Principal’s Message: Economic Education Teaches Students Risk Managment

principal's  message logoGraduation is less than one month away. Before we know it, our seniors will embark on their college journeys and in a quick four years will be a part of the real world. One skill that is vital to any “real world” education is an understanding of risk management and the world of economics. Guest blogger, Diane Larsen, of the Social Studies Department shares her experience in guiding our seniors through the stock simulation over the last 10 years.

After attending a workshop offered by the California Council on Economic Education (CCEE), I began teaching the stock simulation in my economics courses. That was over 10 years ago.

Each semester, my students and I participate in the California Stock Market Simulation. Teams are assembled and are “given” $100,000 to invest with option of leveraging an additional $100,000 at eight percent. Throughout the simulation, everything is tracked through a program called StockTrak.

Our investment timeframes are short – only 10 weeks – and we are “in it to win it.” Over the 10+ years of the program here at Mater Dei, we are proud to have won four California Stock Market Simulations and have been top finalists in other state-wide competitions including Capital Markets and Money Wise Teen.  We are regarded as the team to beat and both the students and I are proud of the work we have done over the years to earn that reputation!

In preparing my students for this simulation, we learn the tickers, how to place trades, and the process for using the simulation. When choosing where to invest, I encourage my students to start with companies they know.  But, I also stress the importance of research which allows for discovery of other stock options – especially since our objective is to invest wisely and win the competition.

In researching stocks and companies, we utilize Yahoo Finance, the Wall Street Journal, Fox Business, and Bloomberg. I encourage students to find stocks with high 1.0 ratings which are indicative of a “strong buy.” Similarly, we look for stocks with 5.0 ratings which are indicative of a “strong sell.”

Each investment team submits a portfolio at the end of the semester. The portfolio includes trade records, account balances, graphs, and concluding essay.  See below for examples of student work.

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It has been wonderful to witness my students’ excitement for these simulations over the years. The students are active and engaged in something practical while learning valuable lessons about financial education. While I don’t expect them to become brokers or world famous economists, I want them to understand that everyone can and should learn this. A keen awareness of the world of finance is vital for any citizen who plans to own property or invest in a retirement account. Developing an understanding of this at a young age certainly sets our students apart from their peers.

Diane Larsen, Economics Teacher
Social Studies Department

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