Rami: Alright Simon, we need to learn how to make money in the stock market. Simon: Ok, fine. What do you know about the stock market?

Transcription

1 Stock Market Game Competition Indian Hill Elementary School May 2014 Luke Castellini Rami Helmy Simon Lococo Slide 1: The Bullish Boys Narration by Rami: In September 2013, Luke Castellini, Rami Helmy and Simon Lococo began a journey to understand the Stock Market and achieve the highest return in the Stock Market Game. First segment: Rami: Alright Simon, we need to learn how to make money in the stock market. Simon: Ok, fine. What do you know about the stock market? Rami: Nothing, what do you know? Simon: Nothing. Rami: Great, then we re on the same page! Simon: Well, I do know that you buy things, I think it s called investing, and then you get rich! I think it also has to do with bears and bulls, and other animals and stuff. Rami: Oh great, what should we invest in? How about this company, it has my initials! Simon: I think there is more of a strategy than that. Luke busts into the room and conversation

2 Luke: Wait, stop this madness! I must share a secret with you. For many months I have been studying the stock market and I have a secret identity.i am Stock Market Man and investing is my power! Rami: Stock Market Man?? Simon: Luke, are you sure you are feeling ok? Luke: Yes, I am fine. My motto is: Know what you own, and know why you own it. I can help you learn about investing, learn about the economy and maybe even make money in the process. Simon: How can you help us? Luke: Well, I happen to have this PowerPoint at hand. Lights, please! Second Segment: Slide 2, Stock Market Terminology Luke: Do you know about any of these terms? Rami: What is a P/E ratio? Is this like fractions or algebra? Simon: Oh! Isn t the stock market important in economics, or something? Luke: Yes, Simon, the stock market is tied directly to the economy. The Stock Market is a place where people buy and sell shares that represent ownership in companies. In a Bull market, we can make money when the price of stocks increase. Simon: What are bull and bear markets? Luke: A bull market is when the majority of stocks are increasing in value and a bear market is when stocks are decreasing in value. Rami: So, how do we make money?

3 Luke: I was just getting to that. We need to research stocks before we buy them. The stocks shouldn t be too expensive relative to the value of the company. When people say Buy low, sell high it means that they buy stocks at their lowest price and sell them at their highest price. Rami: So we need to find the lowest priced companies, like Penny stocks? Luke: No, we need to find stocks with a low price compared to their potential growth. Stocks like this have a low P/E ratio, which means their stock price is low compared to the earnings of the company. (Insert P/E ratio slide) Simon: I get it - Let s look up the P/E ratios of companies now. What companies do you know? Rami: I know that Amazon sends packages to my neighborhood every day, I see them on all the doorsteps. Let s research it! Simon: And I know that every kid in school wants or has an Ipad or Iphone or Ipod, so let s research Apple too. Luke: Excellent, and I will research growth stocks to see what might be a good pick. Third Segment: Slide: One week later.. Rami: Amazon is an amazing company, just look at these stats I found. They are growing like crazy and I think we should definitely buy Amazon! Simon: Apple is out of this world with great stats too. Although the price looks really high, my research shows it can keep growing. Let s buy Apple too! Luke: Your research looks great, and I agree with your choices. I would also suggest we buy Celgene, Tesla and JPMorgan to diversify. Rami: What does diversity have to do with stock-picking?

4 Luke: Diversify, not diversity. It means that we shouldn t pick all stocks in one sector, like all technology stocks or all bank stocks, because if the sector gets hit hard for some reason our portfolio would suffer. Diversification is a means to lessen risk, so we should buy a few stocks in different sectors. (Insert Diversification Slide) Simon: I get it! Let s make sure we have stocks with low P/E ratios, strong growth potential, and stocks from different sectors. Rami: I read that most of the Economists on Wall Street are very Bullish right now and I like our list of stocks. Is there any way we can buy more? Luke: Actually, yes. Fourth Segment: Luke: We can buy on margin which means that we can take a loan to buy more stocks. This is great and works well as long as our stocks increase in value, but if they go down in value it is difficult to pay back the loan and interest. (Insert slide on Margin ) Simon: Can we just buy a medium amount on margin and see what happens? Luke: Let s vote on it. Who feels so strongly about our stock picks and a bull market that we should buy more on margin? (All 3 raise hands) Rami: Then it s unanimous, we will buy this portfolio of stocks and use margin. And we will vote on changes to the portfolio. Luke: Very good, we make a great team! Each week we will evaluate what to buy and sell and figure in the transaction costs because making trades isn t free. We will also make graphs to check on the performance of our stocks and keep tabs on

5 what is happening in the overall market by reading the Wall Street Journal and Barrons. (Insert Slide Our Process then Invested in Diversified Portfolio and Weekly Review with music in background) Fifth Segment: Slide: 10 weeks later.. Simon: These past 10 weeks I ve learned so much about the market and buying stocks. Rami: Now the contest is over and we did it!!! We have the highest return! Luke: With a lot of research and a little luck, we can do really well in the market. Thanks for being great partners. Maybe someday we can even go to Wall Street together! Boys look up and daydream Video cuts to photos of Wall Street and footage of Stock Exchange Slide with total return and winning #1 in state (for 10 seconds with Happy song in background) Video of Boys dancing on lawn to Happy Song Special Thanks Slide