Thanks Joan, Mark, Jurgis, and Paul for your thoughts.
Paul's response hit me like a smack upside the head, and I realized I hadn't shared the whole story of this budding teen investor. I also now admit I am really interested in ETFs out of curiosity and for other purposes, not just the 15 yr. old.
Just for the record, his picks for the contest were WM, MCD, DELL, and BOBJ; he's currently in 5th place with a 6.33% gain (in two weeks).
His 17 yr. old sister is in first place at 10.76% with SWF, NOK, AMD, and SUNW.
More importantly, he was an eager student in a "school" I put together for him and his sister last summer. I met with them for about 40 minutes once or twice a week, teaching them the basics of the market, stocks, funds, etc.
Very high level stuff, with lots of sports metaphors to keep their interest. It was great fun. I even had quizs with pushups for wrong answers! :>)
The thing is - and what Paul's email jolted me into admitting - was that I was projecting my anxieties about going through 2000-2002 again, losing big, on this great kid. I wasn't giving him credit for what he learned. To wit, here's my synopsis of what I taught them:
Lauren and Conner’s Kool Investment School
By Kris With a K
Teen Investing Lesson Modules
1. Getting started, making and saving money, proper goal setting, 5 ways to invest, why investing can be like fishing
2. Income and expenses, assets and liabilities; what are they?
3. Spock (live long and prosper), the power of compounding, what is a stock, what is a fund, Freddy Garcia vs. The Pitching Machine
4. Graph 1: How one dollar grew over time
5. How to invest: doing homework, diversity, why the Seattle Mariners are a diversified portfolio, the emotions that get in the way, how diversity can be like Tic Tac Toe, predicting the most popular kid
6. Chart 1: The high cost of short-term investing (letting your emotions make your decisions)
7. Chart 2: The high cost of waiting (Poor George, Smart Martha)
8. What is a mutual fund?
9. Review 1
10. Is investing risky? What can I do about it? Food groups and proper “dieting” (why you should have a protein, a starch, a vegetable, a dairy product, and only one dessert in your investing portfolio.)
11. Graph 2: Stock performance
12. Chart 3: Why diversify?
13. Quiz 1
14. What is a bear market?
15. Chart 4: Results of 5 different asset classes (1982 – 2001)
16. What worries me? (Things Not to do)
17. Quiz 2
18. More bearish questions
19. The fundamental approach and funny acronyms like PE, PEG, ROE, and ROA
20. Different flavors: value, growth, income, dividends
21. Web break: different cool sites and how to use them (Websites for teens)
22. Quality and size – micro, small, mid, large
23. Review 2
24. Being realistic, demand and supply, volatility (lions and tigers and bears, oh my!)
25. 10 lessons a bear market teaches
26. Quiz 3
27. The Beav goes investing
28. Top line, bottom line: sample Income Statement for a Kool-Aide stand
29. Rule of 72, your goal for investing, branding
30. Review 3
31. Index funds, “The All-Star Team”
32. 60-Second guide to index funds
33. Things to ask before you buy a stock
34. Quiz 4 |
