1. Mr. Lange - Economics

2.  Welcome to Mr. Lange’s Stock Market Simulation!  As members of an investment group, you will be competing against one another to see which group can increase their investments the most.  The investment group with the greatest net worth at the end of the simulation wins.

3.  Each group (three to four members) must come up with an original name for their investment group and elect a team captain. All trades must only be performed by the captain of that team, with the approval of the majority of the team.  Each team begins the simulation with $100,000 in cash.

4.  Teams may only trade stocks listed on Nasdaq or the NYSE.  All stock values are priced at current market prices.  Teams are not permitted to own stock in more than six companies at a time.

5.  Teams may not buy stocks priced under $5/share, and only shares of common stock may be purchased.  Preferred stock will be designated with a “pf,” and may not be purchased.  Teams are not permitted to have more than $25,000 in cash at any time.  To buy stock, each team must complete a purchase order form and have it initialed by the broker (Mr. Lange).

6.  A 2% broker’s fee is charged for all transactions. (For example, if you buy 100 shares of a stock at $10/share, you must pay the 2% of $1000, or $20.)  A team ledger (data on portfolio performance and cash on hand balance) and purchase orders/transactions must be maintained daily.  The team with the greatest net worth at the end of the simulation (value of all shares + cash on- hand) wins.

7. HOW ARE YOU GRADED?  Completion of all assignments  Completion of all daily transactions/work  Final portfolio value  Did you “beat the market”?  Success will be rewarded with a higher grade! (Just like real life.)

8.  In your investment groups (3 to 4 members), complete the following tasks:  Choose a name for your investment group. Design a logo for your group.  Select a team captain.  Get a folder/binder and make sure you obtain:  One “Guide to Stock Listings”  One rules sheet  One ledger  Three purchase order forms  One “Research Tips” sheet for the group

9.  52 week high/low  What might these indicate?  Dividends  Annual dividend per share  Volume  Closing Price (Close) & Change  P/E  Price-to-Earnings Ratio  http://www.reuters.com/finance/stocks http://www.reuters.com/finance/stocks

10.  “What is P/E Ratio” – WallStreetSurvivor.comWhat is P/E Ratio  Current stock price ÷ Earnings per share  Simply put, it is the price an investor is willing to pay for $1 of a company's earnings or profit.

11.  A lower P/E ratio may indicate an undervaluation of the stock, and therefore more bang for your buck.  WARNING! It is useful for comparing companies within the same industry, but not for companies across industries.  Google’s (GOOG) P/E ratio is 24.33  Walmart’s (WMT) P/E ratio is 15.64  Target’s (TGT) P/E ratio is 15.35 Not a good comparison Similar numbers

12. HOW TO CALCULATE STOCKS  Price of stock at market close x Number of shares purchased = Total amount of purchase  Total amount of purchase x 2% (0.02) = Broker’s fee  The same applies when you want to sell stocks as well

13. MEASURING YOUR PROGRESS  Your group is responsible for charting the amount and value of the stocks you purchase and your overall portfolio worth.  In other words, you will need a table that measures your group’s overall portfolio worth

14. HOW TO CHART YOUR PORTFOLIO  Your ledger has four columns:  Date; Cash-on-hand; Stocks; Total Value  “Cash-on-hand” is taken from the bottom of that day’s purchase order form.  “Stocks” is taken from the sum of the total values of all your stock investments.  “Total Value” is the sum of your cash-on-hand and your stocks.

15.  High Schooler Makes $300K Trading Stocks on His Phone High Schooler Makes $300K Trading Stocks on His Phone  20 Top Stock Market Traders Under 20 20 Top Stock Market Traders Under 20

16. WHICH STOCKS TO CHOOSE?  Brainstorm and discuss:  What would you need to know about a company before you invest in it? Come up with at least ten criteria.  How is your group going to decide on the stocks it will invest in? List all indicators and data you will use to decide who to invest in.  What are your preliminary choices for the stocks you will invest in? Which companies are you currently looking at? Remember, you can only invest in a maximum of six stocks.

17.  Your investment group will research at least four companies that you would like to invest in.  Remember: You can’t throw money at the stocks… you have to know who you’re investing in!  Industry = What business sector?  Apple = ___________; Exxon = ___________; Wal-Mart = ___________  History = financial and organizational history.  How long has the company been around?  How has its stock performed historically? Has it experienced wild gains/losses?  What is the financial forecast for the stock? TechnologyEnergyRetail

18. WRAPPING IT UP  Your portfolio needs to be arranged in the following order:  Ledger  P.O. forms in chronological order (earliest to latest)  Research Tips  On your rubric, write your team name, period number, and your final total portfolio value (cash on hand + stocks) at the top.  Circle your portfolio’s market performance score.  Place your rubric in the inside front pocket of your portfolio.

19. EVALUATION  Which stocks performed the best? The worst?  Were there any stocks that surprised you?  For the groups that beat the market performance, what was your group’s strategy?  What effect did the broker’s fee have on your strategy?  What would you have done differently?