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

National Council of Economic Education

Carolyn ShirkVice President

849 Tame Deer DriveWinfield, PA 17889

Cell: 570-975-5149570-374-9467

Sponsored By: Sponsored By:

Who we are….

ECONOMICSPennsylvania at www.economicspa.org

NCEE at www.ncee.net

SMG Advisors

Welcome & Welcome & IntroductionsIntroductionsWelcome & Welcome & IntroductionsIntroductions

FNB Center for

Economic Education

Stock MarketStock MarketGameGameProgramProgram

Teacher Survey FindingsTeacher 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.

Teacher Survey FindingsTeacher 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.

What Teachers like about SMGWhat 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

teaches economic concepts sharpens skills in mathematics,

especially in fractions and basic computations

incorporates easily into most classes Is FUN!

What Teachers like about SMGWhat Teachers like about SMG

What is the What is the Stock Market Stock Market Game Game ProgramProgram

(SMGP) ?(SMGP) ?

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

History of the GameHistory of the Game

EconomicsPennsylvaniaEconomicsPennsylvania is the is the licensed distributor of the Stock licensed distributor of the Stock Market Game Program in PAMarket Game Program in PA

Administrative offices and support of SMGP of PA provided by Temple University Fox School of Business and Management

Stock Market Stock Market Game Game Interdisciplinary Interdisciplinary ApplicationsApplications

SMG Interdisciplinary SMG Interdisciplinary BenefitsBenefits

Language Arts: Research, Vocabulary, Presentations, Reading Comprehension

Social Studies: Current Events, Government Policy, Economic Concepts, Cultural Issues, History of our Economy

Business Education: Consumer Spending, Decision Making, Record Keeping, Financial PlanningMathematics: Fractions, Decimals, Percentages, Ratios, Basic Computation

SMG Interdisciplinary SMG Interdisciplinary BenefitsBenefits

Technology: Spreadsheets, On-line Research, Presentations, Word Processing

Stock Stock MarketMarket

Game Game BasicsBasics

SMG BasicsSMG BasicsReal-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

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, short sell, or short cover their stocks

SMG BasicsSMG Basics

Teams should have two to five players

Only common stocks listed on the American, New York, and NASDAQ Stock Exchanges may be traded


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.

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


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.


How Does How Does the the Competition Competition Work?Work?

Teams compete within a geographic region and on six levels

Grades 4-6 Grades 7-8 Grades 9-12 Post-Secondary Youth Groups Adult

SMG LevelsSMG Levels

Rules of the Rules of the Stock Market Stock Market GameGame

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

SMG RulesSMG 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

SMG RulesSMG Rules

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 General In formationIn formation

Buying: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

General InformationGeneral Information

Selling: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


Please Note:

For real time trading price limits are generally not needed except for trades entered after the market close.


Short Selling: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: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 Example: Short Selling and CoveringCoveringExample: Short Selling and Example: Short Selling and CoveringCovering

I am borrowing the stock from the broker (2% brokerage fee) and selling it. Now I’ve got cash.

I feel that IBM stock is going to go down and want to short sell the stock.


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.

Example: Short Selling and Example: Short Selling and CoveringCoveringExample: Short Selling and Example: Short Selling and CoveringCovering


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.

Long Positions: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


Short Positions: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


Equity:Equity:

Total Value of Long Position

+ Cash Balance

= Equity


Buying on Margin: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%


Borrowing on MarginBorrowing 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

SMG Assessment Ideas: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

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



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

Suggested Team RolesSuggested Team RolesEntire TeamResearch all holdingsIdentify possible stocksCollect company informationGive rationale for making a tradeCaptainConduct team meetingsDetermine consensusEnter transactions on game site

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....

Team RolesTeam Roles

$$

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

SMG CostsSMG Costs

New advisors receive:New advisors receive:

Learning From the Market Your Guide to Understanding

Investing Market Mechanics CD Rom Classroom materials A free adult team upon

request

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

Documents

smg program

stock market game programsmgp

nasdaq stock exchanges

american stock exchanges

game winsportfolios

basic skills

students ability

short sell