Stock Market Game

Economics – Fall 2006

 

All economics students will participate in the Stock Market Game (SMG) during the fall semester.  The SMG is administered locally by the Houston Chronicle and nationally by the Securities Industry Foundation for Economic Education.  Students will be graded on the quality and completeness of their group portfolio and not on the overall success of their stock purchases.  There are several requirements for the competition which will be explained both in class and through handouts.  Students must read all materials carefully and completely. 

 

Required Materials:  three ring binder, 8-tab dividers (one each per team)

All teams are required to keep a portfolio in a new or gently used three-ring binder.  This binder will contain the teams portfolio which is the basis of their grade for this project.  There will be numerous assignments for the students to complete and keep in their binders.  Also all materials relevant to the game should be kept in the binder. The Portfolio will count as two test grades in the fourth quarter.  The binder will be taken up several times during the competition to make sure teams are staying up to date.

 

Portfolio Requirements:

 

Ø      Title page, with the following information:


  1. Team log-in ID
  2. Team Members
  3.  Period
  4. Teacher
  5. Dates of Competition

 

Ø      Table of Contents, with the following sections:

 

1.                  Summary of Results

a.         Chart showing week by week performance

b.         Chart for each stock showing weekly performance

c.         Weekly account holdings print-outs

d.         Weekly account summary print-outs

e.         Transaction List

 

2.                  Stock Research and Analysis

a.                   Description of company including relevant company officers

b.                  Chart/graphs showing one year and 5 year performance

c.                   Paragraph explaining rationale for purchasing stock – signed by all group members

d.                  Paragraph for the sale for the sale of the stock – signed by all group members

 

3.                  Stock Market Assignments

-                     To be given throughout the game

 

4.                  Report on Economist/password

 

5.                  Team Assessment


Rules of the Stock Market Game

 

1.       Each team begins the simulation with $100,000 in cash and may borrow additional funds. How much you may borrow is dependent upon the equity in your account. Interest is charged weekly on negative cash balances at an annual rate of 7.00%, and credited weekly on positive cash balances at an annual rate of 5.00%.

 

2.       You may trade only those common stocks listed on the American Stock Exchange, Nasdaq Stock Market and the New York Stock Exchange. You may not trade preferred stock (those listed with a "pf" after their name in the stock tables).

 

3.       All transactions are made on the basis of daily closing prices, which can be found in the next day's newspaper or by using the price quote facilities of SMG WORLDWIDE.

 

4.       All buy orders must be a minimum of 100 shares. Sell orders for less than 100 shares will be permitted.

 

5.       SMG WORLDWIDE does not permit buying stocks that trade below $5 per share. Such orders will be rejected. Sell transactions for existing long positions will be accepted, even if the price is less than $5.00 per share.  (There are a number of reasons for this rule. Low priced stocks, known as penny stocks, are very risky and volatile investments. Accordingly, brokers will not permit their customers to trade such securities on margin, just as SMG WORLDWIDE does not. Also, penny stocks tend to have very shallow markets and their prices move sharply with large orders, unlike SMG WORLDWIDE where transactions are executed at closing prices regardless of order size).

 

6.       Trades can only be processed in whole and will be rejected if sufficient buying power does not exist to execute the entire order.

 

7.       A 2% broker's fee is charged for all transactions. For example, if you buy 100 shares of a stock at $10 per share, you must pay the 2% of $1000 or $20.  On Sell or Short-sell transactions an SEC fee of 1/300 of 1% rounded to the nearest penny is also charged.

 

8.       The Game is run Monday through Friday. Teams may trade on any day the participating stock markets are open. Orders may be entered 7 days a week 24 hours a day.

 

9.       Trades entered after close of market (4:00p.m. E.T.) will be priced at next trading day's closing price.

 

10.   Teams do not have to liquidate their portfolios at the end of The Game.  Winners will be determined on the basis of the equity in their portfolios at the end of the final transaction day. (Some states may use an essay contest to determine winners).

 

SHORT SELL/SHORT COVER RULES

 

11.   All short sell orders must be for a minimum of 100 shares. Short cover orders for less than 100 shares will be permitted.

 

12.   SMG WORLDWIDE does not permit short sells on stocks that trade below $5.00 per share. Such orders will be rejected. Short cover transactions for existing short positions will be accepted, even if the price is less than $5.00per share. (See Rule #5 for an explanation).

 

 

PORTFOLIOS

 

13.   A record of a team's portfolio and transactions will be available daily. A team will not receive a portfolio nor be listed in regional rankings until its initial transaction is entered successfully. No back posting of trades will be done for trades of securities not contained within the SMG WORLDWIDE Security Table. Once the missing security has been added to the Security Table the security can then be traded. The same rule applies to trades rejected if they are incorrectly pricing below $5.  Once the pricing has been corrected the stock can then be traded.

 

14.   No back posting of trades will be done for trades of securities not contained within the SMG WORLDWIDE Security Table. Once the missing security has been added to the Security Table the security can then be traded. The same rule applies to trades rejected if they are incorrectly pricing below $5.  Once the pricing has been corrected the stock can then be traded.

 

15.   Stock and cash dividends and stock splits are automatically computed into your portfolio. However, you are required to check them for accuracy.  Promptly notify your Coordinator at their e-mail address of any problems you encounter.

 

16.   Participants of the end of day pricing game may delete pending transactions prior to market close.

 

ADDITIONAL RULES

 

17.   Any violation of the rules of the SMG may result in the invalidation of a transaction. Repeated violation of the rules may result in the disqualification of a team.

 

18.   Additional rules have been developed in some states and, if applicable, have been included in your Coordinator's Information Page. It is the responsibility of your team to learn and abide by all rules.

 

19.   You must maintain a total equity position that is greater than or equal to 30% of the current value of your current holdings. If you don't you will receive a margin call.

 

CODE OF PARTICIPATION

 

1.       SMG advisors must be responsible adults 18 years of age or older. In no case may they be a matriculated student in grades K-12.

 

2.       SMG advisors will ensure that every participant on their team(s) has read and understands the SMG Rules and the Code of Participation.

 

3.       Teams that do not comply with the SMG Code of Participation will be removed from the portfolio rankings.

 

4.       The authority to remove a team from the rankings lies solely with the team's SMG coordinator organization.

 

5.       Each team is responsible for any opening or closing transactions entered into its portfolio.

 

6.       Teams may not enter transactions into portfolios other than their own.  (Please note that when a team asserts that a transaction was entered by a non-member of that team, the team will nevertheless be ranked based on their portfolio's total equity, which will include the challenged transaction.)

 

7.       Only transactions stored on the SMG database will be recognized for purposes of evaluating portfolio total equity.

 

8.       SIFEE will be responsible for the accuracy of the market data. If a team believes a stock price or other information is in error, it shall notify its SMG coordinator organization.

 

9.       In the event of an error on the part of SIFEE and/or coordinator organization(s), their liability to a participant shall be limited to the refund of registration or other fees paid.

 

Your Local Rules for the Stock Market Game

1. We will use real-time pricing with overnight posting. This means that the teams will be given the price for the stock at the time of the transaction. It will be posted into the account overnight. Trades cannot be cancelled.

2. Each student team must buy and/or short sell stocks in 5 different companies by the end of the 10th week. For Spring 2005 that date is March 25.These stocks can be sold at any time based on their performance. There will be no $5000 minimum.

3. Teams may invest no more than 30% of their Buying Power(as listed on the Account Holdings page) on any one stock. This can also be stated as 30% of their Total Equity X 2. The SMG system will reject any trades that exceed this amount.

 


GENSHEIMER RULES FOR THE SMG

 

1.     Do not use an inappropriate password.

Your password will be monitored by both your teacher and the SMG coordinator.  Any inappropriate passwords will result in a seven point reduction in your team’s portfolio grade.  The team’s password will be changed by the teacher.

 

2.     Do not attempt to invest in inappropriate companies.

Though the SMG allows students to purchase any common stock traded on the American Stock Exchange, Nasdaq, and New York Stock Exchange not all of the companies are appropriate for high schools students at a Catholic institution.  As a general rule do not buy any company which you cannot freely discuss with either your mother or with Father Schwenzer.  Your teacher will have the final word on all decisions regarding appropriateness of any particular firm.  When in doubt, ask.

 

3.     Do not attempt to lose all your money.

The objectives of the SMG are all related to the proper use of the stock market as a tool to increase one’s assets.  Any deliberate attempt to directly contradict the objectives of this assignment will result in a team portfolio grade of zero.

 

4.      Team grades will be based upon the quality and completeness of the team portfolio.  These portfolios will count as two test scores in the fourth quarter.  Each team’s portfolio will be collected twice before the end of the game to be checked that it is up to date.  Additional assignments and grades may be associated with the SMG project throughout the semester including the possibility of an individual grade based upon participation and positive contributions to the team effort.

 

Ø      Portfolio’s will be due on Tuesday, December 5, 2006.  No late portfolios will be accepted.

 

Team Members

Printed Name                                                   Signature                                              Date

__________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

 


Sample Company Profile

 

Wireless Facilities, Inc. (WFII):  NASDAQ

 

Business Summary

Wireless Facilities, Inc. is an independent provider of outsourced services for the wireless communications industry. The Company plans, designs, deploys and manages wireless telecommunications networks. This work involves radio frequency engineering, site development, project management and the installation of radio equipment networks. The Company has also expanded its network management services, which involve day-to-day optimization and maintenance of wireless networks. As part of the Company's strategy, it is technology and vendor independent, which allows it to objectively evaluate and recommend specific products or technologies. The Company provides network design and deployment services to wireless carriers such as Verizon and AT&T affiliates Telecorp PCS and Triton PCS; equipment vendors such as Ericsson and Siemens and wireless data carriers, such as Sprint and XO Communications.

 

Financial Summary

Wireless Facilities, Inc. is an independent provider of outsourced services for the wireless communications industry, planning, designing, deploying and managing wireless telecommunications networks. For the nine months ended 9/30/01, revenues fell 8% to $162.2 million. Net loss totaled $49.7 million vs. an income of $22.7 million. Results reflect the recent decline in wireless infrastructure spending and increased amortization and asset impairment charges.

 

Officers                                                                                                                                                              FY2000 Pay

 

Massih Tayebi, Ph.D., 41

Chairman                                                                                      $223K

 

Masood Tayebi, Ph.D., 39

CEO, Director                                                                               $224K

 

Thomas Munro, 44

Pres                                                                                                $189K

 

Terry Ashwill, 56

CFO, Exec. VP                                                                                 --

 

Scott Fox, 44

Pres of Network Management & Operations                                 $225K

                                                            

Source:   Yahoo Finance

 


Portfolio Weekly Summary

 

                                                                                               

Week

 End Date

Portfolio Value

Profit/Loss

% Change

1

9/8

 

 

 

2

9/15

 

 

 

3

9/22

 

 

 

4

9/29

 

 

 

5

10/6

 

 

 

6

10/13

 

 

 

7

10/20

 

 

 

8

10/27

 

 

 

9

11/3

 

 

 

10

11/10

 

 

 

11

11/17

 

 

 

12

11/24

 

 

 

13

12/1

 

 

 

 

 

 

 

 

Totals

 

 

 

 

 


Stock Market Game Calendar 2006

 

Sept. 4

Market Closed

Labor Day

5 SMG Trading Begins

6

7

8

End of Week 1

11    Print Reports for Week 1

12 Class in the Computer Lab

13

14

15

End of Week2

18     Print Reports

     for Week 2

19

20

21

22

End of Week 2

25     Print Reports for Week 3

26

27

28

29

End of Week 4

Oct. 2

         Print Reports for Week 4

3

4

5

6

End of Week 5

9   

        Print Reports for Week 5

10

11

12

13

End of Week 6

16

        Print Reports for Week 6

17

 

18

 

19

 

20

End of Week 7

23

        Print Reports for Week 7

24

25

26

27

End of Week 8

30

        Print Reports for Week 8   

31

Nov. 1

2

3

End of Week 9

6  

          Print Reports for Week 9

7

8

9

10

End of Week 10

13   

        Print Reports for Week 10

14

15

16

17

End of Week 11

20  

        Print Reports for Week 11 

21

22

23

24

End of Week 12

27  

   Print Reports for Week 12

28

29

30

Dec. 1

End of Week 13

4

     Print Reports for Week 13

5

Portfolio Due

6

7

8

 

11

 

12

 

13

 

14

Semester Exams

15

Semester Exams

18  

Semester Exams

19

Semester Exams

20

21

 

22

 

 

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