Posted on 03/01/2019 5:24:55 PM PST by TermLimits4All
Good evening fellow FRiends. I posted this in chit chat and hope for some fun feedback to distract from our daily political injections. So my kids much to my dismay on school education these days came home with an interesting assignment. They're to pick 10 stocks from the paper that they want to invest a total of 1,000 make believe dollars in to monitor until the end of the school year.
I'm not savvy enough to provide any educated guidance, my portfolio is mainly my Fidelity and Vanguard stuff which I dont have much control of. I can pick funds but not individual stocks.
What 10 stocks would be a good point to start with? How does one with no knowledge go about researching individual stocks to purchase?
I think this is a great exercise for them to learn about the markets and frankly shocked that they're still teaching this in the socialist public schools today.
I was thinking of making this a true learning experience and doing some actual investing in individual stocks with them. Say no more than 300 for each kid (2).
Any suggestions or guidance would be appreciated from this total novice. Hey, I may learn a thing or two with them.
Throwing darts at the stock listings and investing in whatever the dart hits has proven to be as effective an investment strategy as any. So don’t come here for advice, and don’t help the kids. The fun is the serendipity of finding a good stock while knowing nothing about it. Don’t spoil it be overthinking. You’d probably be wrong anyway.
Show them the top ten stocks your Fidelity and Vanguard have,they may not win over a year,but they will learn that investing early in their life pays off.
AAPL, T, D, XOM, UNH, MSFT, JNJ, PEP, UNP, WFC
Ask the kids this: Which products would you recommend to friends?
You’ll probably get answers like McDonald’s hamburgers, Disney movies, Nike sneakers, etc. Those should be the stocks they pick.
Just be sure to introduce the concept of diversification. Not too many fast food stocks. Not too many entertainment stocks. Etc.
Teach them to diversify and invest over the long term. Show them what one of the indexes over a 30 or 40 year period has earned.
Full time professionals have a hard time beating the indexes.
Whatever you end up advising them, make sure to tell them that picking stocks for short term gains over a specific time period, like until the end of the school year, is a fools errand.
Once they figure out the degree of risk they can handle, they could start looking at the types of stocks to get there.
One idea might be to pick the top stocks from one or more mutual funds that fit the risk profile (after some research, of course). They may have some good ideas based on the products they or their friends have.
Have fun! The Richest Man in Babylon might be worth a look.
There's even a 4-minute video.
Moonman62 makes a very good point (post #6). No stock market lesson would be complete without mentioning this simple fact:
“Full time professionals have a hard time beating the indexes.”
http://www.betterinvesting.org/NR/rdonlyres/59721666-9CD6-4462-8BFB-7915992749F3/0/top100.pdf
Check out their stock selection guides, investment clubs, etc.
Why 10? Fewer (e.g. 5) would help one keep sanity and clarity in tracking them.
Motley Fool
BINGO!!!..if its a contest to the end of year and they don't have to invest real money.....Tell em to pick long shots..no dividend stocks....Just the opposite of what you'd do at a young age.....Then...after the contest is over..view the losing portfolios...pick one in the middle and invest some real money in those stocks for them
Einstrein said it best....
Albert Einstein called compound interest the “eighth wonder of the world”, adding: “He who understands it earns it; he who doesn't pays it.”
Tell them to download the 10-K reports and analyze the balance sheets, earnings, and cash flows. Be sure to read all the footnotes.
A single stock that has been just clobbered lately yet is still recommended highly by “the experts” as a buy is CVS. Over the course of the remainder of the school year, it might recover.
I would ask the kids to explain what the companies they want to invest in do. If they can’t tell that “Boeing makes airplanes” then I would ask them why they want that stock?
A good place to start with investing is to invest in products you understand, and have some confidence in. It doesn’t mean the stock won’t go down but at least they are making an educated guess. Also, they should have a plan for when to sell and when to bail. If the stock rises 5% in one day maybe they sell, keep the profits and invest in something else.
/S If that doesn’t work you could use the approach Malachi Constant used in the novel The Sirens of Titan. Open the Bible take the first letter of each word (ITB-GCT-HAT-EAT and so forth and so on) until you find 3 letters that match a stock symbol. Invest everything in that stock. /S
I should add. I did day trading in Asian penny stocks. So not normal type investor. I was in for the quick buy and sell.
TermLimits4All -
I would suggest whatever you choose to create a large billboard using Construction Paper.
List the stocks to the left. First column should be the # of stock they ‘invested’ in; with the second column containing the actual cost of each share they invested in; the third column should have the day’s current share cost; the forth should have the up or down arrow. For the individual squares cut plastic and tape it to the construction paper so you can simply mark/erase/repeat as the year goes forward. This way they can see daily what’s happening and hopefully they can tie it to the daily actions of the world around them.
I don’t have the memory my beloved does, so I printed up 2 pages of the stocks I own using that type of charting. LOL
Click It!
I had this assignment in high school in the early ‘80s. My investments paid well in fake dollars.
Pepsico (I was working for Pizza Hut, which was a subsidiary at the time)
Bally (I pumped enough quarters into their arcade games, they must have been doing something right)
Netslé (I lived on Nestlé Quik)
Cenvill Communities (retirement homes in Florida. That one split for me.)
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