The Real Losers In The Stock Market Game – ValueWalk Premium
Institutional Investors

The Real Losers In The Stock Market Game

The American educational system prepares our children to be successful in whatever field of work they choose. But that is not true of the popular “stock market game,” which has been hijacked by the brokerage industry to indoctrinate students into disastrous financial practices.

Get The Timeless Reading eBook in PDF

Get the entire 10-part series on Timeless Reading in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues.

We respect your email privacy

Q1 hedge fund letters, conference, scoops etc, Also read Lear Capital: Financial Products You Should Avoid?

Stock Market Game

mohamed_hassan / Pixabay

Do some of your clients or prospective clients shun the thought of owning broad stock index funds in favor of particular hot stocks they believe are a sure thing? Or maybe they just want to own certain industries in which they are confident. If so, perhaps they are among the 17 million people since 1977 who were exposed in high school to something called the stock market game. The game is pitched to teachers of classes from 4th to 12th grade as helping students learn financial literacy. You be the judge as to whether it actually does.

The stock market game

The stock market game (SMG) is a program of SIMFA’s Foundation for Investor Education. The foundation’s website says it is “an educational non-profit organization dedicated to fostering knowledge and understanding of the financial markets for individuals of all backgrounds.” That is a very worthy cause and perhaps why it qualifies as tax-exempt.

I spoke with Jim Ford, a paid market coordinator for the SIFMA game. He covers four states, including my home state of Colorado where my son has played this game twice before entering college, and a version from a different sponsor just a few weeks ago in college. I’m very proud to report that he scored 119th out of 120 students, but more on that in a bit. The rules of SMG are as follows:

  1. Students start with $100,000 in “fake” money.
  2. They can margin up to 50%, meaning they could have $150,000 of securities. The margin rate is 7% annually.
  3. The game lasts 10 weeks, though there is a version that goes for up to a year.
  4. Students must buy a minimum of three securities and each security must be priced at least $3 a share.
  5. Trades incur a 1% commission to buy or sell, irrespective of the security, whether individual stocks, mutual funds, or ETFs. Ford noted that this discourages churning.
  6. The winners are the students who make the most money during the duration of the game.

Ford told me that the SMG is an “exciting” way for students to learn investing, including fundamental and technical analysis.

Read the full article here by Allan Roth, Advisor Perspectives


Saved Articles

Here’s a Tip: Read What Professional Investors Read

ValueWalk Premium is for investors looking to improve their investment process AND keep up-to-date on the latest industry trends.

It’s THE resource for value investing and hedge funds. 📈

And with a free three-day trial and $29.99 per month thereafter, it’s a value in its own right.

Sign up now. 👇