Lesson 6

Lesson Topic: Investing Challenge

Goal: To give students a little real-world experience into what investing in the stock market means.

Class discussion

What do students remember about stocks and the stock market from last lesson? How do people make money on the stock market? (dividends and capital gains)

Today we will be pretending to buy stocks listed on any of the major North American Exchanges (The TSX, NYSE or the NASDAQ). For simplicity, we will disregard the exchange rate between US and Canadian dollars and just assume the stock price listed is in a uniform ‘Dollar’. What we are mainly looking at here is capital gains/losses which are based on a percentage change in stock price, so the unit of currency is not relevant as long as we remain consistent. This will allow students to ‘Invest’ in many of the companies they have heard of like Tesla, or Facebook or Google, as well as Canadian companies like Telus or Canadian Tire.

Background Information

There are many different versions of the investing challenge or ‘stock market game’ out there, many online electronic ones, but here we will be manually calculating portfolio value based on changes in stock prices over time. This gives students a real view into how this actually works and how investing in stocks can be risky. It also gives them multiplication practice and experience looking after ‘money’. Usually by the end of a month there will be some students who have made money and others who have lost.

Video – How to set up your stock sheet (lesson, not a video?)

Activity/In-class work

How it works: Students begin with $10,000 to invest. They must choose at least 5 stocks to buy and then they must decide how many shares of each company to buy. They can simply allot $2000 each to each of 5 companies, or $6000 to one and $1000 each for the rest. They can keep up to 20% of their money in cash but must have purchased stock in at least 5 companies. They must calculate (using a calculator) how many shares of each company they will buy based on the current stock price which can be looked up online. They then write down the number of shares purchased, multiplied by the share price and this is the total amount spent to purchase those shares. Usually it doesn’t work out exactly and students are not allowed to go over the $10,000 so they usually have a little cash left over, this gets noted in the “Cash left over” box and gets added to the total of their investments at the end of the month. The idea is once a week students look up the stock price for the companies they bought, multiply it by the number of shares they bought and record the total. So each week they can see if their investment in that company went up in value or down. This is an opportunity for students to manually calculate stock and portfolio value to see the relationship between stock price and value. We are learning about concepts such as stock price, market capitalization, and capital gains. At the end of 4 weeks (or six weeks if you want to go longer) students do a final calculation, add back their cash amount and see if they have more than $10,000 or less, did they make money or lose money? This can lead into a good class discussion about the riskiness of investing in stocks.

Sample stock sheets included in package, or student may set up their own sheet in Excel or Google.

Wrap-up/ Extension

Pick a company, preferably one that has been around for at least 30 - 40 years and see if you can find a graph of their stock price and market capitalization over time. Look for big jumps and falls in stock price then see if you can find out what happened. There will be common places for many of the stocks such as the dot.com bubble or the 2008 financial crisis or the Covid-19 pandemic. Share out with the class.