Ssmg Supplementary2 Tr

7/29/2019 Ssmg Supplementary2 Tr

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THE ASX SCHOOLS SHAREMARKET GAME

SUPPLEMENTARY LESSON 2

MONEY AND RISK MANAGEMENT

THINKTRADEWIN



T.1

Researching a companyIntroduction:

The aim o this lesson is or students to get an idea o what to look or when choosing companies and gain anawareness o the benefts o investing across dierent sectors.

We start with a brie look at what share price indices are. Students will learn that companies are included indierent indices as well as dierent industry sectors.

The lesson helps to get students started with researching a company including:

• discovering the company’s story;

• looking at the latest numbers; and

• how the share price is trending.

Lesson Design:Online lesson

Expected Learning Outcomes:Students will have:

1) A basic understanding o an index

2) Knowledge o dierent sectors

3) Knowledge o how to use undamental analysis to fnd out more about companies

4) An understanding o what a dividend is5) A basic understanding o share price trends

Overview o Student Lesson:Students can complete the worksheet on their own or it can be done as a class.

As a class:

1) Hand out the worksheets and read through the introduction on ‘ASX indices and sectors’ (pg S.1).

2) Students to complete the ‘Investigate: Industry sectors’ task - this can be done individually or in groups (pg S.2).

For answers to this exercise:

• To fnd the ASX codes or indices and descriptions see: http://www.asx.com.au/products/indices/types/sector.htm

• To fnd which sector a company in the Game is in see: ‘Company sectors list’ on the Getting started page.

3) ‘What to buy’ – this section is about analysing an individual company (pg S.3 - S.4).

Using Billabong International Ltd., you can either show students or ask them to fnd the Billabongcompany inormation on the ASX website or the Billabong website.

Ask the class about the STORY o this company. This can include how it started; what service or productsit oers; the sector it is in and who are its customers?

Write eedback on the board.

For the NUMBERS: Go to the latest company report and see i they can fnd whether the company isgrowing, whether costs are rising or alling etc.

The ASX website (in its announcements or that company) and the company website (in the shareholdersor media section) will usually include a good presentation including power point slides made or

shareholders that contains this inormation.

QUICKSTART LESSON 3: TEACHER NOTES


SUPPLEMENTARY LESSON 2: TEACHER NOTES


Money and risk management

T.1

Introduction:

The purpose o this unit is to help students be more aware o managing risk when investing in thesharemarket.

Students are given a number o strategies they can use to help protect their portolio – these includediversifcation, position size and deciding whether to be aggressive or deensive.

Lesson Design:

Oine lesson

Expected Learning Outcomes:

Students will:

1) Gain a better understanding o the level o risk in the sharemarket

2) Understand sharemarket volatility

3) Learn the importance o diversifcation or their trading portolios

4) Learn about choosing between deensive and aggressive stocks

Overview o Student Lesson:

1) Read the introduction ‘Money & risk management’ (pg S.1 – S.2) and discuss the movement shown ingraphs and perceptions o the market.

2) Ask students what their strategy might be i they have money invested in the Sharemarket Game and themarket starts becoming more volatile (moving up and down a lot (as in graph 3). What could they do toprotect their portolio?

3) Students to work through the ‘frst 2 levels o deence’ (pg S.3 – S.4) and answer questions.

4) Listen to audio: Aggressive vs. deensive (pg S.4) and answer questions. This will help students to decidewhether they will be aggressive or deensive in their approach to the Game.

5) Discuss answers.

6) Additional Activity: Student debates

This topic lends itsel to student debates: these could be used to end the lesson.

Topics might include:

• The sharemarket is / is not risky.

• It is better to be deensive rather than aggressive.

• It is better to invest long-term rather than short-term.

ADDITIONAL RESOURCES

See Teacher’s Game Home page.Aggressive vs. deensive audio: this link is also available in the Student worksheet – pg S.4.

https://www9.asx.com.au/smg/media/aggressive_vs_defensive.mp3





QUICKSTART LESSON 3: TEACHER NOTES

THE ASX SCHOOLS SHAREMARKET GAMETHE ASX SCHOOLS SHAREMARKET GAME

T.2

The organiser o the ASX Schools Sharemarket Game is ASX Operations Pty Limited ABN 42 004 523 782, 20 Bridge Street, Sydney, NSW 2000.

The Game and inormation provided in relation to the Game (including the teacher resources) are provided or educational purposes only.Such inormation including, without limitation, lesson plans, presentations and worksheets, is general and does not constitute fnancialproduct advice or a recommendation o any fnancial products (and should not be relied upon as such). Persons should consider obtainingindependent, expert advice beore making any fnancial decisions.

Whilst every care has been taken in producing inormation in relation to the Game; neither ASX Operations Pty Limited, nor ASX Limited,nor any o their related bodies corporate (the “ASX Group”) make or imply any representation or warranty as to the reliability, accuracy,or completeness o such inormation.

To the extent permitted by law, the ASX Group is not liable or any loss incurred by anyone arising rom or in relation to their participation inthe Game or acting or reraining rom acting as a result o this inormation, other inormation in relation to the Game or the teacher resources.

© 2011 Copyright. ASX Operations Pty Limited ABN 42 004 523 782. All rights reserved.Edition 1: 2011

Answers to Audio: ‘Aggressive vs. Deensive’

1) What does it mean to be aggressive?

Answer: Confdent, orceul, looking to attack.

2) What does it mean to be deensive?

Answer: Trying to keep sae, protect yoursel rom bad things happening.

3) What are deensive stocks – give an example o a type o business that is deensive?

Answer: Those businesses that we use everyday and don’t have much choice whether we use them.These are essential services, or example supermarkets, toll roads, healthcare and electricity.

4) What are aggressive stocks – can you give an example o a business?

Answer: (Aggressive stocks are also called cyclical stocks because their ortunes tend to be cyclical.)

Aggressive stocks are those companies where the economy (local or global) might have an impact onproftability or business, or example BHP, where overseas economic growth can lead to an increasein demand or their products pushing up the price they receive or their products.

Other companies that do well when the economy is strong and not so well in downturns would becompanies in the tourism industry, advertising agencies or a retailer specialising in luxury goods.Companies in the Game that are more aggressive stocks include FLT – Flight Centre; WTF – Woti.com; SEK – Seek Limited.

5) Is a bull an investor who is aggressive or deensive? Why?

Answer: A bull thinks the market is going up - aggressive

6)Is a bear an investor who is aggressive or deensive?

Answer: A bear thinks the market will go down - deensive

7) I you think the market is going to go up, what type o stocks would you buy?

Answer: Aggressive

8) I you think the market is going to go down, what type o stocks would you buy?

Answer: Deensive

9) What things do you need to think about beore setting up a strategy?

Answer: You have to make a decision as to where you think the market is going to go in the shortterm. Are you going to be a bull or a bear? This will inuence your decision on the type o stocksyou will buy.

SUPPLEMENTARY LESSON 2: TEACHER NOTES



SUPPLEMENTARY LESSON 2: STUDENT WORKSHEET


S.1

Money and risk managementYou’re in the middle o a basketball game and the opposing team is continually breaking through yourdeence and shooting goals.

What will you have to do i you want to win…shoot more goals?

Well, maybe, but perhaps the better strategy would be to deend, stop them rom shooting goals and then getthe ball down your end. Deence needs to come frst and then you can shoot the baskets.

So what’s this got to do with investing? Well, one o the things you need to think about is how you will protect yourinvestment. Yes you want to make money, but i you don’t protect it in the frst place you may not get very ar.

Your goal frst and oremost is to preserve your capital – your $50,000.

In doing this you want to be able to cut your losses (deend) and let your profts run (attack).

It is important to remember that the sharemarket can be risky.

The sharemarket doesn’t always go up!

Take a look at this chart o the All Ordinaries Index rom 2005 – 2007

At the end o 2007 you might have thought that the market always

goes up…however, take a look at the next chart.

The All Ordinaries Index: 2006 – 2009

You can now see that the market also goes down. The period romlate 2007 to early 2009 is known as the Global Financial Crisis. As youcan see, it would have been very important to have risk managementstrategies in place in order to survive this downward market.


Graph 1

Graph 2

(Continued over)





S.2


Graph 3

Now look at this 3 month period – o the All Ordinaries Index

Volatility means the market is moving up and down a lot.In this chart there is a lot o volatility. Now i you were investedover a longer period o time, this type o movement maynot bother you that much (because the market is movingmore sideways rather than up or down). However, i you areinvesting over a shorter period (as in the Game) it highlightsthe need to manage your risk and to have a plan.

So when investing in the sharemarket it is vital that youmanage your risk.

I you have money invested in the Sharemarket Game and the market starts to become more volatile(as in graph 3) what do you think you could do to protect your portolio?




S.3



Protecting your portfolioHere are some ways you can protect your portolio.

The frst level o deence:

Don’t put all your eggs in one basketInvest in 2 to 3 dierent sectors.

I you put all your money into one sector and that sector alls, thisis not going to help you preserve your capital. Also i you were ableto put all your money into one company and their shares dropped,

again you would potentially lose a signifcant amount o money.In the Game you are not able to invest all o your dollars into onecompany; you have to invest in at least our.

So, already you have started to manage risk.

A good idea is to go back to the section on industry sectors and seehow these sectors have perormed over the past year. Look at thecompanies you have chosen. Which sectors do they ft into? Makesure that you are investing in at least 2 to 3 dierent sectors.

Ask yoursel:

• Have you invested in more than one sector, i so which ones and why?

• I you have not yet invested, what sectors do you think you might invest in? (For more help on sectorssee Quick start guide 2: Company research)

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S.4

The second level o deence:

Your position sizeHow much will you invest in each company? Somestudents start o by investing $1000 – $2000 in a company.Be careul o this because every time you buy or sell youare paying brokerage and this can add up very quickly.Plus i some companies do really well you want to ownenough o these shares to make some good profts.


The third level o deence:

Decide whether you will invest deensivelyor aggressivelyIn the sharemarket you will fnd that there are companies thatare known as deensive companies and those that are known asaggressive companies. Aggressive companies are also reerredto as cyclical stocks.

When choosing whether you will invest aggressively or deensively,you will also need to decide on what you think the market is going

to do e.g. keep going up, move sideways or all.Listen to the audio ‘Aggressive vs. Deensive’ (recorded 2009) andanswer the questions on the next page to work out whether youwill be aggressive or deensive in the Game.

Link to audio:https://www9.asx.com.au/smg/media/aggressive_vs_deensive.mp3





S.5

Aggressive vs.Defensive1) What does it mean to be aggressive?

2) What does it mean to be deensive?

3) What are deensive stocks – give an example o a type o business that is deensive?

4) What are aggressive stocks – can you give an example o a business?

5) Is a bull an investor who is aggressive or deensive? Why?

6) Is a bear an investor who is aggressive or deensive? Why?

7) I you think the market is going to go up, what type o stocks would you buy?

Aggressive or Deensive?

8) I you think the market is going to go down, what type o stocks would you buy?

Aggressive or Deensive?

9) What things do you need to think about beore setting up a strategy?

What will you be?

Aggressive or Deensive

Documents

Ssmg Supplementary2 Tr