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6.   Where do I begin my research? Sherlock

 

So, the students are ready to go, they have their team IDs, and they can read the stock data. 

Then they look at each other...then you...and ask "how do I know what to buy?", or "where can I find stocks to buy?" 

 

There are many different strategies to use to help students begin to build their portfolios. 

Peter Lynch, in a video called "Stock Market Adventure", tells a class of students to "buy what you know".  (You can purchase this short video from your SMG coordinator.) 

Any broker will tell you    


 

"...forget the hot tip! 

"Do your research!"

 

 
Great advice for your students!    

 

1) Start your Research With a Company -

To get students started thinking about what they already know, you might try these activities.

a.  In the Peter Lynch video "Stock Market Adventure", the kids take a trip to the Mall and find out what the "hot" sellers are.  They look at shoe stores, department stores, music stores, etc.  Have students take an imaginary trip to the mall, department store, etc. and write on the board products that they would buy.  Then beside each product, list the name of companies that sell these products.

b.  Have students bring in products from home, i.e, from their kitchen shelves.  Find on the labels who the product maker is. 

c.  Check magazine ads -they have the parent company in the fine print.

c.  Read the following "short story" about Jim's Birthday Present .  Have students start a list of companies based on this activity.

As students begin to find companies they want to invest in--through Internet research, newspaper articles, magazine articles, etc., you will find that they will run across companies that are not listed on the stock exchanges.  This may be because these are foreign-owned companies or privately owned companies; or that the producing company is not the parent company, but a subsidiary company; or the product may be a brand name. 

An example: Students may want to buy "Taco Bell", but can't find the ticker symbol.  This is because Taco Bell's parent company is the company YUM! Brands, Inc..  To purchase Taco Bell stock, they would need to find the ticker symbol for YUM! Brands,, Inc.---which just so happens to be YUM.  YUM is also the parent company for what other companies?

So what are the strategies to finding who makes a product, like "Doritos"?

Tips for Finding Parent Companies:  

  • The product itself will always include in small print the name of the parent company
  • Magazine ads often carry (in small print) the name of the company that produces the product
  • The Internet --using search engines, like Lycos or Yahoo and typing in the name of the product  will often list related websites (usually listing the parent company site).
  • the product website - which will usually provide "corporate or information"
  • and last, but not least, and after exhausting all other research methods, contact a local broker or banker (remember, though that they are busy people, especially at the beginning and close of the market!)

   

2)   Start Your Research With an Industry

Have students choose several industries (restaurants, banking, oil, telecommunications, etc.) to analyze, based on students' familiarity with companies in the industries and their perceptions of the industry's outlook. Is the industry profitable? Will it continue to be? What factors will affect the industry's prospects? 

This is also an excellent way to teach students about diversification within a portfolio.

(Adapted from SMG Guide to the Internet in the Learning Resource Center, where you will find several extension class lessons to guide students in research).
 

Check out financial website that lists industries and news about companies in each industry. Select the link "Industries" or "Industry Research".

http://www.finance.lycos.com

http://finance.yahoo.com

 

Use the following worksheet for researching companies within various industries.

 

Industry Research Worksheet

Go to 7.  Researching a Company