The Stock Market Game Program
A classroom activity for students
grades 4 - 12
Stock Market
Game Basics
SMG Basics
 The game runs from November 4 –
January 10
 Each team begins with a
hypothetical $100,000
 Teams may buy, sell, short sell, or
short cover their stocks
SMG Basics
 Only common stocks listed on the
American, New York, and NASDAQ
Stock Exchanges may be traded
 Use google finance for your
information (easiest to use)
SMG Basics
 A 1% 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 – 7% interest
is charged
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 (MEANING DO NOT SELL
YOUR STOCK AT THE END)
 Portfolio equity in the tenth week is used
for final rankings
How Does the
Competition
Work?
Teams compete within
a geographic region
and on six levels
SMG Levels
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Grades 4-6
Grades 7-8
Grades 9-12
Post-Secondary
Youth Groups
Adult
Rules of the
Stock Market Game
SMG Rules
 Teams need Internet access to play
 Transactions are made at the SMG
WorldWide site at: www.smgww.org
or http://stockmarketgame.org/
login.html
 SMG of PA operates on ‘real time’
trading
 Trades are processed within 15 – 20
minutes
SMG Rules
 Stock splits and cash dividends are
automatically computed into team
portfolios
 1% interest is earned on cash balance
 Portfolios are updated overnight 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
Investment Basics
The Three Main Markets:
Can only buy stocks on NASDAQ, NYSE or
American Stock Exchange
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
 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.
General
In formation
General Information
Buying:
 Must be for a minimum of 100
shares
 Must have a closing price of at least
$5.00 per share
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.
General Information
Equity:
Total Value of Stocks
+ Cash Balance
= Equity
Investment Basics
What stocks should I buy?
PE Ratio
Price-to-earnings ratio.
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If it is 17 then you would pay $17 for every
$1 of earnings
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.
Look for stocks that offer dividends
Playing the
Stock Market Game
Online Demo
Investment
Basics
Investment Basics
Different Types of Investments:
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Insured Savings Accounts
Savings Bonds
Certificates of Deposit
Treasury Bonds
Corporate Bonds
Mutual Funds
Stocks
Collectibles
Commodities
Investment Basics
The RISK to RETURN
Relationship:
The RISKIER the
Investment The HIGHER the
Return
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: - NOT USING
You loan money to a corporation or government
You earn the interest
Mutual Funds: - NOT USING
You own one portion of a collection of stocks,
bonds, or other securities
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
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
Investment Basics
Why long term
investing is the
best route?
Investment Basics
DJIA over last 33+ years:
Where to get more information
American Stock Exchange- www.amex.com
NASDAQ- www.nasdaq.com
NYSE- www.nyse.com
CNNfn- www.cnnfn.com
CNBC- www.cnbc.com
EDGAR Database of Corporate Informationwww.sec.gov/edgarhp.htm
 Yahoo! Finance- http://finance.yahoo.com
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