Lesson 2.14, two days. Day 1: slides 1 to 10. Day 2: slides 11 to 20. Every price and date is from Handout 02.14 - The Gilded Age Market Kit.md; check the board against page 2 before class.
Do now (Day 1)
- You have $100 you will not need for a whole year.
- Where do you put it: a jar at home, a savings account at a bank, or your cousin's new sneaker business?
- One sentence: why.
Teacher notes
Hands for each. Count the business votes; that is the pre-assessment.
Three real choices
- The jar: safest. Pays nothing.
- The bank: almost as safe. Pays a little.
- The business: could double. Could lose it all.
- Adults make this choice every month. For ten days it is 1870, you have $1,000, and you make it once a round, eight rounds, from 1870 to 1932.
Teacher notes
Image: three drawings side by side: a glass jar with bills, a stone bank building with columns, a sneaker with a price tag.
Saving
- Saving: money set aside where it is safe and you can get it back.
- In this game the bank pays 3 percent of your balance at the start of every round.
- It never drops. It never gets exciting.
Teacher notes
Image: a cast iron bank vault door, closed, with a small coin slot.
Investing
- Investing: buying something you expect to be worth more later.
- No promise. It can go up. It can go down.
- A share is one small piece of a company. Own a share, own a piece.
Teacher notes
Image: a small plant growing out of a coin, with a storm cloud in the corner.
The risk ladder
- Bottom rung: a jar. Then a savings account. Then a government bond (a loan you make to the government). Then a company bond (a loan you make to a company).
- Middle: real estate.
- Top: a big company's stock. A brand new company's stock.
- The rule: higher up the ladder, more it can grow, more it can fall.
Teacher notes
Image: a ladder with an icon on each rung: jar, bank, flag, handshake, house, factory, rocket.
Students copy the ladder to the journal cover. Say the rule twice.
Two check questions
- The bank pays 3 percent a round and never drops. Where on the ladder?
- A brand new company's stock doubled in one round and lost half in the next. Where on the ladder?
- Which one would you want for money you need next month?
Teacher notes
Thumbs, then cold call.
The eight companies
- BANK, the savings bank. RAIL, Pennsylvania Railroad. OIL, Standard Oil. GAS, Manhattan Gas Light.
- ELEC, Edison Electric Light. STEEL, United States Steel. AUTO, General Motors. RADIO, Radio Corporation of America.
- Your job with your partner: read the eight cards, line them up safest to riskiest, write your risk word on the journal cover.
- Some of these do not exist yet in 1870. They join the board in a later round; the card says which. Nobody learns what happened to them until Day 9.
Teacher notes
Image: eight small drawings in a row: a vault door, a steam locomotive, an oil barrel, a gas street lamp, a light bulb, a steel beam, an early automobile, a radio cabinet.
7 minutes. Circulate. Debrief with the class order on the board.
How a trade goes on the ledger
- The price table: one column per round. Round 0 is 1870: RAIL 50, OIL 10, GAS 20.
- The trade log: round, company, buy or sell, shares, price, cash that moved. One line per trade, or it did not happen.
- The holdings table: shares times price equals value.
- Whole shares only. You cannot spend cash you do not have.
Teacher notes
Image: a drawn ledger page with the three tables labeled.
Model one buy on the board: 10 shares of RAIL at $50 is $500 out; cash goes from $1,000 to $500.
Round 0, 1870. The market opens.
- Three companies on the board and the bank. Read the dispatch.
- Cash on your ledger is the jar: it pays nothing. The BANK line pays 3 percent a round.
- Question from the dispatch: which of the three companies is the safest, and how do you know?
Teacher notes
Image: a steam locomotive on new track across open plains, 1870.
Read the Round 0 dispatch from page 3 of the kit.
Today's two rules, then trade
- Buy at least two different companies.
- Keep at least $100 out of stock: in the bank or in cash.
- Write your tickers and shares on the journal cover as you go.
- Then Round 1 lands: the year is 1873. Add the bank's 3 percent first, fill the column, work out your total. Then the dispatch.
- Closure: the project sheet and the rubric go out (the leaderboard is real and is not the grade), then Entry 1 (what I bought, why, my total) and the 3-2-1 card.
Teacher notes
Four minutes of trading in Round 0. Then Round 1: RAIL 30, OIL 12, GAS 21. Read the Panic of 1873 dispatch after the totals are done. Four more minutes of trading. Do not tell anyone what to buy.
Do now (Day 2)
- Open your ledger. Find your total after Round 1.
- Write it at the top of Entry 2.
- Above or below $1,000? By how much?
Teacher notes
3 minutes.
Reading your ledger
- Price table: one column per round.
- Holdings table: shares held, this round's price, value equals shares times price.
- Cash. Bank. Margin loan (empty until 1928).
- Total equals cash plus bank plus every value.
- Gain or loss equals total minus 1,000.
Teacher notes
Image: a drawn ledger with each number circled and labeled.
Fill in the model portfolio live: 10 RAIL and 20 OIL bought in 1870, $300 in the bank. After Round 1: bank 309, RAIL 300, OIL 240, total 849. After Round 2: bank 318, RAIL 450, OIL 600, total 1,368.
The trade log
- Every buy and sell, in order: round, company, buy or sell, shares, price, cash moved.
- The log is proof. If two investors disagree, the log settles it.
- Check one trade: shares times price should equal the cash that moved.
- Write the check on Entry 2.
Teacher notes
Image: a drawn trade log with four rows.
Have you lost money?
- Your total says $800. You started with $1,000.
- Did you lose $200? Or did the price of something you hold drop?
- You have not lost anything until you sell.
- Say it with me.
Teacher notes
This line comes back in October 1929. Plant it now.
Look at your pie
- Hands: more than half your money in one company?
- Hands: something in every line on the board?
- Sketch your pie on Entry 2. Label the slices with tickers.
Teacher notes
Image: two pies: one with a 90 percent slice, one with six even slices.
No lecture. "On Day 5 we find out which pie survives a panic."
Round 2, 1882. Oil, and the trust.
- Add the bank's 3 percent first. Fill the column: RAIL 45, OIL 30, GAS 26, and a new line, ELEC 25.
- Work out your total. Then the dispatch.
- Question from the dispatch: if one company controls almost all of something you need, what happens to the price you pay?
- Four minutes of trading. Nobody has to trade. Holding is a decision too.
Teacher notes
Image: an electric street lamp glowing on a New York street at night, 1882, with gas lamps still lit down the block.
10 minutes. Read the Round 2 dispatch from page 3 of the kit after the totals are done.
The Investor Journal: three prompts
- What I did (bought, sold, or held; which company; how many shares).
- Why I did it (a dispatch, a risk level, my pie, a feeling you noticed).
- What happened (did the price move, did my total move).
- Plus the number: my total at the bell, in dollars.
Teacher notes
Image: a journal page with three boxes and a number line at the bottom.
A model entry
- "In Round 2 I moved $100 out of the bank and bought 4 shares of ELEC at $25, because the dispatch said Pearl Street lit up and I think electricity is coming."
- "OIL went from 12 to 30, so my 20 shares went from $240 to $600."
- "My total is $1,368."
- Three sentences and the number. That is a complete entry.
Teacher notes
Model it live on the board, then 10 minutes for Entry 2. Students finish anything missing on Entry 1.
Sentence starters
- Today I bought ___ because ___. / Hoy compré ___ porque ___.
- I did not trade today because ___. / Hoy no hice ninguna operación porque ___.
- My total is $___. / Mi total es $___.
- Buy / comprar. Sell / vender.
Closure (Day 2)
- Two investors read Entry 2 aloud.
- Exit card: cash, bank, shares, price, value, total. Put all six in one sentence about your own ledger.
- Tomorrow: why prices move.
Teacher notes
4 minutes. Sort the cards: all six words used correctly is "got it."