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 Stock
The
Market
By Linda Crotta Brennan
Illustrated by Rowan Barnes-Murphy

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Published by The Childs World
1980 Lookout Drive Mankato, MN 56003-1705
800-599-READ www.childsworld.com
Acknowledgments
The Childs World: Mary Berendes, Publishing Director
The Design Lab: Design and production
Red Line Editorial: Editorial direction
Design elements: Eric Krouse/Dreamstime
Copyright 2013 by The Childs World
All rights reserved. No part of this book may be
reproduced or utilized in any form or by any means
without written permission from the publisher.
ISBN 9781614732464
LCCN 2012932828
Printed in the United States of America
Mankato, MN
July 2012
PA02122
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About the Author
Linda Crotta Brennan has a
masters degree in early childhood
education. She has taught
elementary school and worked in
a library. Now, she is a full-time
writer. She enjoys learning new
things and writing about them. She
lives with her husband and goofy
golden retriever in Rhode Island.
She has three grown daughters.
About the Illustrator
Rowan Barnes-Murphy has
created images and characters
for childrens and adults books.
His drawings have appeared in
magazines and newspapers all
over the world. Hes even drawn
for greeting cards and board
games. He lives and works in
Dorset, in southwest England, and
spends time in rural France, where
he works in an ancient farmhouse.
 Mia checked the cash box. Wow, we made
a lot of money from our lemonade stand!
Great! Maybe we should open another
one, Toms said.

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 Mia tapped her chin. Hmm . . .
we could. Well need wood to
make another stand. Well need
more signs, too. And we may have
to pay someone to work at the
new stand.
Toms wrinkled his nose. We
dont have enough money for
all that.

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 What might Toms and Mia do to get money?
They could borrow money. But then theyd
have to pay it back. Is there another way they
could raise money?

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 There is! They could sell stocks.
A stock gives someone a share, or
part ownership, in a business. Sharing
ownership also means Mia and Toms
could share expenses.
Mia and Toms decided to sell ten
shares in their business. They each
bought three shares. They sold the
other four shares. Tomss Uncle Tito
bought two shares. Jack, their friend
and classmate, bought one share.
Molly, Mias older sister, also bought
one share. These people invested, or
gave money, to help Mia and Tomss
business grow.

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Mia and Toms sold ten shares. They each bought
three. That gives each of them 30% of the company:
3| 10 = .3 = 30%. Uncle Tito bought two shares, so
he has 20% ownership: 2| 10 = .2 = 20%. Jack and
Molly each own 10% because they bought 1 share:
1| 10 = .1 = 10%.

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 Toms hammered in the last
nail on their new stand. Dont we
have to pay our investors back?
he asked.
No, we dont. Instead, they
get part ownership of the business.
They get to vote on who runs our
business, said Mia as she tacked
on their sign. And investors get
part of our earnings. Those are
called dividends.

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 After a few weeks, Mia and
Tomss new lemonade stand
started to earn money. They put
part of their earnings back into the
business. After buying lemons and
sugar, they had $10 left over to
pay dividends.
Mia and Toms each earned $3
in dividends$1 for each share they
own. Uncle Tito earned $2, and Jack
and Molly each earned $1.

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The size of an investors dividend depends on how
many shares the person owns.

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12
 Mia and Toms couldnt pay
dividends every month. Sometimes,
they needed all their earnings to help
the business grow. At the end of each
month, Mia and Toms reported their
earnings to their investors. They let
investors know if there were dividends.
We know you wont always make a
profit, said Uncle Tito. We want your
business to do well.
Thats right, said Molly. That will
give us another way to make money.
We bought our shares at a low price.
If youre successful, well be able to sell
the shares for a higher price.

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 Molly had paid $6 for her share
in the lemonade stand. After a few
months, she sold her share to Mr.
Smith, her neighbor and softball
coach, for $10. Buying her share
for $6 and selling it for $10 earned
Molly $4.

Buy low, sell high is an important rule for investing

in stock. If you sell shares for a higher price than you
bought them, youll earn a profit.

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 Mr. Smith attended the next investor
meeting instead of Molly. He explained
that he had bought Mollys share.
So, the price of a share can go up
or down? Toms asked.
Thats right, said Mr. Smith. The
price is higher if a business is making
lots of money. The price of a share also
depends on how many people want to
buy them. If many people want to buy
shares, the price will be higher. If only a
few people want to buy them, the price
will be lower.

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 Our new lemonade stand is
making lots of money. We should
open more, said Mia. I wish there
were a place where we could sell
shares to thousands and thousands
of people.
There is a place like that, said
Uncle Tito. Its the stock market.
Its where people can buy and sell
shares in different companies.
Where is it? How can we get
there? asked Toms.

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 You dont have to travel anywhere, Uncle
Tito said. You can buy stocks online. You can
also use a stockbroker. This person buys and
sells stocks for others.
So, they spend other peoples money? said
Toms. That could be fun.
It isnt a game, Uncle Tito replied. There
are risks. You can make money if the price of
your stocks goes up. But you can lose money if
the price goes down.
Yes! Mr. Smith added. I invested in the
High Style Sneakers Company. After a while,
their sneakers went out of style. I lost a lot
of money.

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Stockbrokers have to know a lot about the stock
market. They have to pass a special test and get
a license. Thats because they need to help their
customers make wise choices.

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The Dow Jones Industrial Average reports whether
most stock prices are going up or down. A plus
sign before the number means prices went up. A
minus sign means they went down. Find todays Dow
Jones Industrial Average. You can look for it in the
newspaper. Is todays stock market bullish or bearish?

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 Later that day, Mia and Toms were at
Mias house watching television. Mia shook
her head as she watched the news. That
big earthquake may cause trouble with the
stock market.
Why? Toms asked.
Dad told me that when good things
happen, investors are happy. They buy
more stocks and prices rise. Thats a bull
market. Mia made bull horns, pointing up,
with her fingers. When bad things happen,
investors get worried. They sell their stocks
and prices go down. Thats a bear market.
Toms pretended to be a bull and
charged at Mia. Lets hope for a bull
market! he cried.

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 Mia dodged Toms on the way to the kitchen.
There, she got a pitcher from the cupboard.
Good thing people always want lemonade!
Toms measured in the sugar. Were making
lots of money now, and well make even more
when we open the stand by the baseball field.
Our business is a good investment, Mia
said as she stirred.
Toms nodded. I bet wed be a big success
on the stock market.

Imagine you want to invest in a company. What

kind of company would you look for? What things
do you, your family, and your friends like to buy?
Do you think people will want to buy those things in
the future? What company makes those products?
Make a list of those companies. Maybe youd like to
invest in some of them.
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Glossary
dividend (DIV-i-dend): A portion of money earned by an investment is a
dividend. When the lemonade stand is successful, its investors earn dividends
based on the number of shares they own.
invest (in-VEST): To invest is to give money to a company with the hope of getting
more money back in the future. Uncle Tito invested in the lemonade stand when he
bought shares of stock.
investment (in-VEST-mint): Something a person can or has given money to, such
as a business from which they hope to get more money later is an investment. Mia
and Toms think their lemonade stand is a good investment.
investor (in-VEST-er): Someone who gives money to a company is an investor.
Uncle Tito, Molly, and Jack are investors in Mia and Tomss lemonade stand.
profit (PRAH-fit): The profit is the money left over after expenses have been paid
or when something is sold for more than it was purchased. Molly sold her share of
stock in the lemonade stand for more than she paid for it and made a profit.
share (shair): A share is a single piece of ownership in a company. Uncle Tito,
Molly, and Jack bought shares of stock in Mia and Tomss lemonade stand.
stock (stahk): Owning stock in a company gives you part ownership of the
company. Uncle Tito bought stock in Mia and Tomss lemonade stand.

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Books Web Sites
McGowan, Eileen Nixon, and Nancy Visit our Web site for links about the
Lagow Dumas. Stock Market Smart. stock market:
Brookfield, CT: Millbrook, 2002. childsworld.com/links

Orr, Tamra. A Kids Guide to Stock Note to Parents, Teachers, and Librarians:
We routinely verify our Web links to make sure
Market Investing. Hockessin, DE: they are safe and active sites. So encourage
Mitchell Lane, 2008. your readers to check them out!

Roman, Rick. Im a Shareholder Kit: The

Basics about Stocks for Kids and Teens.
3rd ed. Gilbert, AZ: Leading Edge
Gifts, 2009.

Index
bear market, 20, 21 profit, 13, 14
bull market, 20, 21 share, 6, 7, 10, 11, 1316
dividend, 9, 10, 11, 13 stock, 6, 14, 18, 21
Dow Jones Industrial Average, 20 stock market, 14, 16, 19, 21, 22
invest, 6, 14, 18, 22 stock price, 13, 15, 18, 20, 21
investment, 22 stockbroker, 18, 19
investor, 9, 11, 13, 15, 21

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