Learning from the Market - Georgia Council on Economic ...

1 Learning FROM THE Market . INTEGRATING THE. STOCK Market GAME. ACROSS THE CURRICULUM. Funding Provided By Securities Industry Foundation for Economic Education Members of the National Design Team Project Director R. J. Charkins Mark C. Schug California State University, San Bernardino University of Wisconsin Milwaukee San Bernardino, California Milwaukee, Wisconsin Donald G. Fell Writers Florida Council on Economic Education Mark C. Schug Tampa, Florida University of Wisconsin Milwaukee Gail Funk Milwaukee, Wisconsin University of Delaware Kathleen Ryan Johnston Center for Economic Education Milwaukee Public Schools Newark, Delaware Milwaukee, Wisconsin Harold Gilbert John S. Morton Westside High School Collegiate School Anderson, South Carolina Richmond, Virginia Melinda Patterson Grenier Donald R. Wentworth Wall Street Journal Classroom Edition Pacific Lutheran University New York, New York Department of Economics DeAnn Huinker Tacoma, Washington University of Wisconsin Milwaukee Milwaukee, Wisconsin Senior Editor Richard D.

2 Western Trina H. Krieger University of Wisconsin Milwaukee Georgia State University Milwaukee, Wisconsin Center for Economic Education Atlanta, Georgia Field Test Teachers Anthony Lamport Steven Carlovsky Securities Industry Association Salem Lutheran School Trustee Milwaukee, Wisconsin Foundation for Economic Education New York, New York Jennifer J. Fontanini Wauwatosa School District Katherine Phillip Wauwatosa, Wisconsin Securities & Exchange Commission Washington, DC Jill Koebernik Milwaukee Public Schools Gloria Talamas Milwaukee, Wisconsin Securities Industry Foundation for Economic Education Stephanie D. Todd New York, New York Milwaukee Public Schools Milwaukee, Wisconsin Copyright 1997, National Council on Economic Education, 1140 Avenue of the Americas, New York, NY 10036. All rights reserved. The activities and worksheets may be duplicated for classroom use, the number not to exceed the number of students in each class.

3 Notice of copyright must appear on all pages. With the exception of the activities and worksheets, no part of this book may be reproduced in any form or by any means without permission in writing from the publisher. Printed in the United States of America. ISBN XXXXXXX 5 4 3 2 1. ii CONTENTS. FOREWORD ..v UNIT I: INTRODUCING THE STOCK Market LEVEL ..Page LESSON 1 Why Study the Stock Market ? LESSON 2 What Is a Corporation? LESSON 3 What Is a Stock? Or, Who Owns McDonald's? LESSON 4 What Are Markets? LESSON 5 Showtime on Wall Street LESSON 6 How Are Stock Prices Determined? LESSON 7 How to Read the Stock Tables LESSON 8 How Do You Make or Lose Money in the Stock Market ? LESSON 9 Getting Fancy: The Bulls, the Bears, and the Pigs! UNIT II: PERSONAL INVESTING. LESSON 10 Are Stock Markets Only for the Wealthy? LESSON 11 Getting Rich is Child's Play The News About Compound Interest LESSON 12 All Savings Choices Involve Risk: Grandma's Gift LESSON 13 Some Risks Are Greater than Others LESSON 14 How to Choose a Stock Beginning/Intermediate.

4 LESSON 15 Building a Stock Portfolio UNIT III: HOW INVESTING AFFECTS THE ECONOMY. LESSON 16 Playing Along with the Averages LESSON 17 The Market -Go-Round LESSON 18 I've Got the Workin' in the Chalk-Mark Factory, Increasing My Productivity Blues LESSON 19 How Do Saving and Investing Affect Economic Growth? UNIT IV: TAKIN' CARE OF BUSINESS. LESSON 20 How Do Businesses Obtain Financing? LESSON 21 How to Read an Annual Report LESSON 22 Researching a Business UNIT V: HOW THE ECONOMY AFFECTS INVESTMENTS. LESSON 23 Business Cycles and Investment Choices LESSON 24 How Do Domestic and International Events Influence the Buying and Selling of Stocks? Glossary iii FOREWORD. I have never understood why entire courses are they can become an owner of one or several of devoted to languages, history, science, but not to these companies, by buying shares.

5 It's always a investing and all its benefits. thrill to walk into a McDonald's or a Circuit City knowing that you're part owner of the place. That Politicians come and go, wars are won and lost, but thrill is one of the perks of becoming an investor. investing (or the lack of it) affects the daily lives of every person, every family, every company, and Investing is not only about investors making money. every country in today's world. Whether we are The fate of the world is in the investors' hands. talking about the Japanese or the Brazilians or the Without investors, there would be no businesses, Americans, the head of General Motors, or the and without businesses there would be no jobs and students in your classroom, those who save and no government, because people would have no invest for the future will be better off financially income to pay the taxes that support the (and because of that, better off in other ways) than government.

6 Those who do not: If students are inspired to invest on their own, so Since the junior high schools and the high schools much the better, The earlier a person gets started do not generally offer Investing 101, it's a lucky down this path, the more likely the long-term thing we have teachers like you who have decided results will be profitable. Naturally. if I were to introduce this material. The Stock Market Game teaching this material, I'd emphasize that stocks is an exciting way to put stocks and young people offer the best chance to create wealth over time, together, but who wins and who loses after a few both for the people who own the stocks and for the weeks or months is not the important part. The companies that grow and expand with the money important part is that the players in the Game come that's raised from the stock Market .

7 Away with a basic understanding of capitalism, and how investing and saving creates jobs. The lesson plan for " Learning From the Market is down to earth and easy to use, either as a Students are often amazed to find out they are complement to The Stock Market Game or as an surrounded by thousands of public companies, introduction to capitalism and investing on its own. including the ones that depend on kids to stay in I hope you and your students enjoy it. Maybe some business (Nike, Disney, and Marvel Comics come of them will be thanking you someday for leading to mind). They are even more amazed to find out them down this exciting path. Peter Lynch with John Rothchild v vi INTRODUCTION. Learning from the Market investments is stressed. Third, students learn to Integrating the Stock Market Game Across recognize that all this Market activity takes place the Curriculum in the context of a legal environment in which The Stock Market Game is a highly successful property is protected and people are protected national program that engages young people in against breach of contract, fraud, and coercion.

8 The study of securities markets. Hundreds of thousands of students participate each year in Learning from the Market offers teachers from The Stock Market Game. Teachers often use the several disciplines a practical tool for curriculum spark of interest it generates as the vehicle for integration. Several of the following Key Features introducing students to the basics of how our illustrate this emphasis. Market economy operates. This curriculum guide is designed to help teachers connect The Stock Key Features Market Game and the school curriculum. CLASSROOM-TESTED LESSONS. Learning from the Market links the excitement of This curriculum guide offers 24 classroom-tested The Stock Market Game to a broader introduction lessons. to economics in the context of the school curricu- lum involving social studies, mathematics, CROSS CURRICULUM SKILLS.

9 Business, and language arts. Each lesson includes a quick overview to tell how the lesson integrates with various parts of the Economic Themes curriculum. Areas of the curriculum well served Learning from the Market introduces young peo- by these lessons include business, language arts, ple to the fundamentals of how a Market economy mathematics, and social studies. operates. The lessons in Unit I, Introducing the Stock Market , are mainly of this sort. The lessons LANGUAGE OF ECONOMICS. in Unit I also coincide with how many teachers Each lesson provides the teachers with back- introduce the Stock Market Game to their stu- ground information about economics. The dents. Language of Economics section in each lesson provides definitions of Economic and business In addition to some basics about the stock mar- terms. These terms are also defined in the kets, three key Economic themes in several of the Glossary.

10 Lessons introduce students to how a Market econ- omy functions. First, Learning from the Market stresses the idea that stock buyers engage in STEP-BY-STEP PROCEDURE. economizing behavior. Like others, people inter- You will find highly detailed teaching procedures ested in stock ownership are trying to gain the stating an explicit purpose for each lesson, along best combination of costs and benefits as they with suggestions for engaging students' interest. consider making their decisions. Second, Each lesson also provides a closure activity sug- Learning from the Market emphasizes the impor- gesting ways in which the teacher may conduct a tance of how Market economies, with their deliberate review of the lesson's key points. encouragement of private ownership of stock and voluntary exchange, encourage the production of MATHEMATICS AND LANGUAGE ARTS.