This is a class I’m running in my local community for ages 12+. I’ll be posting the materials here after each lesson
Class #1
Materials
Homework
- Identify 5-10 companies in 3 industries and report on what their margins are and the average margins in the industry based on your research. The open-endedness of this question is a feature not a bug. Let’s see what they come up with.
⭐I strongly recommend playing with the spreadsheet to explore the lender and equity investor results if we had rolled “bankruptcy”. Stepping through the formulas is a valuable exercise!
Class #2
- Spreadsheet (File:duplicate to have your own editable copy)
Homework
1. Inflation Scavenger Hunt
Look up 3–5 prices from the year you were born vs today (Big Mac, movie ticket, gas, minimum wage). Calculate the % increase. What's the annual inflation rate?
2. Fee Impact Calculator
Pick a monthly investment amount. Calculate ending wealth after 40 years at 0.03% vs 1% annual fees (assume 8% gross return). How much did the fee cost you?
3. P/E Return Decomposition
Pick 5 stocks. For each, look up the price and EPS 5 years ago vs today.
- How much of the total return came from P/E multiple change vs EPS growth?
- Then compute the current earnings yield (E/P). Compare it to the trailing 5-year CAGR. Using the Rule of 72: if the 5-yr CAGR continued, how long to double your money? If you earned the earnings yield instead, how long to double?
4. Compounding Frequency
Invest $10,000 at 6% for 5 years. Calculate FV compounded annually vs semi-annually. Which gives a higher return? By how much? Why?