Kids Stock Market Education Can Be Fun?

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Start Kids Young

Kids stock market education should be taught, beginning at an early age.

The stock market may seem too advanced for your young one. But as with anything, the younger your start the better you become.

You will know whats appropriate for your child. His age and understanding will pay an important factor in determining this. Many children would rather play video games. But, it is your job to make it interesting.

Make Financial Education Fun

Kids stock market education should be fun.

Good news, this is not too hard. There are just a few basic things you need to understand.

Find a system and stick with it. This is just like with basic parenting. So, you already have the basics down.

Kids like games. Make learning a game. Put them in competition up against their friends. They will be doing it for the prize and you will be doing it for they’re future.

Create The Rules And Stock With Them

All kids stock market education games need rules.

Start by telling your kids to pick a stock. This can be done online through paper trading. They can buy stock long or short stock. You may want to stick with buying long till they get that down.

You can put them in competition up against they’re friends and siblings.

Be creative. Kids get excited about small things. So, you can give them rewards such as games, special trips (mini golf, chucky cheese), or cash.

You know your kids better than anyone else. So, play to your kids’ attention span in a way that they don’t loose focus.

Getting The Knowledge Snowball Rolling

Now begins the learning part of kids stock market education.

After you have a system set up, you can start from the beginning teaching them actually which stocks to buy and which stocks to short.

Kids learn about things that happen in the real world. If not on TV, then at least in school. Since most things that happen in the real world effect the stock market, this can be a good learning experience.

You can talk to your kids about current economic events that they would be interested in and how they relate to the stock market.

More Advanced Investing

In time you may want to introduce your kids to technical analysis, which is my preferred trading method. Technical analysis is the other way to research stocks.

With this technique, you strictly focus on the stock chart. You can overlay it with indicators and oscillators. But, you will want to start with the basics: price, volume, and long term moving averages.

Remember, start early. Create a game that works for you and works for your kids. Then stick to it.

Dow Jones Stocks: The DJIA tips, stocks and profiles

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The Dow Jones Stocks are one of the most quoted indexes in the world, and are often used as a barometer of not just the US economy, but to an increasingly large extent the world economy. But the Dow Jones wasn’t always this important.

Dow’s Early Start

The origins of the Dow Jones Industrial Average were at the end of the 19th Century when Charles Dow, the founder of the Dow Jones & Company, created the index to measure and track the value of just 12 Dow Jones Stocks from the best industries in America.

While this wasn’t the first of Charles Dow’s indexes, it became the best known and has influenced Wall Street, Main Street and Washington for more than a century since its creation.

While the formula is something of a complexity and is based on the Dow Divisor (currently approx. 0.13231925), the index is referred to as an average of the price of the components. The math involved is statistical, and perhaps a little obscure.

Currently, the DJIA consists of 30 Dow Jones Stocks, all of which Successful-Stock-Trading will be examining in the coming months. So readers will be able to follow up on some of the highlights of each company’s history, current situation, and performance.

The Components of the Dow

The Components, 30 in all, are listed below. Please note that the list contains all the current members, but that from time to time the actual composition of the Index may vary.

Company Name Symbol Business
3M MMM Conglomerate
Alcoa AA Aluminum
American Express AXP Consumer finance
AT&T T Telecommunication
Bank of America BAC Banking
Boeing BA Aerospace and defense
Caterpillar CAT Construction and mining equipment
Chevron Corporation CVX Oil & gas
Cisco Systems CSCO Computer networking
Coca-Cola KO Beverages
DuPont DD Chemical industry
ExxonMobil XOM Oil & gas
General Electric GE Conglomerate
Hewlett-Packard HPQ Technology
The Home Depot HD Home improvement retailer
Intel INTC Semiconductors
IBM IBM Computers and technology
Johnson & Johnson JNJ Pharmaceuticals
JPMorgan Chase JPM Banking
Kraft Foods Inc. KFT Food processing
McDonald’s Corp. MCD Fast food
Merck MRK Pharmaceuticals
Microsoft Corporation MSFT Software
Pfizer PFE Pharmaceuticals
Procter & Gamble PG Consumer goods
Travelers TRV Insurance
United Technologies Corporation UTX Conglomerate
Verizon Communications VZ Telecommunication
Wal-Mart WMT Retail
Walt Disney DIS Broadcasting and entertainment

Recent additions to the index in the past two years include: Kraft Foods, Inc. after it was spun off from Philip Morris (aka Altria). Travelers Companies and Cisco Systems in 2009 replaced two venerable names from the list: General Motors and Citibank.

Investing with the Dow

There are quite a few strategies to investing with the Dow Jones stocks: from buying individual components to buying the entire index in an ETF.

ETFs

There are several ETFs that aim to match the price movement in the Dow Jones. One popular choice is the Diamonds ETF, first introduced in 1998 from a family of ETFs known as SPDRs. I’m currently holding some Diamonds in my stock account, and regularly get updates and dividends paid out (usually monthly).

Souped-up ETFs

You can also buy DJIA ETFs that promise to either match the daily performance of the index or do the exact opposite upto 300% of the change.

There are other strategies that involve buying a weighted short list from the components that are undervalued, and holding them with their more generous dividends payouts and potential for price increase in the stock value.

Dogs of the Dow

One of the most famous of these strategies is the Dogs of the Dow first made popular by Michael O’Higgins in 1991.

It goes thus: Investors in the Dogs of the Dow strategy believe that large companies do not often vary their dividend simply to reflect current market values, and that the dividend is akin to a measure of the value of the company’s worth. In contrast, the stock price itself can vary considerably through the business cycle.

Therefore, dogs of the dow investors will buy those that are relatively undervalued by stock price, and will receive more upside potential as well as a reasonable regular and stable dividend. Rinsing and repeating the process will lead to higher longer term returns than just buying the full index.

Of course, events in 2009/10 have proved that even substantial companies, like Citibank, GM, and others can find themselves undergoing exceptionally bad cycles in which bankruptcy (as in GM’s case) becomes the only way to save the company.

In those extreme cases, stock investors usually lose their shirts. Fortunately, this higher risk usually rewards more patient investors as well. If you are interested in finding out more about this way of investing, check out the Dogs of the DowWebsite which has very complete stats and information on current incumbents.

Updates: Coming through 2010

I’ll be expanding this page and its related content on a regular basis as I find more information and products. I’ll also be updating the list of Dow Jones Stocks, too. So do remember to bookmark this page, and check back each month or so.

Double Dip Recession: Is this where we’re headed in 2010/11?

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Are we at risk of a double dip recession? Certainly many investors, economists, and pundits think so.

You may have noted that the Australian Reserve Bank has raised interest rates, and other countries are following suit. Unfortunately for many borrowers in the weaker economies of the Western world, jobs are being cut, and salaries are stagnating as companies and governments fight their own battles with shrinking revenues.

What is a double dip recession?

In short, a double dip recession occurs when the gross domestic product (GDP) growth starts to shrink after a quarter or two of positive growth. This positive growth period itself occurs after a recession.

In other words, the sequence of events is: a recession that precedes a recovery; after a truncated period in the recovery, perhaps only one or two quarters, a recessionary period returns as growth in GDP shrinks again.

Consumers Bite Back

So what do borrowers do facing such double dip uncertainty? They rein in spending, cut expenses and start saving like mad. And we can all clearly see the effects of this, as retail expenditure falls off a cliff, bank balances rise and expensive services get cut, like premium services on cable, mobile phone, etc..

Unemployment in the US is hovering around 10% so job security is a primary concern for many working people. Those with jobs would rather save more money now than spend, spend, borrow and spend, so the employed are increasingly boosting their savings rate to multi-year highs. With unemployment likely to remain high for the foreseeable future, this bodes well for savings rates and workers’ bank accounts and it coincides with a period of lower interest rates.

Banks: Protecting their interests

The banks have acted in their own best guardians in many situations by raising rates on unsecured loan items such as credit cards, personal loans, etc. as they are facing an onslaught of credit defaults and increasingly interventionist laws from governments worldwide that seek to curtail their excessive profiteering.

The latest round of BASEL III talks has threatened to increase capital requirements further, thereby making banks less vulnerable but in short-medium term dampening lending prospects even further.

However, many consumers are experiencing surging credit card rates to as high as 30% pa for their debts, increased levels of minimum payments, and restricted credit lines, or even credit card terminations.

The consequence of this for the economy in the short term is only bad: higher default rates on loans, less leveraged spending on consumer items, less reinvestment by companies, and tightened budgets in both governments and corporations. And banks on the one hand are stashing the extra cash to bolster their banking reserves rather than lend, and on the other cite reduced demand for loan products and services. But governments keep calling for more lending, yet banks only lend to those who don’t need it. Ironic, but true. After all none of this really lessens the risks of a double dip recession by any means.

It’s The Economics That Matter

Why? The inflationary subsidies, tax breaks and bailouts have all served to add stimulus to the economy, preventing the situation getting far worse. Recently, for example, in Taiwan, the economic indicators started flashing green again, after extensive periods of both overheating (until 2007) and recession (2007-2009). So in many markets, there are initial signs of recovery as some exporting economies move out of recession and bond rates are indicating upward pressure, too. But…

Where now, consumers?

Many economists are predicting a double-dip recession in 2010. This may happen, and things may worsen again in the short term as the stimulus measures are withdrawn, run out of funds (new car credits) or expire their terms. Even if that doesn’t happen, I don’t think consumers are going to start spending any time soon. They are scared of the future, and the prospect of a double-dip may only force consumers to redouble their efforts at controlling their spending.

In short, going into the latter part of 2010, there is still a lack of confidence in the recovery; and recent upturns in the stock market are likely to be short-lived. I do not think we will retest bargain basement pricing as in early 2009, but for those with patience, guts, and cash, there will be good opportunities to purchase both stocks and real estate in the coming 12 months.

What’s an investor to do?

With the risk of a double dip recession, typical in a bear market scenario like this, investors are unlikely to be buying for the long haul. They would prefer to ‘trade the markets’ in either direction, buying or shorting stocks when there’s opportunity otherwise staying in cash.

How would you plan to trade these recessionary times? Let me know, via the contact form! Look forward to hearing from you.