A Stock Market Exercise

Try "playing" at stocks to get to know the market.

• Research stocks listed on the U.S. exchanges and select three you like.
• Develop company profiles using the analytical tools explained in How to Read Stock Tables, paying special attention to Price-to-Earnings (P/E) ratio, as it explains if the stock is overpriced compared to its earnings.
• Determine earnings projections, which are quarterly company reports of earnings expectations for the next year.
• Invest $600 of play money, "purchasing" close to $200 worth of "shares" in each.
• After your initial purchases, deduct $10 each time you "sell" or "buy." In the real world, the cost may be higher or lower.
• Track your progress for several months, referring to the stock tables. Use a chart like this to keep a record.
• See how items in the news affect your stock's price.
  

After several months, you may be surprised how your research pays off.