Week 4 – Stock Market Background

The Stock Market Game kicks off next week and all students have been preparing this week learning about different business formation types (Sole Proprietors, Partnerships and Corporation).  They discovered the 5 key reasons businesses incorporate: limited liability, long life, ease of transferring ownership, specialized management and of course, meet capital expansion needs. Key terms were introduced including Large Cap, Mid Cap and Small Cap coupled with risk tolerance.  We explored how to calculate return on investment and what dividends are.

Students thought about what to purchase with 100K in preparation for this understanding how much money they actually have when we start the game  (100K to spend on stocks).  I encouraged them to spend it all on things and many students were hard pressed to spend it all.  Cars were often the large purchase item of choice and one group decided to build a traveling zoo in a used RV with a variety of animals for which they found prices!  Yet another group developed a business plan so that the 100K would generate even more income.

Most students, when asked what they want to learn, want to understand when and what to buy for stocks.  Next week they’ll learn the basics on how to read stock research reports and get a feel for what data to review before making a purchasing decision.  They will also find many other sources helpful and I have attached one article below giving some insight how to figure out when to make a move on a stock.

Great article about how to maybe pick stocks about to be major movers: https://www.thestreet.com/story/13837018/1/7-breakout-stock-spiking-on-big-volume.html

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