TUESDAY, March 11, 2008 - “CAREERS in INVESTMENTS”- 9:00 AM ONLY

Register online at http://www.vanderbilt.edu/virtualschool/registration.htm

 

Series: Career Conversations

Topic: “Careers in Investments”

Presenter: Matthew Wright

Date:  TUESDAY, March 11, 2008

Target Audience: Students in grades 7 -12

Time:  9:00 AM ONLY (CENTRAL time zone)

Format: 45-minutes segmented into 30-minute presentation and 15-20 minute Q & A

Cost: $75 per site

Registration: Register online at http://www.vanderbilt.edu/virtualschool/registration.htm

Questions: Chandra Allison , at (615) 322-6511 or email Chandra at chandra.allison@vanderbilt.edu

 

 

LESSON: “Careers in Investments”

Objectives:

 

Students will:

·        Discuss investing, money management, and responsible decision making as a career choice

·        Discover the concept of return on investment, or ROI

·        Discuss what pays higher rates, stocks, bonds, treasury bonds, treasury bills,. . . .

·        Understand the concept of risk and return

·        Find out what is a P/E (or price/ earning) ratio

·        Learn what is the Dow Jones Industrial Average

 

Pre-Activities:

 

1)   Students will research and answer these questions:

·        What are stocks? 

·        What words or ideas are associated with the stock market?  (Possible answers: Dow Jones, going up or going down, Wall Street, etc.)

·        What is an investment? 

·        What are some examples of investments?

 

2) Students will explore on-line stock market simulations at http://www.howthemarketworks.com

 

Have you ever wondered How the Stock Market Works? This website was created to help you understand how stock trading works. Hopefully you will be able to begin trading for the first time or simply have a better understanding of what happens behind the scenes. Best of all, this site is completely free!

This site allows students to access information about a particular company or about a company in a particular business sector using authentic resources.

Try the Virtual Stock Exchange. Students can practice trading without any risk!  This is the Stock Market Simulation or Fantasy Stock Market. Look for answers on the Frequently Asked Market Questions page.  Look for Quotes and Charts. Students will learn what affects stock prices and what are penny stocks.

Check out the recommended books and websites as a great source of information. One feature allows you to "throw" a dart to find a random stock to buy, much like throwing a dart at a newspaper full of symbols. There is also a  free virtual currency trading!

 It's easy to integrate the Stock Market Game into any curriculum and it  reinforces standards set by the National Council on Economic Education (NCEE), the National Council for Social Studies (NCSS), the National Council for Teachers of Mathematics (NCTM), and the International Society for Technology Education (ISTE).

For students using the game, it will pique their interest in what is happening in our economy, as well as in life in general. Students will research what the codes stand for; researching companies they are interested in investing in; and reading the newspaper searching for articles that might affect their stocks, as well as those that might reflect the activity of their stock. And it is FUN in the classroom!

 

LESSON DESCRIPTION:

 

Careers in Investments will discuss a career that answers basic questions including:

• How much money do you want to invest?
• What type of investment return do you expect to achieve?
• How much risk are you willing to take?
• What are the tax consequences of your investment decisions?
• How does inflation impact your investments?
• Can I make sense of the ups and downs of the American economy through the various economic indicators?

Join Matthew Wright, Vanderbilt University Vice Chancellor for Investments for a discussion of “Careers in Investments.”  In his job, he is responsible for the management of approximately $4 Billion in stock, bonds, venture capital, leveraged buyout, real estate, timber, and oil and gas investments.  

Prior to joining Vanderbilt University , Matthew was the Director of Investments at Emory University for over six years.  While at Emory his primary duties included analysis and implementation of asset allocation policies, investment strategy, and management of the marketable investment portfolios comprised of Global Equities, Fixed Income, Marketable Alternatives, and REITs.  He was also responsible for initiating and implementing Emory’s internally managed portfolio and trading capabilities. 

Prior to joining Emory University , Matthew worked for Bank of America Capital Management's Quantitative Strategies Group where he was responsible for portfolio management and equity trading.  His previous work experience also includes product development at Gartmore Global Partners and investment analysis for the Xerox Corporation Trust Investments.

Matthew graduated from Seton Hall University with a bachelor’s degree in Finance and has an M.B.A. from the University of Rochester . He holds the Chartered Financial Analyst designation and is a member of the CFA Institute and Chicago Quantitative Alliance.

Matthew Wright practices hands-on experience with an investment portfolio to build a team without a lot of instability. The investments world is fascinating and very challenging mentally. If you are very deliberate in what you do and very disciplined, you tend to be successful. I find that much more appealing than work that is more random in nature. True, returns can be random, but success relative to the market is the thing that really motivates and drives me. In terms of this particular opportunity, we have the chance to do a lot of different things with the endowment, which has exposure to a variety of managers investing in exciting opportunities within equities, bonds and real estate all over the world.
 
The endowment is a pot of money that has been endowed, or donated, to Vanderbilt.. There are about 2,300 individual endowments within that. There are endowments for the schools, for professors, for chairs, for scholarships – a number of different things. Donations to the institution, some recent and some a long time ago, are restricted; in other words, they were earmarked by the donors to go to a particular school or program. The goal is that this money will grow over time so that, for example, a donation will provide not just one scholarship for one person, but many for a number of years. We have a strong foundation and portfolio. We are going to strive to find the best opportunities in which to invest in and around the globe.

 POST ACTIVITIES:

1)      Students will research Stock Market history and understand the events preceding the Great Depression, some of the causes of the Great Depression, and the effects it had on American society.

 

2)    Students will research "Black Tuesday", the stock market crash of 1929.

  3) Students will research answers to these questions:

§         What is a depression?  If someone is depressed, then how does he or she feel?  How can the word “depression” be applied to society as a whole?  If society is going through a depression, what would that look like?

 

§         Define: The Jazz Age, The Roaring Twenties, Black Tuesday, stock market, investment, Wall Street, The Great Depression, breadline

 

§         What role did PANIC play in the Great Depression?  What other kinds of groups or social situations can panic have an effect on?

 

§         Why was the color “black” chosen as part of the name “Black Tuesday”?  What does the color black suggest?

 

4.  What was a “Hooverville” and why was it called by this name?  What message were people trying to send to President Hoover by using his name in this manner?

 

NATIONAL STANDARDS to which this lesson aligns:

 

 

NSS-EC.9-12.7 MARKETS -- PRICE AND QUANTITY DETERMINATION

Markets exist when buyers and sellers interact. This interaction determines market prices and thereby allocates scarce goods and services.

At the completion of Grade 12, students will know the Grade 4 and Grade 8 benchmarks for this standard, and also understand:

• A shortage occurs when buyers want to purchase more than producers want to sell at the prevailing price.
• A surplus occurs when producers want to sell more than buyers want to purchase at the prevailing price.
• Shortages of a product usually result in price increases in a market economy; surpluses usually result in price decreases.
• When the exchange rate between two currencies changes, the relative prices of the goods and services traded among countries using those currencies change; as a result, some groups gain and others lose.

NSS-EC.9-12.8 ROLE OF PRICE IN MARKET SYSTEM

Prices send signals and provide incentives to buyers and sellers. When supply or demand changes, market prices adjust, affecting incentives.

At the completion of Grade 12, students will know the Grade 4 and Grade 8 benchmarks for this standard, and also understand:

• Demand for a product changes when there is a change in consumers' incomes or preferences, or in the prices of related goods or services, or in the number of consumers in a market.
• Supply of a product changes when there are changes in either the prices of the productive resources used to make the good or service, the technology used to make the good or service, the profit opportunities available to producers by selling other goods or services, or the number of sellers in a market.
• Changes in supply or demand cause relative prices to change; in turn, buyers and sellers adjust their purchase and sales decisions.
• Government-enforced price ceilings set below the market-clearing price and government-enforced price floors set above the market-clearing price distort price signals and incentives to producers and consumers. The price ceilings cause persistent shortages, while the price floors cause persistent surpluses.

NSS-EC.9-12.9 ROLE OF COMPETITION

Competition among sellers lowers costs and prices, and encourages producers to produce more of what consumers are willing and able to buy. Competition among buyers increases prices and allocates goods and services to those people who are willing and able to pay the most for them.

At the completion of Grade 12, students will know the Grade 4 and Grade 8 benchmarks for this standard, and also understand:

• The pursuit of self-interest in competitive markets generally leads to choices and behavior that also promote the national level of economic well-being.
• The level of competition in an industry is affected by the ease with which new producers can enter the industry and by consumers' information about the availability, price and quantity of substitute goods and services.
• Collusion among buyers or sellers reduces the level of competition in a market. Collusion is more difficult in markets with large numbers of buyers and sellers.
• The introduction of new products and production methods by entrepreneurs is an important form of competition and is a source of technological progress and economic growth.

NSS-EC.9-12.10 ROLE OF MARKET INSTITUTIONS

Institutions evolve in market economies to help individuals and groups accomplish their goals. Banks, labor unions, corporations, legal systems, and not-for-profit organizations are examples of important institutions. A different kind of institution, clearly defined and enforced property rights, is essential to a market economy.

At the completion of Grade 12, students will know the Grade 4 and Grade 8 benchmarks for this standard, and also understand:

• Property rights, contract enforcement, standards for weights and measures, and liability rules affect incentives for people to produce and exchange goods and services.
• Incorporation allows firms to accumulate sufficient financial capital to make large-scale investments and achieve economies of scale. Incorporation also reduces the risk to investors by limiting stockholders' liability to their share of ownership of the corporation.

]

NSS-EC.9-12.11 ROLE OF MONEY

Money makes it easier to trade, borrow, save, invest, and compare the value of goods and services.

At the completion of Grade 12, students will know the Grade 4 and Grade 8 benchmarks for this standard, and also understand:

• The basic money supply in the United States consists of currency, coins, and checking account deposits.
• In many economies, when banks make loans, the money supply increases; when loans are paid off, the money supply decreases.
• In many economies, when banks make loans, the money supply increases; when loans are paid off, the money supply decreases.

NSS-EC.9-12.12 ROLE OF INTEREST RATES

Interest rates, adjusted for inflation, rise and fall to balance the amount saved with the amount borrowed, which affects the allocation of scarce resources between present and future uses.

At the completion of Grade 12, students will understand:

• An interest rate is a price of money that is borrowed or saved.
• Like other prices, interest rates are determined by the forces of supply and demand.
• The real interest rate is the nominal or current market interest rate minus the expected rate of inflation.
• Higher real interest rates provide incentives for people to save more and borrow less. Lower real interest rates provide incentives for people to save less and borrow more.
• Real interest rates normally are positive because people must be compensated for deferring the use of resources from the present into the future.
• Riskier loans command higher interest rates than safer loans because of the greater chance of default on the repayment of the risky loan. Higher interest rates reduce business investment spending and consumer spending on housing, cars, and other major purchases. Policies that raise interest rates can be used to reduce these kinds of spending, while policies that decrease interest rates can be used to increase these kinds of spending.

NSS-EC.9-12.13 ROLE OF RESOURCES IN DETERMINING INCOME

Income for most people is determined by the market value of the productive resources they sell. What workers earn depends, primarily, on the market value of what they produce and how productive they are.

At the completion of Grade 12, students will know the Grade 4 and Grade 8 benchmarks for this standard, and also understand

• Changes in the structure of the economy, the level of gross domestic product, technology, government policies, and discrimination can influence personal income.
• In a labor market, in the absence of other changes, if wage or salary payments increase, workers will increase the quantity of labor they supply and firms will decrease the quantity of labor they demand.
• Changes in the prices for productive resources affect the incomes of the owners of those productive resources and the combination of those resources used by firms.
• Changes in demand for specific goods and services often affect the incomes of the workers who make those goods and services.
• Two methods for classifying how income is distributed in a nation the personal distribution of income and the functional distribution reflect, respectively, the distribution of income among different groups of households and the distribution of income among different businesses and occupations in the economy.

 

NSS-EC.9-12.14 PROFIT AND THE ENTREPRENEUR

Entrepreneurs are people who take the risks of organizing productive resources to make goods and services. Profit is an important incentive that leads entrepreneurs to accept the risks of business failure.

At the completion of Grade 12, students will know the Grade 4 and Grade 8 benchmarks for this standard, and also understand:

• Entrepreneurial decisions affect job opportunities for other workers.
• Entrepreneurial decisions are influenced by government tax and regulatory policies.

 

NSS-EC.9-12.15 GROWTH

Investment in factories, machinery, new technology, and in the health, education, and training of people can raise future standards of living.

At the completion of Grade 12, students will know the Grade 4 and Grade 8 benchmarks for this standard, and also understand:

• Economic growth is a sustained rise in a nation's production of goods and services. It results from investments in human and physical capital, research and development, and technological change, and from improved institutional arrangements and incentives.
• Historically, economic growth as been the primary vehicle for alleviating poverty and raising standards of living.
• Economic growth creates new employment and profit opportunities in some industries, but growth reduces opportunities in others.
• Investments in physical and or human capital can increase productivity, but such investments entail opportunity costs and economic risks.
• Investing in new physical or human capital can increase productivity, but such investments entail opportunity costs and economic risks.
• Higher interest rates discourage investment.
• The rate of productivity increase in an economy is strongly affected by the incentives that reward successful innovation and investments (in research and development, and in physical and human capital).

 

NSS-EC.9-12.16 ROLE OF GOVERNMENT

There is an economic role for government in a market economy whenever the benefits of a government policy outweigh its costs. Governments often provide for national defense, address environmental concerns, define and protect property rights, and attempt to make markets more competitive. Most government policies also redistribute income.

At the completion of Grade 12, students will know the Grade 4 and Grade 8 benchmarks for this standard, and also understand:

• Markets do not allocate resources effectively if: (1) property rights are not clearly defined or enforced, (2) externalities (spillover effects) affecting large numbers of people are associated with the production or consumption of a product; or (3) markets are not competitive.
• An important role for government in the economy is to define, establish, and enforce property rights. A property right to a good or service includes the right to exclude others from using the good or service and the right to transfer the ownership or use of the resource to others.
• Property rights provide incentives for the owners of resources to weigh the value of present uses against the value of conserving the resources for future use.
• Externalities exist when some of the costs and benefits associated with production and consumption fall on someone other than the producers or consumers of the product.
• When a price fails to reflect all the benefits of a product, too little of the product is produced and consumed. When a price fails to reflect all the cots of a product, too much of it is produced and consumed. Government can use subsidies to help correct for insufficient output; it can use taxes to help correct for excessive output; or it can regulate output directly to correct for over- or under-production or consumption of a product.
• When one producer can supply total output in a market at a cost that is lower than when two or more producers divide production, competition may be impossible. In the absence of competition, government regulations may then be used to try to control price, output, and quality.
• Governments often redistribute income directly when individuals or interest groups are not satisfied with the income distribution resulting from markets; governments also redistribute income indirectly as side-effects of other government actions that affect prices or output levels for various goods and services.
• Governments provide an alternative method to markets for supplying goods and services when it appears that the benefits to society of doing so outweigh the costs to society. Not all individuals will bear the same costs or share the same benefits of those policies.
• A government policy to correct a market imperfection is not justified economically if the cost of implementing it exceeds its expected net benefits.

NSS-EC.9-12.17 USING COST/BENEFIT ANALYSIS TO EVALUATE GOVERNMENT PROGRAMS

Costs of government policies sometimes exceed benefits. This may occur because of incentives facing voters, government officials, and government employees, because of actions by special interest groups that can impose costs on the general public, or because social goals other than economic efficiency are being pursued.

At the completion of Grade 12, students will understand:

• Citizens, government employees, and elected officials do not always directly bear the costs of their political decisions. This often leads to policies whose costs outweigh their benefits for society.
• Incentives exist for political leaders to implement policies that disperse costs widely over large groups of people and benefit small, and politically powerful groups of people.