Implementing the Stock Market Game
Professional Development Workshop
What is the Stock Market Game?
An on-line simulation of Wall Street trading
that provides a framework for teaching
students about the American economic
system.
Designed specifically for classroom use to
help students understand the stock market,
the costs and benefits of investing, the
sources and uses of capital, profit and
loss, and many other related economic
concepts
History of the Game
• Started in the late 1970’s by a
University of Buffalo professor
• Over 750,000 students compete
nationally each year and over 40,000
students in Pennsylvania compete
each year
• Nationally sponsored by the SIFMA
Foundation
Stock Market Game of Pennsylvania
• EconomicsPennsylvania is only licensed
distributor in Pennsylvania
• Recognized as Top 10 Premier Partner
by SIFMA
Statewide Coordinator: Patricia Schoeniger
smgofpa@economcispa.org
1-800-722-6708
What Teachers Like About SMG
• Generates enthusiasm in hard-tomotivate students
• Helps meet educational standards
across many required disciplines
• Combines the spirit of competition with
learning
• Promotes cooperation and group
autonomy among students
What Teachers Like About SMG
• Creates interest in current events
• Teaches economic concepts
• Sharpens skills in mathematics
• Incorporates easily into most classes
• Is FUN!
SMG Research: Testing Results
• National Assessment of Educational
Progress (NAEP)
• Jump$tart
• Learning Point Associates (LPA)
• Full reports available on
EconomicsPennsylvania web site
Testing Results: NAEP
• 14 point or 9.8% increase.
• Students who participated in a stock
market simulation
mean grade = 160
• Students who had no exposure to stock
market simulation
mean grade = 146
Testing Results: NAEP
As compared to other economics
related activities:
• FBLA
• DECA
• Junior Achievement
• Economics-related clubs
• Academic competitions
• Stock market game or simulation
• Student managed store
• Student managed credit union or
bank.
Testing Results: NAEP
Other significant factors
• writing long answers to questions
• using the Internet at least once a week
to gather economic data
• inclusion of a required economics test
or economics questions on a broader
test.
Testing Results: Jump$tart
2008
Testing Results: LPA
• Fall of 2008
• Nationwide randomized controlled trial
• Measured the impact on student
performance in mathematics and
financial literacy.
The Stock Market Game positively
affected student academic performance.
Testing Results: LPA
• Improvements in Mathematics performance
• SMG students: 55th Percentile (Grades 4-6);
54th Percentile (Grades 7-10)
• Non SMG students: 43th Percentile (Grades 46); 46th Percentile (Grades 7-10)
• Improvements in Financial Literacy
• SMG students: 62th Percentile (Elementary);
58th Percentile (MS/HS)
• Non SMG students: 42th Percentile
(Elementary); 40th/42nd Percentile (MS/HS)
Testing Results: LPA
Other findings:
• Student achievement increased
regardless of how teachers implemented
The Stock Market Game.
• Teachers of The Stock Market Game
report that the program influenced their
financial practices.
Interdisciplinary Applications
Social Studies: Current Events,
Government Policy, Economic
Concepts, Cultural Issues, History of
our Economy
Language Arts: Research, Vocabulary,
Presentations, Reading
Comprehension
Interdisciplinary Applications
Business Education: Consumer
Spending, Decision Making, Record
Keeping, Financial Planning
Mathematics: Decimals, Graphs
Percentages, Ratios, Basic
Computation
Technology: Spreadsheets, On-line
Research, Presentations, Word
Processing
PA Standards Alignment
Alignment to PA Academic Standards
available on EconomicsPA web site.
• Economics
• Social Studies
• Math
• Language Arts
• Science and Technology
• Career Education and Work
Stock Market Game Windows
•
•
Available games:
• 3 ten week periods
o Fall - October – December
o Spring – February - April
o Late Spring – Mid March - May
• One year long game
Current game dates:
www.economicspa.org
The Competition: Levels
• Grades 4-6
• Grades 7-8
• Grades 9-12
• Post-Secondary
• Youth Groups
• Adult
The Competition: Regions
• Fall, Spring and Late Spring teams also
compete within a geographic region.
• Regions are identified by
EconomicsPennsylvania Centers for
Economic Education service areas.
EconomicsPennsylvania Regional Map
• Note: year long game levels are
statewide.
Stock Market Game Basics
• Teams of students make investment
trades to manage portfolios throughout
the game.
• 3-5 players per team recommended.
• Each team begins with a hypothetical
$100,000.
• Stocks, bonds and mutual funds are
available for trading.
Stock Market Game Basics
• Advisors need a working Email
address and Internet access to play
• Transactions are made at the SMG
WorldWide site at: www.smgww.org or
http://stockmarketgame.org/
• SMG of PA operates on ‘real time’
trading
Stock Market Game Basics
• Teams may borrow up to $100,000 to
purchase stocks on margin – 7% interest
is charged
• The team with the highest portfolio equity
at the end of the game wins. Portfolios
are not liquidated at the end of the game.
Stock Market Game Basics
• Trades are processed within 15 – 20
minutes
• Portfolios are updated overnight and
available on a daily basis
• Rankings are updated every weekend
Trading Stocks
• Teams may buy, sell, short sell, or short
cover their stocks.
• A 2% brokers fee is charged for each
transaction
• Stocks valued at less than $5.00 per
share may not be bought.
Trading Stocks
• 2% interest is earned on cash balance.
• Common stocks listed on the American,
New York, and NASDAQ Stock
Exchanges may be traded.
• Stock dividends and stock splits are
automatically computed into team
portfolios
Trading Stocks
• Stock ticker symbols are used and can be
looked up on the game pages
• 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.
Buying Stocks
• Must be for a minimum of 100 shares
• Must have a price of at least $5.00 per
share
• May set a maximum purchase price
limit for stocks
Selling Stocks
• Must already own the asset
• Stock and mutual fund sell orders for
less than 100 are permitted.
• May set a minimum selling price limit
for stocks
Please Note: For real time trading price
limits are generally not needed except for
trades entered after the market close.
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
Short Covering
• Must have already short sold the stock
• May set a maximum price limit
• All other rules for selling apply
Example: Short Selling and Covering
I feel that IBM stock is going to go
down and want to short sell the stock.
• I borrow the stock from the broker (2%
brokerage fee)
• I sell it. Now I’ve got cash.
• I short cover by buying the stock back
in the stock exchange at a lower price
Example: Short Selling and Covering
•
I return the stock to the broker (2%
brokerage fee).
•
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 (except for brokerage fee).
Portfolio Value: Long Position
A long position is an asset you own.
Stocks:
# of shares
x current price per share
= Value of Long Stocks
Portfolio Value: Short Position
A short position is an asset you owe.
# of shares stock/closed mutual fund
x current price per share
= Value of Short Position
• Appears as a minus (-) to indicate a debt
• Held short sell positions are marked to the
market daily and the resulting gain or loss
is added or subtracted from cash.
Portfolio Value: Equity
Total Value of Long Position
• Stocks
• Mutual Funds
• Treasury/Municipal/Corporate Bonds
+ Cash Balance
= Total Equity
Additional Information: Interest
• Credited weekly on positive cash
balances at an annual rate of 2%
• Charged weekly on negative cash
balances at an annual rate of 7%
• Interest is calculated daily, summed for
the week (Saturday through Friday) and
posted on the following Tuesday.
• Daily rate is based upon a 365 day year.
Additional Information: Borrowing
• Teams may borrow funds to buy stock
– called ‘buying on margin’
• Uses ½ the holdings in the portfolio as
collateral for the loan
• Initial margin requirement (50% of Long
Position) is subtracted from equity
• Remainder is matched dollar for dollar
for total buying power
Additional Information: Borrowing
Formula for Initial Margin Requirement
• 50% of Stocks & Mutual Funds
• 40% of Treasury Bonds
• 10% of Municipal Bonds
• 25% of Corporate Bonds
In the Classroom: Assessment
• Articles from newspapers or magazines
on corporations
• Notes that state why
• Glossary of terms with definitions
• Letters to corporations requesting
information
In the Classroom: Assessment
• 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
• Graphs showing changes in the value of
a stock
In the Classroom: Assessment
• Basic Data about a corporation
o 52-week high and low
o P-E ratio
o Location
o Amount of debt
o Average number of shares trading daily
o Company plans for the future
o S&P ranking, etc
• Worksheets that track the initial purchase,
price, broker’s fee, selling price, and profit or
loss
In the Classroom: 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
In the Classroom: Team Roles
• Secretary/Recorder
• Track the prices of all stocks owned by the
team
• Record the Dow Jones closing average on a
line graph
• Treasurer
• Keep accurate record of all transactions
• Balance portfolio account
• Print and provide portfolio reports to team
SMG Costs: Teams
Team Fees: 10 Week Games:
Grades 4-12
$15
College
$15
Youth Groups
$18
Adult
$25
Team Fees: Year Long Game:
All groups
$25
SMG Costs: Resource Packet
Teacher Resource Packet available for
purchase ($40):
• Beyond the Market
• Your Guide to Understanding Investing
• Market Mechanics CD Rom
• Classroom materials
Send check to SMG of PA
123 Market Street, Selinsgrove PA 17870
(Note SMG Teacher Packet on check)
Trading Mutual Funds
• Closed and Open ended mutual funds
may be traded just like stocks on the
three exchanges.
• No short sell or short cover
• Mutual fund dividends are automatically
computed into team portfolios
Buying Mutual Funds
• Must be for a minimum of 100 shares
• Must have a price of at least $5.00 per
share
• May set a maximum purchase price
limit for stocks
Selling Mutual Funds
• Must already own the asset
• Stock and mutual fund sell orders for
less than 100 are permitted.
• May set a minimum selling price limit
for stocks
Please Note: For real time trading price
limits are generally not needed except for
trades entered after the market close.
Portfolio Value: Long Position
Mutual Funds:
# of shares
x current price per share (NAV)*
= Value of Mutual Funds Long Position
*Net Asset Value is computed once a day
at the end of the day based on the value
of the securities in their portfolios.
Trading Bonds
• Bond interest payments are automatically
computed into team portfolios
• Bond numbers assigned by the game are
looked up on the game pages
Trading Bonds
8,000 Bonds available:
• Corporate
• Municipal (state only)
• Treasury
AXXXX.YYNN.N
T M or C
Maturity Year
Seq #
Annual
interest rate
Buying and Selling: Bonds
• Maturity dates no shorter than 5 years
• May not be short sold
• Daily feed of pricing from S&P using
previous day’s prices
Buying and Selling: Bonds
Bonds are priced per $100 of bond
principal.
Cost of $4,000 bond with a price of $99.50:
4000/100 = 40
40 x 99.50 = $3,980
+ accrued interest + commission
For all Bond Sell Transactions the SEC
Fee of 5.6 cents per $10,000 trading
amount is always added.
Portfolio Value: Long Position
Bonds:
Per $100 of bond face value
$ value/100
x price per $100
= Value of Bonds Long Position
1-800-722-6708
smgofpa@economicspa.org