Stock Market Game Week in Review

The Stock Market Game is a curriculum-based teaching tool that allows students to invest a hypothetical $100,000 online stock portfolio to learn about long-term saving and investing.

While the majority of the headlines continue to highlight the doom and gloom felt on Wall Street, Warren Buffett focused on the positive in his op-ed piece "Buy American. I Am," in Friday's The New York Times.

Buffett, regarded as the "Oracle of Omaha" due to his fortune-building skills, is the world's richest man, according to Forbes Magazine. In his op-ed article, Buffett says that he is buying U.S. stocks despite the current state of the economy. He writes, "in the near term, unemployment will rise, business activity will falter and headlines will continue to be scary," but "a simple rule dictates my buying: be fearful when others are greedy, and be greedy when others are fearful." He also provides a short history lesson, reviewing the major events of the 20th century and their effect on the Dow -- from the Great Depression to the 1980s when inflation soared.

In coming days, the market is likely to experience more volatility, especially as it absorbs the slew of corporate earnings reports that is scheduled for release.

While Buffett cannot predict how the market will ride out the roller-coaster days in the short term, he stresses that pulling out of the market now is unwise, as "equities will almost certainly outperform cash over the next decade, probably by a substantial degree."

To assist your Stock Market Game students, we will also focus on the positive and highlight some companies rewarding their shareholders through dividends, despite these trying times.

So what are dividends and why do companies choose to pay them?

When a corporation earns a profit or surplus, that money can be reinvested in the business (called retained earnings), or it can be paid to its shareholders as a dividend. These dividends, which are often declared quarterly, are usually in the form of cash, but may also be paid as additional shares of stock. In terms of the SMG program, if a team holds a stock that pays a dividend during its game session, the dividend payment will be reflected in the team's total equity.

If a company increases or at least maintains its dividend payment in this dismal economy it suggests that company is strong. And despite the Wall Street selloff frenzy, the following companies have actually increased their quarterly dividends: McDonald's(MCD) -- by 3.6%; Microsoft(MSFT) -- by 2.2%; and United Technologies(UTX) -- by 2.9%.

For more information about stocks paying dividends, have your students take a look at www.dividend.com. The site provides a wealth of information on how dividends work and when they get paid, and it also includes a listing of its top dividend-paying stock picks.

You may also be interested in the Dividends and Earnings core lesson located in the Lesson Sequence Section of the Teacher Support Center. This lesson touches upon the relationship between a company's earnings and its stock price.

To learn more about The Stock Market Game, visit www.stockmarketgame.org.

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