Brief Description

In this unit, students will learn about the stock market, specifically the stocks included in the Dow Jones Industrial Average.  They will create a virtual portfolio containing 5 stocks from the Dow and watch their movement for a 3-month period.  Each day as they gather data, they will keep a chart in Excel.  History of the market, the Dow, as well as a guest speaker from an investment firm would be excellent additions. This lesson takes approximately 3 days to teach and then you can follow up on it for as long as you would like.

Standards and Frameworks

Technology Standards

• 3T-E2. Use a variety of technology tools for data collection and analysis
• 5T-E1. Locate information from electronic resources

• 3M-E2. Describe, represent and analyze patterns and relationships using shapes,

tables, graphs, data plots, verbal rules and standard algebraic notation
1M-E6. Recognize that the degree of precision needed in calculating a number depends
on how the results will be used and the instruments used to generate the measurements
4SS-E7. Describe the operation of a market economy, with emphasis on:

Academic

• Students will be able to put together data on the Dow Jones and the stock market in their study of the New York Stock Exchange through an Excel Chart.

• By developing an Excel Chart, students will demonstrate their ability to construct a chart while synthesizing knowledge in regard to the stock program being studied.

• Students should have some knowledge about searching the Internet and using Excel. You may use the links provided to help with finding the Internet sites.

Internet ready computer, printer, Microsoft Excel, 1 newspaper per day

Accommodations for Special Needs

Students who need assistance should be grouped.  Those who are accelerated may enjoy studying other stocks on the market as well as other stock exchanges.

Procedures

1. The first thing teachers should do is become familiar with the stock market.  Use the web addresses listed in procedure #6 to gain some background information.
2. Talk to the students about cars.  What was the first car?  How did Ford get enough money to support his research and build the Model-T?  Explain that supporters wanted to “own” part of the idea so they gave him money.  They bought stock in his company hoping it would succeed and then they could profit from its achievement.  When people began to buy Ford’s cars, they stock prices went up.  When others saw the idea was going to work, they began to invest too.  Ford Motor Company became even bigger.  Stockowners could sell their shares and make a profit or they could let their money grow.  The stock may have been 5 dollars initially.  If someone had given Ford $100, then they would have 20 shares of stock.  Then, after the company does well, the share price will rise.  After the success of the Model-T, the stock price might have gone up to $20.00.  If the investor who spent $100.00 on his 20 shares sold his shares he would have made a dividend (or profit) of $300.00.
3. Explain to the students that if they were to start a new company, they would go through the same process with their own ideas.  Say they invented a new product they thought would be successful, then they would find investors to buy stock in the product. If the product failed, the shareholders would lose all of their money – if they succeeded, then they would share profits.
4. The next thing you may want to discuss with your students is other options for investing money. Give them the option to save it in the bank, buy a blue chip stock, purchase speculative stock, or invest in government savings bonds. Tell students they received a $1000.00 check from a long lost aunt.
a. Show them what would happen to their money after 1 year in a savings account with 3.6% interest.  Discuss how this option assures them that the money invested will be protected up to $100,000.00 and it will earn interest, though it will earn very slowly.  Next, talk to the class about what will happen if they left this money in the bank at the same rate for a 10-year period. You may want to have students chart this in an Excel document, or it can just be a discussion.

b. The next option is to invest in blue chip stocks.  Explain to students that this means that they are purchasing stock in large and successful corporations like Nike, McDonalds, and Home Depot. With this investment, you are buying stock in many companies, not just one. Companies involved in blue chip have great financial reputations and tend to do well.  They are named after the blue chips in poker – they are the chips that are worth the most. The benefits of this program is that you can receive dividends and pay outs frequently.  The drawback is you will not receive a pay out if the companies involved to not do well.

c. You could also take your $1000 and purchase speculative stock.  This means that you purchase stock in a specific company.  If that company does well, so do you, if not, you do not make any money.  In fact, you could lose money.  You are considered a part owner, and potentially you could make a large sum of money fast.

d. Lastly, students could invest in government savings bonds.  They would make approximately 5.6% interest and after about 18 years, your investment will double.

e. The only difficulty with this exercise is that you cannot tell students what their money will do in the stock market.  One thing I did is ask a broker for some statements that showed blue chip and speculative stock investments over a one-year period.  He sent me some charts and graphs showing both large funds that grew and large funds that failed.  The truth is that you never know how your stock will do, and this is a great exercise to show that.  It also helps to let the kids see that the potential for gaining more is definitely better in the stock market than any guaranteed fund.
 

5. Now that the students understand the 4 options, have them talk about what they would do with their inheritance. Here you will learn who in the class is a risk taker and who is conservative when it comes to money anyway…
6. Students need to know more about the Stock Market now so they can be educated investors.  Use the following URLs to give students some background knowledge.

http://www.cftech.com/BrainBank/FINANCE/DowJonesAvgsHist.html
The above site will help explain the history of the Dow Jones.

http://www.cftech.com/BrainBank/FINANCE/DowJonesAvgs.html
This will tell more about the 30 stocks involved in the Dow Jones Industrial Average.

http://www.nyse.com/about/education/investworld/17341.html
This site will aid in teaching students to read the stock table.
 

1. You can take this a step further and teach students about the different trading markets; the NASDAC, NYSE…
2. Now that students have an idea about the market, have them create an Excel chart showing what companies are involved with the Dow Jones.  The chart should show the stock name, symbol, price, average price, and its gains or losses in the year. They can use the Internet and business section of the newspaper to find all the necessary information. Not only will students gain ideas about the stocks included in the Dow, but they will also come by experience using Excel.  You could have them use the functions to figure out the average price of a share of stock etc. Example:

1. Put students into groups of 3-5.  Have them discuss the information on their Excel charts.  Here they will learn about the importance the news has on businesses.  For example, if a company were going bankrupt, you would not want to make any investments in that product.  When Time Warner merged with AOL, the stock price split – this means that a single share of stock was priced so high that they thought that no one would buy it – so they split the shares in half. Many who owned stock in these companies made tons of money!  Their amounts doubled! Students need to be aware of these events. Students should also use this time to decide what stocks they would like to include in their virtual portfolio.  They should cross out the companies listed that are definite no’s and mark the yeses as well.  Remind them that they will buy 5 shares of stock in any company listed in the Dow Jones Industrial Average.  (Their portfolios should have no less than 3 different companies – so they can buy up to 2 shares in each listing.
2. Now it is time to choose the virtual portfolio.  Each student in the group should get to pick at least one stock to be included.  Have each group submit in writing the names of the companies they wish to purchase stock in as well as reasons for choosing those companies. They should also be able to use the “price today” to figure out how much their portfolio is worth.  As the teacher, you may want to use Publisher to create a certificate stating that the children own this virtual portfolio worth __________.
3. For the remainder of the predetermined time, students should keep an Excel chart including the day to day or week to week data on their virtual portfolio.  Their chart could be set up as follows:

1. Students should use the Internet to gain access to all of the stock symbols and prices.  This is real time data as it is updated on a daily basis and changes throughout the day! Students could continue this project for the entire year and then turn in monthly reports on the status of their virtual portfolio.
2. It is a good idea to teach students to read the business section of the newspaper.  They should be able to read the stock tables by the end of this unit.

Were students able to use the Internet to collect data and then create Excel charts that reflected knowledge of the stock market?  Use the rubric attached to judge the Excel charts.   http://rubistar.4teachers.org/view_rubric.php3?id=231166

Take into account the discussions that take place during this unit.  More often than not, you will see some of your best learning here.

Teacher Name: Niki Tilicki
Site: Wilson
Date Submitted: April 2002