Updated: Sep 20, 2018
In my blog post on July 23, 2018, I wrote about the investment picks of teenagers in my Barter2Bitcoin summer camp. My class produced a balanced portfolio that included a mix of dividend payers, growth companies, and large and small caps. The stocks ranged from top technology picks like Apple Inc. (the most valuable US-listed company with a market cap of over $1 Trillion) to Nathan's Famous, Inc. (a foodservice company with a market cap of less than $400 Million). The reasons for picking these stocks were just as diverse as the stocks themselves. Some picked the companies that they were most familiar with as users of the companies’ products – e.g., Facebook, T-Mobile, Apple. Some were names from the current news cycle – e.g., Boeing or Raytheon. And still some were the place of their parent’s employment – e.g., Novartis. I certainly got some of the best teenage investors in my class. I was impressed by their thoughtful process in picking stocks based on their personal experiences and beliefs about stock valuations.
My experience with the brilliance of teenage investors was further confirmed by Jim Cramer, the host of CNBC’s popular show Mad Money.
Admittedly, our kids may not know about income or the power of compounding, but they sure know a lot about how they and their friends feel about the brand. That’s how Cramer found some of the best investments, including Domino’s Pizza, Apple, Verizon, Google, Netflix, Facebook (and Instagram), and Chipotle. Cramer’s last piece of advice – teenagers are likely going to make some mistakes in picking their investments, but they have their whole lives to make up those losses – that’s the cost of learning. That’s some good advice, especially the powerful lessons that kids learn when they start practicing financial decisions at a young age. As for the investment portfolio that my class picked, the changes in stock values range from a wonderful gain of 10% to a crushing loss of over 33%. I am sure you would agree that’s a financial lesson best learned in a class with play money!