In this lesson students will learn about the impact that efficient markets have on attempting to correctly time the stock market, as well as how investing in stocks should have long-term investment goals. Part I begins by having students read and discuss a story. A small exercise is included which demonstrates that predicting what a stock does next is not so easy. Parts II and III takes the student through an interactive historical simulation giving the student a chance to make decisions about investing in the U.S. stock market.
The practice of saving and investing is definitely a good thing, but there are many ways to save and invest. In thinking about the options, it is important to consider the degree of risk involved and the potential for return. Typically, the higher the risk, the higher the potential return. The key is to work up to the riskier investments, where you stand to earn the most money, but only after you've successfully established some safer holdings. This lesson walks students through the stages of investing, demonstrating why that sort of sequential order is important. At the end of the lesson, students are asked to serve as financial advisors and give advice to people considering investments at different stages of the investment ladder.
In Part II of this lesson, students will have the opportunity to complete an interactive exercise that will take them on a historical tour of the stock market from 1920 until just after WWII. Students will learn the difference between a buy and hold vs market timing strategy as it relates to investing. Part III continues this interactive exercise by taking the student on a historical stock journey beginning slightly after WWII and proceeding through end of year 2000.
The following lessons come from the Council for Economic Education's library of publications. Clicking the publication title or image will take you to the Council for Economic Education Store for more detailed information.
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9 out of 23 lessons from this publication relate to this EconEdLink lesson.
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3 out of 24 lessons from this publication relate to this EconEdLink lesson.