| AP Econ classes get first-hand experience with stocks (3/08) | | Print | |
| Written by Bonnie Tong | |
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Most investors agree that buying low and selling high is a good strategy in investing in the stock market, but this strategy doesn’t always work. Students now have a chance to test it out. Kristin Lubenow and Michael Conley’s Advanced Placement Economics classes get a chance to experience the risks and rewards in speculating in the stock market through an online 16-week Stock Market Game (www.stocksquest.com). The teachers provide each student and a partner $100,000 worth of virtual money to start their stock portfolio. Upon completing economic research students buy shares in five different US companies. Popular firms amongst the students include technological and industrial companies such as Google, Yahoo!, Macy’s, Apple, Microsoft and Shell. “We invest in these companies for the same reason people tend to buy brand names,” senior Jessica Huang said. “It’s brand loyalty to things you know about.” This realistic simulation allows students to plan their transactions strategically for economic gain. “The person in the lead has about $170,000 now, which is about double the value of what she began with,” Huang said. Another less fortunate classmate is down to approximately $89,000, according to Huang. Lubenow explained that “the project gives the students a familiarity with economic indicators. Students usually have a hard time getting used to macroeconomics because it’s difficult to make a personal connection,” she said. The stock market game “lets them see what’s happening to everybody who’s out there investing, and they can see how the macro economy relates to them personally.” During the days before Valentine’s Day, senior Ching Ching Liu’s shares in Hershey’s stocks went up, due to the sudden consumption of holiday chocolates. “Economic indicators give us a hint as to what is doing well in the economy and what is not,” Huang said. The project has “a dual purpose,” Lubenow said. “It gives students the ability to see how people make money in the stock market, as well as all the ups and downs. They also get to see how the government and Federal Reserve get involved in stocks.” Lubenow recognized that investing in the stock market is like gambling. “People spend a whole lifetime in this. There’s always a risk that you might lose or make a bad bet, but you just hope you’ll rise overall in the long run,” she explained. “You have to be smart about what you invest in, but there’s no true strategy to this.” To prepare for this, it is important to secure a diverse portfolio. “The most important thing in investing is to have different kinds of companies,” Lubenow said. Huang agreed. “You need a variety of companies like entertainment, food, retail clothing and banking. There’s a type of chain reaction going on, “ she added. “For example, if you only invested in entertainment, and all the investments dropped, you would be very screwed. That’s why you extend your investments and have something else (to reply on).” However, despite Liu’s investments in various companies like Microsoft and AT&T, “they’re doing really badly, and the stock market is falling. I would probably be really upset if this were real life,” she said. Not all students are disappointed. Huang finds the game fun and entertaining. “It’s not real money, or else I’d be stressing out,” she said. “But I know it’s just a game, so if I lose money I’ll just think, ‘oh well, now I know better.’” Liu agreed she was gaining experience by playing the stock market game. “I’m learning from all the mistakes I make here in the practice round,” she said. “I’ll know what to do and what not to do in real life when I’m using real money.” For the end of the project, students will describe the reasons for their decisions in the form of a final report and presentation, due May 23. They will analyze their decisions and discuss their total gains and losses for the 16-week period, finishing with the sharing of their strategies in buying and selling stocks. |
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