March 1, 2012
Financial Adviser Creates March (Money) Madness to Promote Financial Literacy
What types of stocks are included in this and how are the match-ups chosen?
The bracket is broken down into four sectors: technology, financial, consumer, and industrial. Sixteen stocks from each sector are chosen for the competition. I choose the stocks in an effort to have some that are widely familiar to people (Nike, Apple, General Electric, etc.) mixed in with a few stocks that are less familiar and will require research. (See the entire list of 64 stocks from last year’s bracket here.)
How does one choose which stock will do better than the other?
This is what makes the game challenging and fun! Just like the games in the NCAA tournament, the outcome of these short-term match-ups are somewhat unpredictable, but doing your homework will help you make an educated prediction.
For example, if a company is releasing their quarterly earnings during one of the rounds and you expect that they will beat estimates, then you probably want to pick that stock because its price will likely go up.
If there are negative news stories affecting a company, then you may not want to pick that stock, as the news will likely negatively affect the stock price.
What can people learn about investing from March Money Madness?
What’s great about the competition is that you can test out your hypotheses about what makes stock prices move in the real market, and this experience can help you become a better investor.
After playing the game, players should be able to:
—Read and understand stock market information in the newspaper (USA Today, local paper, etc)
—Know where to go to find information on the market (Black Enterprise, WSJ, Barrons, Smartmoney)
—Know how to research past stock prices (Google Finance, Yahoo Finance, Morningstar)
—Understand issues that affect stock prices (revenue, earnings announcements, interest rates, unemployment reports, etc.)
—Gain a comfort level with the movement of stocks in the market (less fear of investing)
Know where to go to open an brokerage account if they want to start investing.