By Beverly Spry
The Hall Street Stock Exchange at Scott's Branch Middle-High School is an economics class exercise designed to teach each student financial planning and fiscal responsibility.
During the exercise, the class divided into 10 groups of three students each, with each group given $3,000 - on paper - to invest in a stock of their choice. In order to show that stocks are unpredictable and thus high risk, the morning class was asked to select their stocks based on name recognition. The afternoon class was given guidelines to research stocks prior to investing.
The overall hypothesis for the two classes was there would be less than a 10 percent difference in gains and losses between the stocks chosen in morning and afternoon classes.
The nine-week course demonstrated that the morning class - name recognition - averaged a $69 gain per student, and the afternoon class - with guidance - averaged a $72 gain per student. The experiment in economics showed an average difference between classes of less than 5 percent, proving the class hypnosis and showing that stocks are unpredictable.
The morning class' gains were contributed to two stocks, Apple and Samsung, which released new upgrades to their popular cell phones toward the end of the nine-week project. The Apple iPhone 6 brought in a $620 gain for one group, while the Samsung S5 made a gain of $578 for another group.
Even with these gains, the class suffered a loss from another name brand company. A group that invested in Nike had a total loss of $110, proving that not all name brand companies make gains on the stock exchange.
The afternoon class used several charts and patterns to select their stocks. The main chart used was the stock's 52-week Performance Chart. The group that invested in Home Depot determined that Home Depot's 52-week high was $83.34 with $62.03 as a low. The stock traded at $65.22 and was on an upward trend.
The group purchased 46 shares of this stock at $65.22 a share, and at the end of the nine weeks, its stock was valued at $76.02 per share - a gain of $497.00. The group also noted by looking at the Three-Year Trend Chart that Home Depot stock peaked twice a year, once in the spring and once in the fall.
The downside for the afternoon class was the group that invested in Exxon Petroleum. Using the same criteria as used for Home Depot, it did not count on a reduction in demand of fuel nationwide. Even though Exxon peaked just like Home Depot, the Exxon group did not lose money on its stock, but gained far less than expected by earning a $30 gain.
In addition to demonstrating stocks to be high risk with potential high yield, the class was also able to compare the low-risk, low-yield interest earning savings accounts. This project showed the students that the same investment in an interest-bearing savings account would only earn $25 over the same period.
