As I mentioned this past
weekend, I recently had this question posed to me: Would I ever encourage my kids to trade? And in seeking representation of all possible points of view, I encouraged you all to email me directly with some succinct thoughts.
Now, why even devote a column -- and as it turns out, two columns -- to something that perhaps is more
? Because like it or not, playing the market has become our national pastime. Everyone's thinking about it. Everyone's talking about it. Frankly, everyone's doing it. And, unlike when I grew up, it isn't sex I'm talking about, it's trading! Yes, forget about investing -- that quaint subject of old -- it's flipping stocks that everyone's enamored with.
And because it's on the tip of everyone's tongue, it's on the tip of our children's tongue. Now maybe it should be; maybe it shouldn't. I do know this, though: I have one responsibility before I pass on, and that's to ensure my kids get off to the best start possible, so when it's their turn, they can get
kids off to the best start possible. So, I'd be remiss not to consider the whole subject of my kids and trading. I may choose the nay route, but I won't choose to ignore the topic.
And, neither did many of you. In fact, responses were still coming in all day Monday, with strong opinions both for and against your kids, or I suppose any kids, trading. Emails ranged from kids themselves all the way to great-grandparents. Some were ready to send their kids off to Camp Cramer, and some thought money was just plain evil. The good news: No one was wrong. (If only trading were like that!) The bad news: Your range of responses certainly didn't help clarify things in my mind!
Therefore, today I'll give you a sample of the various emails I received. Some have been edited for clarity and style. Trust me, though, this is a small sampling of what I received, so if you sent in an email and don't see it here, know that I am most appreciative, and that your views are hopefully reflected in one of the notes below.
Take the time to read through these notes, though, as the collective wisdom contained here is a lot more than any one individual can offer.
Finally, next Monday, I'll follow up with my own conclusion, highlighting some of your own thoughts, while presenting a few ideas you might not have considered.
For the Pro Side...
I began to follow the market when my grandmother bought me 20 shares of
for my eighth birthday in 1985. Throughout junior high school and high school I noticed numerous trends such as
(I was one of their original customers in 1993), and
that would have made me rich (relative to my peers, of course). Kids should be an essential research tool for all traders. Forget balance sheets and income statements. Kids wouldn't need such direction. Just by being immersed in the consumer culture that is America, kids are the ultimate stock-pickers.
It would be great if kids started to actively trade the market. Then in 10, maybe 15, years, our country won't make a damn thing. We'll just value countries with companies that do. Who wants to make anything, anyway? It's just too post-World War II.
I teach technology education at
Whitman Middle School
in Seattle. Recently a group of high school students wired my computers so that we have access to the Internet. To make a long story short, my students -- 12-, 13-, 14-year-olds -- are now tracking about 10 to 15 stocks that they have chosen. They are learning fractions, doing research reports on companies, finding out how much a CEO earns and why, they get emotional over losses as well as the gains. In any case, we are having a contest for the month of April to see which students are the most profitable by the end of the month. The top three students will receive prizes.
I am 17 years old. I have been actively trading stocks for the last year and moderately trading stocks since I was 13. Currently, I am an intern at
and I am an aspiring hedge fund manager (that's right, I want Cramer's job). On Christmas when I was 13, my parents and grandparents went out and bought me stock in two different golf companies (yes, I am a golfer). They wanted me to become more interested in the stock market (and I guess it worked). My dad was a stockbroker, so I was able to gain knowledge from him. Neither of my parents said, "Brett, sit down, you are going to learn about the market whether you like it or not!!!" My parents did a good job, they never forced anything upon me, they only answered my questions when I had them. I think that is the big picture, you can't teach people that don't want to learn, you can only stick the dinner plate in front of them and hope they eat.
Future hedge fund manager
Hello. I am a kid (14 years old) and I invest (sort of). I trade imaginary stocks at a virtual stock game and am doing very well. I personally think that kids should start investing at around the high-school level. This is because middle schoolers don't know much about the stock market and will probably buy stocks that are more of trends than ones that will actually appreciate. But I do think that kids should invest because they know what companies are doing well and which ones aren't. I have almost doubled my imaginary portfolio's value in about two months.
I am a high school teacher in Montreal, Quebec, and am currently working on a project for grade 9's and 10's. The project is highly technology-based with the students building a "virtual" company from the ground up. One aspect of the project relates to the students picking a "ticker" symbol of any given company and using that company's profits or losses in their weekly budget; for their virtual company. Why would I do this? Well, most of my students are learning disabled and come from broken homes, where they may never get any positive feedback or guidance when it comes to investing and finance. This project may be their only introduction to the stock market and how it functions. If nothing else, at least they will understand the pages and pages of ticker symbols in the business section.
Our research team is planning to scale down the project to include some of the lower grade levels. So to answer your question about when should kids begin trading ... never too young to at least begin to understand how the markets work.
My answer has two parts:
1. First, I think parents should start introducing their kids to the market as early as possible (may be 9-10 years old).
2. If the child shows interest and is curious about certain stocks or how the market works, then he/she can be introduced to research and eventually actual trading.
Kids should start trading when they have $500 they can put away for their adulthood. I think age 15 should be about right.
But even before they have their own money to invest, they can easily be engaged in the investing process by Mom or Dad promising them something they've been asking for by saying something like "...well, I tell you what. I'll buy you that new bike when my
stock closes over 105 for three days in a row or
gains more than 12% in a week..." or some such. Believe me, the kid will be checking the stocks regularly.
They'll develop an early maturity with respect to seeing economic trends and an appreciation of the interaction of market forces that will serve them well the rest of their investing lives.
I don't have kids, but if I did, I would encourage them to begin trading as soon as possible. Around the same time that they get what the words "up" and "down" mean, and can put crayon to (graph) paper. The sooner people learn to cut losses and let profits run (yes Virginia, that's all there is to it), the better. And it's just a matter of time for most people to learn that that is all it takes.
I am planning to start teaching Junior about "the markets" around the same time he wants to have his own money in his pocket. I might start with a mutual fund first. Stocks later. Whatever rate we progress at, I think the earlier we start the better. You never know when daddy is gonna drop dead.
Richard D. Mazur
Representing the Con Side...
I know that this bull market has created many myths, some of which include the idea that a truck driver can own an island, a housewife can casually pick up $1,700 a day, a kid can own his own helicopter, etc, etc...
The idea that kids should start trading is absolutely ridiculous. It is like saying when should kids run their own business, when should kids run their law practice, etc, etc... I have read your column over the past couple of years because I found it interesting, but I also think that you should exercise some of your own discretion as an investment professional to debunk the myth that the markets are easy money and that mindless pointing and clicking will bring the everyman fame and fortune.
This is not a game for the faint of heart, and kids have no place in these markets. I know parents mean well, but I don't think any of them would send their kids to medical school or to take the bar before they completed graduate school, so let's get this point across to them before they lose all of their assets and their kids' self-esteem when they so naively throw money at their children. Enough said and "let's stop the insanity"...
I trade for a living from home but have some reservations about kids trading at all. Like the lottery, trading is usually seen as a quick and easy way to make a lot of money. Kids should learn a profession and work in a regular job for a few years. I was shocked to read in a newspaper article that a survey revealed that one of the main goals of today's youth is to win the lottery.
Let's face it, if you learn a profession you really enjoy, it's probably a lot less stressful and a lot more satisfying than trading.
Of course, investing (which I've never been able to do for lack of patience) is another matter. It teaches children to save, how the free market system works and gives them a head start in areas they normally wouldn't know about until adulthood.
Let kids enjoy their "kids' life," build up their future by concentrating on education, not falling in love with money in their young life. They can begin trading after they finish high school.
I have a 7-year-old boy. When I am looking into his future, I wish he will become a well-educated person. The professional area he is going to be in will depend on his personal interest. But he needs to get his brain fixed first by modern education in general. So I will not even let him touch this money game before he graduates from college. Why? Money spoils the soul.
Let's not confuse trading with investing. Teaching your child the importance of saving and investing is part of raising them to be self-sufficient adults. Despite how easy trading looks to some people, it is an adult game. Teaching children to respect the value of money and the power of markets is probably more important now than ever as online brokerage commercials want us to believe that just opening a brokerage account will lead to having your own island or helicopter. The goal should be to teach smart investing. If you want to give your kid a few bucks and watch him/her play their hunches, take 'em to the track!
I think it is a terrible idea for kids...ie...teenagers to begin trading. Trading does require technical skills and discipline, but I doubt if kids will learning anything useful from trading at such a young age. I would definitely be in favor of teaching them about the markets, and the benefits of long-term investing. Imagine if your kid starts trading and gets lucky and rakes it in. Do you think he'll want to strive to go to college and get a "real job" when he sees how easy it is to make money in the market if he gets lucky a few times? In addition, I think trading is a very addictive, sometimes antisocial endeavor, and I would fear they would turn into some spoiled bratty compulsive daytrader like the kid in the
And Sitting in the Middle....
I've been trading since I was 14 years old (I'm currently 19 years old) and I wouldn't recommend it. I did fairly well for about three years, but I must say that it did take away from my childhood. I'd skip class to get quotes on my positions; I was somewhat of an addict. I would sometimes go research securities, then hang out with my friends. There are benefits to trading at 17 -- I became the youngest investment adviser in the nation, and from there I went on to become a professional daytrader in my senior year (I would not recommend this if you want to appreciate your final year in high school). Making and losing hundreds of dollars a day adds stress and takes away from enjoying one's youth. But then again the money comes in nice in college, education and social.
Gary B. Smith is a freelance writer who trades for his own account from his Maryland home using technical analysis. At time of publication he had no positions in the stocks mentioned, although holdings can change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Smith also writes Charted Territory, which appears every Wednesday, and TSC Technical Forum, which runs Saturdays and Sundays. While he cannot provide investment advice or recommendations, he welcomes your feedback at