Friday, February 23, 2007

Economics of Investing

Wanna know why teaching Economics is really cool? Because you don't have to teach to some idiot STAR test, and you get to actually teach stuff they really need to know.
For instance, if you haven't noticed, the current presidential administration is very high on fixing Social Security by making the general public do more investing in their own retirement. The idea is a good one, and a bad one. It's good because it is the solution to fixing Social Security. You need to have people much more involved in planning their own future to make them actually look forward to retirement. Plus, it will ease the burden on the number one cost in the federal budget. The bad part about more privatization of Social Security is that you are going to introduce this to a general public that can hardly balance their own check book, and that is in massive debt. So, you would figure that the California Economics Standards would have a large section on Investing, since we (as in, California) are the 6th largest economy on the planet.
Wait a minute, there are no Investing standards.
That's right, zero.
So whatever push the government is making towards private investment, it can't be that serious because Economics teachers don't have to even mention it.
But of course, Economics teachers are cool because we say, "Screw that". I do a whole unit on Investing, from budgeting to stocks to bonds to retirement accounts, and the students totally love it. Most Economics' teachers are very familiar with creating a Stock Market Project, the hook-line-and sinker that nabs Seniors during the second semester and keeps them glued to Wall Street. I take simulation and make it go to another level.

-First, I show them a small clip from Mad Money's Lightening Round, which makes their head spin in five directions at once, but gets them totally enthralled with the concept of stocks.
-Then we discuss the methods of reading and researching stocks. This is great for those Macroeconomic concepts that are totally boring to regularly teach. Get them looking at Economic Indicators, traditional stock signs (PE, EPS, Trends, IPO's, Splits), and balance sheets. It will amaze you how much a kid will learn about a company.
-I assign the project. They invest $10,000 at the Virtual Stock Exchange, which is set to my own guidelines ($10 trades, no margin buys, allowed to sell short, allowed to by Mutual Funds), and they compete against other students. The top five investors gain extra credit. The project is due in late May and consists of your standard report material, graphs, and a stock transaction log.
-Every day, after the Newshour summary, we watch the Nightly Business Reports's "Stocks in the News", a three minute summary of the most active stocks and stocks that warrant media attention. Students are hooked.
-Throughout the entire Economics course, we look at the subject matter primarily through the eyes of entrepreneurship, and investing. This means that the news becomes even more important because the students have a monetary interest in it. Students will fly into the classroom asking to go into the computer lab because they read in the newspaper that two companies might merge, and they need to get in on the action!
-Finally, I incorporate a variety of other mediums for students to learn about the markets. Last month, I found Wallstrip, a web show that is dedicated to showing the new generation of investors that the Stock Market is actually really cool. Think of it as the Nightly Business Report version of the Daily Show, ran by Howard Lindzon, an investment advisor and hedge fund manager. Oh yeah, it is also hosted by the uber-hot Lindsay Campbell, who can be used as a great promotional tool for going to college.

Mix it together and you have what Economics should be, some prep for the future for these kids.
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