Saturday, March 04, 2006

I let my students buy Playboy!

Yea, got your attention now didn't I?

Of course, now I'll have some crazy parent that will read the title and insist that I'm Satan and I'm out to ruin the lives of their 18 year old son, who is probably doing things a hell of a lot worse than reading Playboy.

Anyhow, most of you know right now that I teach Government/Economics to Seniors in high school. This presents an interesting dilemma when it comes to subject matter and controversial, or possibly inappropriate, material. In government, we have to talk about plenty of controversial issue, whether it is abortion, homosexual marriage, drug policy, freedom of expression, right to privacy, etc...

In Economics, it becomes a little tougher to deal with what might be called "inappropriate", mainly because the kids realize that they are 18, and therefore think that society should start treating them as adults (regardless how they act). Kids openly talk about smokeless tobacco, 40's, Bacardi, and in this county, marijuana, without any fear of repercussion. Teachers do the best they can to keep the topic out of the classroom, but do you really kick an 18 year old student out for talking about getting drunk on the weekend? Don't blame the administration, because I'm the one who has the power to toss a student. But seriously, if I removed every student who mentioned those things, I would have about 6 kids left in my classroom, maybe!

This gets us to the Stock Market Simulation and Playboy. The students are given $10,000 to invest in the market. After going over all the numbers that I want them to research (PE, Debt, Revenue, etc) I let them go research. The first question that comes up is almost always, "Mr. Silva-Brown, can I invest in Playboy?" Then I get the same question for Trojan condoms, Budweiser, JD, and a myriad of other things that might make parents irritated. My answer is the same always; is it a company that issues stock? Then of course you can buy shares in Playboy.

Now bear with me in the reasoning. First off, we are trying to make these kids think like adults, right? I understand that the content of Playboy is not appropriate for the classroom, but we aren't dealing with the content. We are dealing with a public company that is actively trading stock on the NYSE. Therefore, I try and get the students to look at the company in terms of the profitability that could be made in the investment. So, when a student asked about investing in Playboy, I told him to pull up the Yahoo Finance page for Playboy and tell me about the factors involved in purchasing stock. Here they are:

Market Price- 13.80
No PE Ratio and no dividend
Very erratic price over the last 5 years
No stock splits since 1990
115 million debt (which isn't much)

Then we discuss what Playboy provides. Yes, it could be a little awkward, but once you get past it, the student starts looking at the business end of the company. So Playboy takes pictures of naked ladies. Ok, now what is the industry? Playboy is a magazine. Does Playboy have a lot of competition? Yes, there are plenty of other sources of pornography, plus the Internet and magazines like FHM and Stuff. Believe it or not, 9 times out of 10, the student is very serious when looking at the company. Also, 9 times out of 10, the student will not buy stock in Playboy because they see a bad investment. Of course, you will get the smart ass asking, "Can I do some in-depth research on their website?", but this is usually followed by the goofy smile of a student that knows he can't.

At the end of the stock market simulation, students do a presentation about the stocks they purchased. Even those that purchase controversial products do a good job in viewing the product in a corporate light. I've had a few small run-ins in the past with parents asking if I feel like I'm promoting those products. I tell them that I don't, I'm giving students the opportunity to become good investors in publicly held companies, not promoting the use of the product. I hope that all Economics teachers take this into account when dealing with people that are about to enter the real world.
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