While it looks like many of our favorite television shows will be in reruns in the next few weeks due to the strike by the Writers Guild of America, Wall Street is experiencing similar disappointments as it continues to suffer through another tough week amid dismal earning reports from Wachovia (WB) - Get Report, Fannie Mae (FNM) and insurance powerhouse AIG (AIG) - Get Report.
Unfortunately, spirits weren't lifted after
Chairman Ben Bernanke said Thursday, Nov. 8, before the Joint Economic Committee that economic
growth is expected to slow noticeably in the coming months while surging oil costs will raise
inflation pressures. However, Bernanke expressed that the economy is nowhere close to the inflation crisis of the 1970s and predicted an economic rebound by mid-2008.
Shouldn't the shopping frenzy of the next few months help ease the situation? Again, somewhat bad news was reported on Thursday, Nov. 8, after retailers announced disappointing October sales results because of consumers' ongoing worries about housing and higher energy prices. The news came from all
sectors, including department stores such as
as well as retail giant
, the world's largest retailer. The few standouts included warehouse operators
, signaling shoppers are in search of lower prices.
What does this type of market news mean for your Stock Market Game teams? Most likely, short-term
losses. Therefore, it's important to emphasize to your students that business cycles are par for the course when it comes to investing. It's a good bet the U.S. will experience another
recession before your students retire. And that recession will be followed by a period of growth and so on and so forth. Your students may be tempted to sell their positions when they see they have declined in value. The "Buy, Sell, or Hold?" lesson in the
Teacher Support Center examines ways students can analyze basic financial data to determine whether they should buy, sell or hold their positions. The lesson is accessible by clicking "Lesson Sequence" and then selecting "Display a Complete Outline of All Lessons." To further discuss the role of the Fed and its recent interest-rate cut, we have also recently released a new
In the News
newsletter titled "A Plea to Mr. B." It's accessible by clicking the "Publications" link in the "In the Classroom" section of the Teacher Support Center.
This article was written by a staff member of The Stock Market Game.