My fifth grade math class has been participating in a stock market game simulation this year. In years past, this has been a culminating math extension activity for students where they can see how math and economics are related. Students use spreadsheets, gather data related to revenue/expenses, use math terms such as interest, rate, and explore world events that impact markets. All-in-all, it is a fun session that students tend to remember as they move onwards towards middle and high school.
Each year I have 5-6 teams consisting of 3-4 students on each team. Each team is given 100k and asked to invest at least 30% of their money in equities. The game occurs January – April. There is a brief introduction to the stock market and the metrics used to determine whether something is a good buy or not. My teams are only able to purchase/sell during class time and after a consensus is made.
This year the stock market game has been a wild ride. The invasion of Ukraine has directly impacted markets and students’ portfolios. Some of the teams are near 120k while others are hovering around 80k. Teams are getting their information from a variety of sources. Hot stock tips from someone at home (this happens every year!) or carefully researching and then deciding on what to purchase. The decision tree in what to purchase runs the gamut. Once students purchase a stock the emotional highs and lows are quite significant – especially this year.
At the end of the game there is usually some type of reflection. Students analyze their holdings and trading history. They reflect on what could have been done differently to optimize their overall equity in the end. While doing this, I tend to also reflect on how the game was organized and decide on what changes might be needed for the next session.
Even before this session ends I have come to the conclusion that a change is needed. Although I believe school stock market game simulations are fun and applicable, the game itself does not encourage students to look long-term. While reading students reflections in past years, I rarely hear comments about long-term investing because it is not part of the goal. Usually the comments involve regretting not buying at the right time or selling too early. There is generally a lot of emotional buying and selling going on during these simulations. I would say it is much better to do this with a fictional 100k and at 10 years old compared to 30. I have to wonder though what is being taught indirectly during the stock market game simulation process?
I would like to see simulations last longer than a few months and involve applicable situations. This year I heard the terms Bitcoin, cryptocurrency, Meta, Apple, and Netflix multiple times. I did not hear mutual fund, index fund or fees once. When is it appropriate to invest or save? How does investing look depending on these situations?
- Plan on making a downpayment on a house in 5 years
- Create a college fund for a daughter that is currently 7 years old
- Plan a retirement fund for someone that is 35 years old
There are plenty of other situations that could be used. This adds a different dynamic to the game, but also allows students to see how investing involves planning depending on the situation. Instead of going with a gut-feeling or gambling, students could look at the risk involved in the time horizon and manage their investing accordingly. This type of simulation would involve more up-front time and education. I think it would pay off though as investing is not as simple as what is currently being used during stock market game simulations. I assume that students would see that investment risk depends on the context and that would influence their decision making process.