Bears & Bulls: Learning About the Stock Market

A few years ago, a second grade teacher told me how she stumbled onto teaching about the stock market to her students. It was pure serendipity, and prompted by a conversation that she overheard by group of students talking about a new guinea pig. The owner of the guinea pig had named it “NASDAQ,” and the other students wanted to know where the name had come from – what the heck kind of name was NASDAQ?

Apparently the owner told his classmates that he kept hearing NASDAQ mentioned on TV, and he concluded that NASDAQ must be a famous celebrity, maybe a new rap star. “Ohhhhhhh,” they all said, and then kept repeating the name, savoring it. The teacher told them what “NASDAQ” actually meant, and – since the kids seemed interested – ended up with an impromptu lesson on the stock market. Since then, she’s educated herself on how stocks work, and has her students participate in a brief project on the stock market each year. Most students seem to enjoy it, and they learn valuable financial literacy skills.

Like the majority of us, kids like to spend money. However, as the current economic crisis has illustrated, many people tend to spend too much money, and save and invest too little. It’s never too early to start educating students about the importance of saving and investing, and there’s quite a bit of age-appropriate material available that addresses how to teach them the concepts. Students stand a better chance of becoming financially savvy adults if they begin to learn early about saving, investing, and the basics of how the economy works. Learning about the importance of saving and investing are valuable life skills that can be taught in the context of real life companies and situations. For example, all kids are familiar with brand names such as McDonalds, Apple, and Nike, and learning about such companies’ stocks allows students of all ages to track stock performance and learn about trends in the stock market.

Stock markets are central to national, as well as global, economies. Some teachers may be reluctant to broach the topic with their students, perhaps fearing that they don’t have enough knowledge, or that the subject is too daunting for students. Give it a try – there are tons of highly readable overviews of how the market and Wall Street works, and the topic of money almost always piques student interest. The topic can also be taught across the curriculum, as students can learn about the history of the stock market, how to calculate profits and losses, how compounding works, and the effect of natural disasters and social upheaval on stock prices. Students should learn about the risks of purchasing stocks, and how a little research can help to lessen investor risk. Students of all ages like “investing” in hypothetical stocks, and seeing who can make the most money over a prescribed period of time. Who doesn’t like to make money, even if it’s the virtual kind?

This week, I’ve selected three stock market resources for all grade levels. We’ll be featuring many more lessons and activities on stocks and investments all week long on our Gateway Twitter and Facebook pages, so please be sure to check those pages often. Also, be sure to check my colleague Peggy’s column (linked below) for her ideas on summer learning.

Play the Market
Subjects: Economics, Math
Grade: 5-8
In this activity, students gain an understanding of the volatile nature of the stock market by participating in a hypothetical experiment. For four weeks, students will track the ups and downs of 10 stocks they have selected. After this month, students will discuss their imaginary gains and losses and share their observations about the stock market, and their reactions to this experience. This activity presents a really nice overview of the history of the stock market and its ups and downs. The ability to track actual stocks over a period of time also presents a nice opportunity for teachers to discuss how current local and world events have an effect on the market. This activity was produced by Big Apple History, an online tour of the history and attractions of New York City. Big Apple History is an online project of Thirteen/WNET New York, New York’s flagship PBS station.

Risky Business – Or Not
Subjects: Economics
Grade: 7-12
In this lesson, students will learn about stocks and understand what it means to buy stock in a company. Students will develop an understanding that investing in a company's stock involves risk, and will also learn factors that make a company risky. I like that this resource has students compare different companies’ stocks and discuss the different risk factors presented by each. This resource was produced by What’s Up in Finance, a reality show featuring teens and young adults working toward financial independence. What’s Up in Finance is produced by the Educational Broadcasting Corporation.

The Stock Market
Subjects: Economics, Probability, Statistics
Grade: 9-12
In this lesson, students learn about the financial pages in newspapers, and review the Dow Jones Industrial Averages, bonds, currency exchange rates, commodities, etc. Students will learn how to read the stock market, and how Wall Street works. This is a great example of a lesson plan that uses real-world examples and methods to teach financial literacy. This lesson was created by Ellen Skinner, a high school teacher in California.