1. National Council of Economic Education
Carolyn Shirk
Community Resource Manager
123 North Market St
Selinsgrove, PA 17870
Cell:

2. Sponsored By:

3. Welcome & Introductions
Who we are….
ECONOMICSPennsylvania at
NCEE at
SMG Advisors

4. Omega Bank Center for Economic Education

5. Stock Market Game Program

6. Teacher Survey Findings
90% said that students were encouraged to learn more about the curriculum being taught with the SMG Program.
94% agree that the SMG Program helps them teach basic academic skills such as math, language arts, and social studies, in exciting ways.

7. Teacher Survey Findings
96% agree that the SMG Program increases students’ ability to apply basic skills to life decisions.
98% found that their students’ understanding of the importance of saving and investing improved using the SMG Program.

8. What Teachers like about SMG
generates enthusiasm in hard-to-motivate students
helps meet educational standards across many required disciplines
combines the spirit of competition with learning
promotes cooperation and group autonomy among students
creates interest in current events

9. What Teachers like about SMG
teaches economic concepts
sharpens skills in mathematics, especially in fractions and basic computations
incorporates easily into most classes
Is FUN!

10. What is the Stock Market Game Program
(SMGP) ?

11. History of the Game
Started in the late 1970’s by a University of Buffalo professor
Over 500,000 students compete nationally each year and over 40,000 students in Pennsylvania compete each year
Nationally sponsored by the Foundation for Investor Education

12. EconomicsPennsylvania is the licensed distributor of the Stock Market Game Program in PA Administrative offices and support of SMGP of PA provided by Temple University Fox School of Business and Management

13. Stock Market Game Interdisciplinary Applications

14. SMG Interdisciplinary Benefits
Language Arts: Research, Vocabulary, Presentations, Reading Comprehension
Social Studies: Current Events, Government Policy, Economic Concepts, Cultural Issues, History of our Economy

15. SMG Interdisciplinary Benefits
Business Education: Consumer Spending, Decision Making, Record Keeping, Financial Planning
Mathematics: Fractions, Decimals, Percentages, Ratios, Basic Computation
Technology: Spreadsheets, On-line Research, Presentations, Word Processing

16. Stock Market
Game Basics

17. SMG Basics Real-time stock market simulation
Played on the internet from any computer
Invest in most stocks and mutual funds traded in the three major US exchanges

18. SMG Basics
The game runs for ten weeks in the Fall and ten weeks in the Spring
Each team begins with a hypothetical $100,000
Teams may buy, sell, short sell, or short cover their stocks

19. SMG Basics
Teams should have one to five players
Only common stocks listed on the American, New York, and NASDAQ Stock Exchanges may be traded

20. Mutual funds may be traded
Closed-ended funds may be traded just like the stocks traded on the NYSE, NASDAQ and American Stock Exchanges.
Open-ended mutual funds can also be traded but cannot be short sold or short covered.

21. SMG Basics A 2% brokers fee is charged for each transaction
Stocks valued at less than $5.00 per share may not be bought
Teams may borrow up to $100,000 to purchase stocks on margin -- interest is charged

22. SMG Basics
The team with the highest portfolio equity at the end of the game wins
Portfolios are not liquidated at the end of the game
Portfolio equity in the tenth week is used for final rankings
Game week runs Monday through Friday.

23. How Does the Competition Work?

24. Teams compete within a geographic region and on six levels

25. Grades 4-6 Grades 7-8 Grades 9-12 Post-Secondary Youth Groups Adult
SMG Levels
Grades 4-6
Grades 7-8
Grades 9-12
Post-Secondary
Youth Groups
Adult

27. Rules of the
Stock Market Game

28. Advisors need a working Email address and Internet access to play
SMG Rules
Advisors need a working address and Internet access to play
Transactions are made at the SMG WorldWide site at: or login.html
SMG of PA operates on ‘real time’ trading
Trades are processed within 15 – 20 minutes

29. 5% interest is earned on cash balance
SMG Rules
Stock and cash dividends are automatically computed into team portfolios
5% interest is earned on cash balance
Portfolios are updated and available on a daily basis
Rankings are updated every weekend
Stock ticker symbols are used and can be looked up on the game pages

30. Trades entered after 4:00 p. m. will be processed at 9:35 a. m
Trades entered after 4:00 p.m. will be processed at 9:35 a.m. the following day.
ROGUE STOCK RULE – If a stock has not been traded for seven days it will not be accepted and will not be permitted to be traded even though it is on the three major stock exchanges.

31. General
In formation

32. Buying: Must be for a minimum of 100 shares
General Information
Buying:
Must be for a minimum of 100 shares
Must have a closing price of at least $5.00 per share
May set a maximum purchase price limit

33. Selling: Must already own the stock
General Information
Selling:
Must already own the stock
Must be for a minimum of 100 shares (unless selling the only remaining shares)
ex: If you bought 120 shares, then sold 100, you may then sell the remaining 20.
May set a minimum selling price limit

34. General Information
Please Note:
For real time trading price limits are generally not needed except for trades entered after the market close.

35. General Information
Short Selling:
Short selling starts with borrowing a stock from your broker
You sell the borrowed stock hoping to buy it back at a lower price and return (short cover) it to your broker for a profit
All rules for buying still apply

36. Short Covering: Must have already short sold the stock
General Information
Short Covering:
Must have already short sold the stock
May set a maximum price limit
All other rules for selling apply

37. Example: Short Selling and Covering
General Information
Example: Short Selling and Covering
I feel that IBM stock is going to go down and want to short sell the stock.
I am borrowing the stock from the broker (2% brokerage fee) and selling it. Now I’ve got cash.

38. Example: Short Selling and Covering
General Information
Example: Short Selling and Covering
When stock price is at its lowest, I short cover by buying the stock back in the stock exchange at the low price and returning it to the broker (2% brokerage fee). I keep what I didn’t spend.
I get the difference between the high price and the low price minus the brokerage fees.
Note: it’s important to remember that you borrow the stock from a broker and return the stock. You do not give the broker any money.

39. A Long Position is a stock you own.
General Information
Long Positions:
A Long Position is a stock you own.
Ex: If a team owns 100 shares of McDonalds, their long position is 100 shares.
= Value of Long Position
# of shares
X current price per share

40. A Short Position is a stock you borrowed from the broker and sold
General Information
Short Positions:
A Short Position is a stock you borrowed from the broker and sold
# of shares
X current price per share
= Value of Short Position

41. = Equity Equity: + Cash Balance Total Value of Long Position
General Information
Equity:
Total Value of Long Position
+ Cash Balance
= Equity

42. Initial Margin Requirement = 50%
General Information
Buying on Margin:
You may borrow funds using the stock in your portfolio as collateral for the loan
Interest charged at 7%
Initial Margin Requirement = 50%

43. Borrowing on Margin
30% of value of long and short position is required as collateral (margin requirement)
Purpose to limit the amount borrowed to purchase stocks (risky) and to protect the broker

44. SMG Assessment Ideas:
ARTICLES from web, newspapers or magazines on corporations
NOTES that state why
GLOSSARY of terms with definitions
LETTER to corporations requesting information

45. SMG Assessment Ideas:
HEADLINES with a brief paragraph explaining the impact the story will have on the market
JOURNAL of TV coverage of market activities
BIBLIOGRAPHY of readings
GRAPH showing changes in the value of a stock

46. SMG Assessment Ideas: BASIC DATA about a corporation
52-week high and low
P-E ratio
Location
Amount of debt
Average number of shares trading daily
Company plans for the future
S&P ranking, etc
WORKSHEETS that track the initial purchase, price, broker’s fee, selling price, and profit or loss

47. Suggested Team Roles Entire Team Research all holdings
Identify possible stocks
Collect company information
Give rationale for making a trade
Captain
Conduct team meetings
Determine consensus
Enter transactions on game site

48. Team Roles
Economic Research Coordinator
Researches fundamental economic data: current events, overall economy...
News about industries
Provide reports to team
Record Keeper, Transaction Reporter, Charter, and more....

49. $
SMG Costs

50. Team Fees: Year Long Game:
SMG Costs
Team Fees: 10 Week Games:
Grades $15
College $15
Youth Groups $18
Adult $25
Team Fees: Year Long Game:
All groups $25
New Advisor Fee: $25 First time registration only

51. New advisors receive: Learning From the Market
Your Guide to Understanding Investing
Market Mechanics CD Rom
Classroom materials
A free adult team upon request

53. Investment Basics

54. Investment Basics
Stock Market IQ Quiz

55. Stocks are items found in the storeroom of a grocery store.
Investment Basics
True or False
Stocks are items found in the storeroom of a grocery store.
Only rich people invest in the stock market.
Most stocks on the stock market are sold by the United States Government.
If the stock market goes up 30 percent one year, it will fall by 30 percent in the next year.

56. Any stock that goes up in price must eventually come back down.
Investment Basics
Any stock that goes up in price must eventually come back down.
Bears, Bulls, and Pigs are found in the stock market.
Stock prices are set by the Securities and Exchange Commission, a regulatory agency of the U.S. government.
Stock markets are open on business days around the clock, around the world.

57. Sometimes companies buy their own stocks on the stock market.
Investment Basics
Sometimes companies buy their own stocks on the stock market.
It is hard to buy a good stock today because all the good ones have already been purchased.
Buying stocks is a sure way to make money.
Corporations sell new issues of stock on the New York Stock Exchange.

58. People can buy stocks on the internet.
Investment Basics
“Insider” stock trading means that trading stocks takes place inside a building.
People can buy stocks on the internet.
When the stock market goes up, it causes the economy to grow.
From Learning from the Market, © National Council on Economic Education, New York, NY

59. Different Types of Investments:
Investment Basics
Different Types of Investments:
Insured Savings Accounts
Savings Bonds
Certificates of Deposit
Treasury Bonds
Corporate Bonds
Mutual Funds
Stocks
Collectibles
Commodities

60. The RISKIER the Investment - The HIGHER the Return
Investment Basics
The RISK to RETURN Relationship:
The RISKIER the Investment -
The HIGHER the Return

61. Investment Basics
The Difference Between Stocks, Bonds, and Mutual Funds
Stocks: You own a piece of the company
You make money if the company does well
Bonds: You loan money to a corporation or government
You earn the interest
Mutual Funds: You own one portion of a collection of stocks, bonds, or other securities

62. Investment Basics
The Three Main Markets:
NYSE:
New York Stock Exchange Oldest, largest, best-known stocks
NASDAQ: Large, mid-sized, and small growth companies
AMEX:
American Stock Exchange Mid-sized growth companies

63. The Difference Between Large and Small Companies:
Investment Basics
The Difference Between Large and Small Companies:
Large:
Often have high prices
Low risk of failure
Usually pay regular dividends
Small:
Potential for growth is greater than for larger companies
Generally prices are lower

64. Pay dividends based on performance of the company
Investment Basics
Common Stocks:
Pay dividends based on performance of the company
Have higher risk but may have higher reward
Preferred Stocks:
Dividend amount is preset
Dividends are paid on preferred stocks before common stocks
Have lower risk but may limit reward

65. More shares are created at a lower price per share
Investment Basics
Stock Splits:
More shares are created at a lower price per share
Stockholders profit if stocks go up
Indicated with an (s) in the paper
Ex: Dell $109  $54

66. Blue Chips the largest and most profitable stocks
Investment Basics
Other Terminology:
Blue Chips the largest and most profitable stocks
Bull Market a market that is rising
Bear Market a market that is falling

67. Why long term investing is the best route?
Investment Basics
Why long term investing is the best route?

68. DJIA over last 33+ years:

69. What stocks should I buy?
Investment Basics
What stocks should I buy?
PE Ratio
Price-to-earnings ratio.
Earnings = earnings per share or firm profit divided by number of shares.
More earnings per share given stock price results in a lower PE ratio and a better buy.
Find PE ratios in the newspaper.

70. Where to get more information
American Stock Exchange-
NASDAQ-
NYSE-
CNNfn-
Google -
Database of Corporate Information-
Yahoo! Finance-

71. Economics and the Stock Market
Micro vs. Macro economics
Going from a good idea to a corporation

72. Micro vs. Macro
Microeconomics
Microeconomics studies the behavior of the consumer, household, or firm.
Scarcity and choice
Utility and profit maximization
How do we allocate our budget, time?
How do firms allocate resources to produce goods and services?
Efficiency

73. Micro and the Stock Market
Micro vs. Macro
Micro and the Stock Market
Look at one company:
How does this company make its product?
Who buys this product?
Does the company have good managers?
Look at one industry:
How much competition in the industry?
Is the industry young or old?
What stock brokers and mutual fund managers get paid to do!

74. Micro vs. Macro
Macroeconomics
Macroeconomics studies the economy as a whole or as aggregates and attempts to predict or forecast changes in national output, unemployment, and inflation.

75. Macro & the Stock Market
Micro vs. Macro
Macro & the Stock Market
Look at the whole economy:
Inflation: Producer and Consumer Price Indices (PPI & CPI)
Unemployment: Unemployment rate
Interest rates: actions of the Fed
Productivity
Use information to estimate good times to buy and times to sell.
Note: an “active” investor thinks about how these indicators will affect the economy in 3 months!

76. When is the news good? Example: decrease in the unemployment rate:
Good: sign of a growing economy  increased consumer spending  increased profits.
Bad: indication of future labor shortages  increasing wages  inflation  fed increases interest rates  decrease profits, slow growth.

77. U.S. Department of Labor Bureau of Labor Statistics
“Economy at a Glance”

78. Going Public: From a Good Idea to a Corporation
Product idea: on-line financial services including banking, investments, retirement planning, estate planning, legal services, etc.
Need funds to start business - find investors “venture capitalists.”
Each investor owns a stake or “share” of the corporation and has limited liability.

79. Going Public: From a Good Idea to a Corporation
Suppose the company is doing well. You need more money - go public, “initial public offering”
Going public: investment bank creates a prospectus and buys all shares of stock and resells them at a set price to the public
A “tombstone” is the public notice of an IPO

81. Stock Market Game
Team Registration
Online Pre-registration

82.
Login into SMG WORLDWIDE

83. Click on “PREREGISTER NOW”
Payment Form
Click on “PREREGISTER NOW”

84. Choose this option when you are ready to pre-register your teams.
SMG WORLDWIDE Pre-Registration
SMG WORLDWIDE, The Stock Market Game (SMG) is a national program.
Find your local SMG coordinator by clicking on “Pre-Registration Information” at the SMG homepage and then selecting your appropriate Country and Location.
Technical requirements for SMG WORLDWIDE include an active Internet connection and account, the latest version of Microsoft Internet Explorer or Netscape Communicator version 4.7, and the latest version of Adobe Acrobat Reader.
DO NOT use Netscape Communicator 6.0 with the SMG WORLDWIDE site.
Rules and registration requirements vary from state to state.
Contact your local SMG coordinator for clarification about the requirements.
Begin the registration process by selecting your Registration Type at the bottom of your coordinator’s Pre-Registration Information page.
Click the Pre-Registration Information button to access the information page for your local SMG Coordinator.
Make sure you have selected the appropriate country and location for your state.
Your local SMG Coordinator’s page includes information about the organization administering the SMG program, session dates, teacher training dates, and other relevant content about your state SMG program.

85. For Free Promo, complete all fields in bold.
The Registration Form
Be sure you check the box after the disclaimer.
Your registration will not be processed unless you do so.
Check that you have selected the desired trading session.
Your local coordinator cannot make any changes to the session date once you have submitted your registration.
In most cases, to change your session date, will require you to re-register with the desired session date selected.
Please inform your local coordinator of any changes you desire.
You must enter a valid address for your registration to be processed.
IDs and passwords and other relevant information is sent to you via .
In most cases, registrations with bad addresses will be deleted.
There is a differentiation between Classes and Teams.
A Team is usually 3-5 participants or students.
Teams usually make up the Class (eg. A class of 25 can be divided into 5 teams).
Login IDs and passwords are usually ed two weeks to a month prior to the start of the trading session.
If you have not received your ID and password, please contact your local coordinator immediately.
FREE

86. Pre-registration Reminders
You can print out the payment form ( to use for obtaining a PO # from your school.
If you submit a PO# with your online pre-registration, team #s and passwords will be generated right away, otherwise SMG will wait for the check.

87. Registering Teams SMG WorldWide
Register online at
Complete and mail the payment form (online PDF) to SMG of PA Headquarters

88. Registering Teams SMG WorldWide
Register online at
Complete and mail the payment form (online PDF) to SMG of PA Headquarters

90. PE Ratio So, is Mattel or Apple the better buy?
Price-to-earnings ratio.
Earnings = earnings per share or firm profit divided by number of shares.
More earnings per share given stock price results in a lower PE ratio and a better buy.
So, is Mattel or Apple the better buy?

91. Apple Inc.
Beta = 1 means that the stock and market change by the same percentage.
Larger beta means a larger change than the market on any given day.
Beta = % change in stock return / % change in market return.

92. Playing the
Stock Market Game
Online Demo

93. Playing SMG Inside SMG WORLDWIDE (Teams) Sample portfolio pages
The blue Trading tab contains all the functions necessary to compile research and make trades.

94. Playing SMG Account Summary Sample portfolio pages
New portfolios start with $100,000.

95. Sample portfolio pages
Includes 2% broker’s fee charged for every transaction.

96. Playing SMG Enter a Trade & Pending Transactions
Click one of these four options.
It is a good idea to use the Validate Ticker option to ensure you are buying the correct stock.

97. Sample portfolio pages

98. Sample portfolio pages

99. Sortable database of all transactions made
This is the actual price of the trade.