Many of us know about the stock market, but few of us know anything about it. The number of amateur investors is rising, and if you would like to be a teen investing in the markets, there are a few tips and tricks of the trade you should know.
I interviewed three people – one man who knew the market inside and out and made it his career, and two teen investors – who have some sentiments which they would like to pass on to the oncoming generation of investors. Here are their words.
Experienced Trader Wisdom – Joe Carroll
Joe Carroll held a seat on the New York Stock Exchange, meaning that he was the one who physically completed stock trades for his company. He collected a vast array of information regarding the market, some of which can be surprising to the unknowing beginner. His philosophy is that stocks should never be kept for very long, because the market is so volatile. “I never hold on to anything that long,” he told me. “If the stock gets stale, you’re screwed. Don’t fall in love with stocks.”
Many of us have the idea that we can “predict” the outcome of an investment, because we can see which companies will experience success in the future. When asked how to make such predictions, Carroll promptly replied, “You can’t.” He does, however, believe in using the events that you know will happen to help guide your investment. “If you know a hurricane is coming, you invest in lumber companies, because wood is used to board up windows and repair homes. If an earthquake is predicted, invest in concrete that people need to fix foundations.”
Joe also told me that it is very difficult to grow a small amount of money into thousands on the stock market quickly. When asked how much money a beginner investor should put in, he replied, “It depends on the price of the stock and how much stock you want to buy. You [generally] need a good amount of money.”
Luck also plays an important role in investment. “I’ve been out of Wall Street thirty years. I sold all my stock the day before the big crash, because I was tired of watching it. I just got lucky and missed it.”
Teen Investing Wisdom – Joe
One of my personal friends, a different Joe, has had a stock market account since the day he was born, and has invested $200 dollars every year for all thirteen years of his existence. For a long time, he didn’t really pay attention to his investments. “I just invested in the companies that were big at the time – Nintendo, Target, Gamestop.” More recently he’s started to put more thought into his choices.
“I invested in Apple stock this year, since I knew the new IPhone 7 was coming out this year. I also invest in the businesses that will have fairly constant demands, like the Home Depot and Wegman’s [a grocery store chain]”. Over the last 13 years, he had invested roughly $2,600 dollars collectively. His account has made about $10,000 dollars in return.
“Stocks like Target, Apple, and Home Depot have been the most profitable over the years – they almost never lose value and occasionally gain so me.”Joe plans on using the funds as a car payment, or as starter money for when he becomes an adult.
Teen Investing Wisdom – Raven
I also spoke with Raven, a family friend who got interested in stocks more recently. “I was reading about a girl who was eleven, who got two Coca Cola shares for Christmas. I asked about what shares were, and when I learned a bit more I was hooked.” She began investing two years ago when she got a share of Dunkin’ Donuts stock for Christmas.
I asked her why she chose Dunkin’ over other stocks, and she answered, “I am interested in the company’s products, and I think the value of its stock will continue to rise.” The stock was worth 46 dollars when she bought it, although now it is worth around 49, and every couple of months she gets a check in the mail with her profits – usually around 30 cents.
Raven said that she would like to continue investing later, when she has, “the money and the education on how investing works.” Her tip to another teen investing in stocks for the first time: “Know what you’re investing in, and start small.”
Should You Invest in the Stock Market?
Investing, when conducted intelligently, can be a useful tool for teens looking to generate some extra income, but it is important to know the basics of the market. See if anyone in your family has any experience with the market, and ask them for help starting out. Also, don’t expect to make thousands of dollars instantaneously upon making one investment.
Profit takes time and patience to see. Like Joe Carroll mentioned, never become too attached with stocks. If you notice one heading into a downward spiral, don’t hesitate to sell it and back out. The only predictable thing about the stock market is that it is unpredictable, so don’t waste time making elaborate guesses, because at the end of the day, they are just that – guesses.
Be prepared to take a gamble, buckle down, and wait for the hopeful profits to roll in.