National Council of Economic Education Carolyn Shirk Vice President 849 Tame Deer Drive

1. National Council of Economic Education Carolyn Shirk Vice President 849 Tame Deer Drive Winfield, PA 17889 Cell: 570-975-5149 570-374-9467

2. Sponsored By:

3. Welcome & Introductions • Who we are…. • ECONOMICSPennsylvania at www.economicspa.org • NCEE at www.ncee.net • SMG Advisors

4. FNB Center for Economic Education

5. Stock MarketGameProgram

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 PAAdministrative 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, Spring, and Late Spring, along with a Yearlong Game • Each team begins with a hypothetical $100,000 • Teams may buy, sell, shortsell, or shortcover their stocks

19. SMG Basics • Teams should have two to five players • Only commonstocks 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%brokersfee 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. SMG Levels • Grades 4-6 • Grades 7-8 • Grades 9-12 • Post-Secondary • Youth Groups • Adult

27. Rules of the Stock Market Game

28. SMG Rules • 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/ login.html • SMG of PA operates on ‘real time’ trading • Trades are processed within 10 – 20 minutes

29. SMG Rules • Stock and cash dividends are automatically computed into team portfolios • 2% 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. 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. 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. 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. General Information Short Covering: • Must have already short sold the stock • May set a maximum price limit • All other rules for selling apply

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

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

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

42. 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: • ARTICLESfrom web, newspapers or magazines on corporations • NOTES that state why • GLOSSARYof terms with definitions • LETTERto corporations requesting information

45. SMG Assessment Ideas: • HEADLINESwith a brief paragraph explaining the impact the story will have on the market • JOURNALof TV coverage of market activities • BIBLIOGRAPHY of readings • GRAPHshowing 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. SMG Costs Team Fees: 10 Week Games: Grades 4-12 $15 College $15 Youth Groups $18 Adult or Yearlong $25 Team Fees: Year Long Game: All groups $25 New Advisor Fee:$25 First time registration only