This lesson plan may be used by anyone, without any prior stock market or investing knowledge. In addition, we are available to answer any questions you may have either when beginning this lesson, or questions you may have during this exercise.
The time involved will vary greatly depending on how much time you wish to spend on this material, as well as the age level of your students. This may vary from 1 week to an entire school year. We recommend continuing this exercise throughout an entire school year, since this will continue to make students interested in current events while they learn important skills.
Typical stock market simulations try to make the simulation a "contest" with the winner the one who has the largest portfolio and the end of the exercise. This is unfortunate since it encourages poor investment decisions such as rapid trading and taking large risks. Unlike typical stock market simulations, the goal here is to learn and understand basic investing principles, current events, the basics of how the economy works, money management skills, basic math and reading comprehension, writing skills, etc.
Here are the steps for your own stock market simulation:
LESSON 1: Introductory Information
Students will learn what is a stock, and be able to look up basic stock market information.
LESSON 2: Introducing the simulation:
Here is our suggested guidelines. This simulation may either be done in groups or individually. Feel free to adjust and improvise as you may feel appropriate:
LESSON 3: LESSON CHOOSING COMPANIES TO INVEST IN
If this is a group activity, the students should get together in their groups.
For choosing stocks, we recommend that students choose companies with products or services they are familiar with. This may include companies that their families or friends work for, or are familiar with. This will help make the learning process more interesting and understandable. In addition, some basic "Fundamental analysis" may be performed. You may start this lesson by asking students the question what companies are they familiar with, and writing the answers on the board. Then students may choose from those companies or other companies they think of.
For younger students, you may want to suggest companies and let the students choose. For older students, you may require additional fundamental analysis, such as PE analysis, or making sure they create a diversified portfolio. In addition, students should write their reasoning and analysis in their journal.
Pick some of the stocks chosen by the students to create an example "portfolio". Choose 3-5 stocks and list their name and stock ticker on the board (use a newspaper or computer to get the stock information). List the closing price as well. Then ask the students how much of each stock they should purchase. Total the amounts and see how close it comes to the $10000 budgeted. Then ask what should be done to get over $9500 but under $10000. Then either have them complete this exercise individually, or do it as a group.
The following links will be of assistance. Note that simply choosing companies that they are familiar with is most appropriate for younger students. Older students may also work on some of the following activities. Optionally, you may also include some of these lessons later so students can analyze their investments.
LESSON 4: PURCHASING STOCKS
Students should fill in their own stock portfolio transaction form, including calculating the transactions.
LESSON 5: MONITORING THE PORTFOLIO
Weekly, students should track their investments.
worksheet to track prices.
Do weekly reporting. Stock price and portfolio performance. News items related to the stock. Economic items related to the portfolio and the stock market. Any correlation between the news and the stock or portfolio? Record this in the journal and create weekly performance sheets.
LESSON 6: SELLING STOCKS
CONTINUATION OF LESSONS
Lessons 3-6 continue till the end of the simulation. Once the simulation is complete, students should sell all stocks in their portfolio. A class presentation should be made at this time regarding what each group learned, and the results of their investments.
OTHER OPTIONAL LESSONS:
Once you have learned about stocks, now go on to learn basic finance and economics.
Basic finance and economics provide the foundation for understanding stocks, business, and the economy. Use these lessons to teach basic finance and economic principles.
Are you new to stocks and investing? We are here to help you with any question you may have. If you are just learning about stocks, we are happy to help you along the way to teaching and learning about stocks.
OTHER SUGGESTED IDEAS:
Have you used this lesson in your classroom? Then we would appreciate your feedback and any suggestions you may have. Simply click on the suggestions link on the top of the page. Your input helps us to continue to build new lessons, lesson plans, and worksheets. Thank you.
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