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You're right Bob, but if Steven's daughter is like mine, the steady
growth of a solid dividend-paying company is probably not what she's
after. She probably wants the pop from an undervalued stock.
So, my suggestion would be to limit her education to a few key
elements like how the markets work, operating a brokerage account,
basic analysis (fundamental and/or technical) and beginning to define
her own risk tolerance.
I suggest one or two how-to books from the library on investing,
$1,000 of her college living expenses in a discount brokerage account,
and a short list of Dow Industrial stocks to analyze. The deal would
be that if she loses money, she has to tighten her belt. If she makes
money, she can either choose to spend it or reinvest. Feeling the
pain or gain from her decisions will help define how she tolerates
risk. Frankly, I wish that education cost me only $1,000.
From: Robert Arbuckle <bobskc@xxxxxxxxxxxx>
To: realtraders@xxxxxxxxxxxxxxx
Date: Friday, October 10, 2008, 8:09:42 PM
Subject: [RT] Advice requested
Teach her how to use a scanner so she can look up stocks that have a
good dividend and who have not failed to pay a dividend for a couple
of decades and who have not cut the dividend in that amount of time.
Most internet brokers have these tools on their web sites.
Talk to her about dividend re-investment for her future and how that
can add up to something very real by the time she reaches retirement
age.
A young person can take a lot more risk than an one of us close to or
at, retirement age but starting out with those simple tools will teach
a good beginning.
As to GM, the first question that must be answered is will they be in
business much longer. They had many years to respond to the public
demand for fuel efficient automobiles and wasted them. Now, they have
government money to try and catch up but having the money to do it and
making it happen are two very different things and the company has not
shown much initiative in this area.
I'm sure you are very proud of her for showing this interest and I
hope she follows through with patience and conviction to sound
investment guidelines and doesn't look for the quick buck .. fast
payoffs lead to fast losses in many cases and learing to be a trader
and being nimble enough to know when to get in and when to get out is
learned slowly and often painfully.
All best,
Bob
On Fri, Oct 10, 2008 at 10:45 PM, Steven Booska <boos1@xxxxxxxxxxxxx> wrote:
My 22 year old college senior daughter called me today and expressed
and interest in investing in stocks. Her perception is that this
market is very oversold with GM, etc. offering opportunites. I have
never discussed trading or investing with her and feel lost as to
where to start. Does anyone have any rules, advice or reference to
training or education sources they would give their child in this
situation?
Steven Booska
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