Great simulation (on Quartz) for students to see the futility of trying to time the market, which is the belief that you can make good decisions about when to get out of the market (if you think it is overvalued) and to get back in (when you think it is undervalued).
This simulation uses prices from the S&P500 for a ten year period (this ten year period changes every time you play the game too!) which unfold on the line graph at the rate of about one year of data every 7-10 seconds. Here is a screenshot after seven years elapsed (note the talking head on the left which provides tempting advice as the game unfolds).
Here is a sample output after the game is completed (total time per game play is about one minute): Continue reading
From Marketplace (5 minute interview):
Here are the questions covered in this interview with a psychology professor:
- What happens in brain when fear hits (e.g., when stock market drops 1,000 points as it did last week)?
- How do different people process the fear stimuli?
- Is our fear response innate or can we teach people to develop a higher tolerance for pain?
- How does fear impact our decision-making?
You might ask students where they fit on the “fight or flight response” continuum and how they might react to a 1,000 drop in the stock market.
I just came across this start-up, SparkGift, which allows you to give gifts of stock and index funds to friends and family. Here is a summary of their offering from their website:
This video (start around the 3:00 mark) about the burgeoning field of neuroeconomics has implications for how we should think about investing. This video will help answer such questions as: Continue reading
According to this research study which I unearthed from 2014, more financially knowledgeable workers have higher returns on their 401(k) balances. While not all that surprising, the research was able to quantify how much that knowledge was actually worth. It also provides a set of five questions that they used to measure financial knowledge that you could use to test your students.
Here’s their summary:
We show that more financially knowledgeable employees are also significantly more likely to hold stocks in their 401(k) plan portfolios. They can also anticipate significantly higher expected excess returns, which over a 30-year working career could build a retirement fund 25% larger than that of their less-knowledgeable peers. Their investment portfolios are also somewhat more volatile, exposing them to slightly more idiosyncratic risk.
I highlighted the key insight from their research. So, what do we need to teach students about investing so they can be knowledgeable and generate that larger 401(k) nest egg? Continue reading
Many students, at some point in their lives, will rely on the services of a financial adviser. CFTC.gov has three short videos (2-3 minutes in length) that allow viewers to make decisions on whether or not to invest after hearing a pitch from an investment “pro.” Ask your students to jot down the key words or phrases used to entice them to invest. Thanks to WAPO’s Michelle Singletary for highlighting these in recent column.
The Dinner Party:
The Graduation: Continue reading
What happens when you ask 7 Motley Fool reporters to provide advice to young people about investing? Continue reading