the day before. Also, in the left column you can also select the top % price loosers from the day before. A good list to find potential 100 % gainers over the next ten weeks This site allows you to set criteria for stock you want Price, P/E, Max Market Cap, etc

Georgia Council on Economic Education w w w. g c e e. o r g magicformulainvesting.com westga.edu/~lvg/SMGPP2014.ppt

Georgia Council on Economic Education w w w. g c e e. o r g Questions?