Meet the Street: Steady Hand Drives Teen's Blue-Chip Ship

Chris Stallman isn't your typical teen-ager with your typical extracurricular activities. A young man who says he first got his taste for money during "show and tell" in kindergarten, Stallman began seriously investing in 1999 as an investor in the (SRYIX)Stein Roe Young Investor fund. The fund returned 31.7% that year. Stallman, now 18 years old, has gone on to become a whiz-kid investor whose portfolio consists of stocks and money market funds.

Chris Stallman, Vice President, Operations, TeenAnalyst.com

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When he isn't listening to punk rock or stocking the shelves for his part-time job at Walgreen (WAG), he's running TeenAnalyst.com, a Web site about investing for young people. He has a lofty title, too -- vice president, operations. The site's "Young30" index of mostly blue-chip stocks with Next Gen appeal claims to be ahead by a respectable 11.2% in the 28 months since its inception in July 1999.

Stallman says his portfolio has returned an average of 17.8% over the past three years, and that he's up 8.8% year to date, thanks to such stocks as, you guessed it, Walgreen. Gap (GPS), Blockbuster (BBI) and Toys R Us (TOY) are also in the mix.

In the past, Stallman has gone on record proclaiming that he plans to be a multimillionaire by age 30. So far, he's saved $15,000 toward his goal of putting himself through college with scholarships and investments. Stallman gives Meet the Street a look, from a teen-ager's point of view, at what's going on in the markets and where the next big money will be made.

TSC: You've got to admit that your zeal for stocks at your age is out of the ordinary. Do any of your friends at school think you're a freak?

Stallman: I'm just your average teen-ager who just happens to be a young investor, too. I started when I was 15 years old in the Stein Roe Young Investor fund. I wanted to start saving for college, to put myself through college on my own, and to make my money work a little bit more for me than it would in a savings account. My mom gave me the idea.

I found out that college is a little bit more expensive than I had originally planned. I've been accepted at the University of Michigan and am also interested in Wharton [business school] at the University of Pennsylvania, but I am determined to pay for it all on my own. If I really wanted, I am sure that my parents could pay for much, if not all, of my college education, but I'm a pretty independent person.

TSC: How much have you earned?

Stallman: I have enough to pay for a year at pretty much any college I want.

TSC: What investments have done well for you?

Stallman: A lot of the money I have made has been from individual stocks, like Advanced Micro Devices (AMD), Intel's (INTC) competitor. When they were making their first big recovery in January 2000, I decided to put some money in the stock just to watch it. Before I knew it, the stock I had bought for $20 a share was worth $90 a share, which was pretty good. And I pulled my money out right at the right time, at $88 a share, which split-adjusted would be $44, about a year ago. Now the stock's dropped -- at $14. That was a good play, right there.

I like stocks that are more pure, less technology-oriented. I'm a big fan of blue-chips -- not blue jeans -- especially for kids.

TSC: Where is your portfolio now? So many investors, this reporter included, have been hammered, absolutely hammered, by the markets.

Stallman: I've taken a little bit more of a conservative approach, only because [college] is just a year away. But it's still oriented almost entirely in common stocks. I own AOL Time Warner (AOL), E*Trade (ET) and Allied Capital(ALD), a lending company that does a lot of mezzanine financing.

TSC: How much money did you start investing with?

Stallman: Very little. Around $400. And then my mom also started me on a plan to pay the $50 a month to keep the account going. The fund did really well for me, and they make it fun. Their monthly newsletter would include profiles about each stock in the fund, like Texas Instruments (TXN), and how that company might affect teen-agers, such as through computer chips or calculators. Within a year, I probably had a 45% return on the fund [although Morningstar data show that, over the trailing three years, the Stein Roe Young Investor fund is up an annual average of only 0.14%].

TSC: You're 18 now, Chris. Old enough to drive, old enough to vote (although not old enough to drink). Are you still invested in the Young Investor fund? And, given the state of the market, have you moved any of your money into bonds or cash?

Stallman: No, but only because I didn't think the fund's holdings reflected companies that truly impact young people's lives. Given that college is only a year away, I have about 30% of my savings in money market accounts.

TSC: Who's your Wall Street idol?

Stallman: Warren Buffett. I like his patience and how he rides out the market.

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