Learn to Invest Money: Investing Made Fun for Teenagers

If you’re a teenager interested in making money, then this article is for you. I’ll tell you how to multiply the money you earn from your after school job with something just as fun as gambling in Las Vegas but a lot safer – the stock market. Most people think that teenagers would be bored by the subject of investing and the stock market, especially when there are much more exciting things for teenagers to talk about such as dating, going to the movies, and hanging out with their friends. Well if you’re reading this article, then you’re one of the many teenagers that break the “teenager stereotype.”

Ok, to make sure that this article wouldn’t bore you, I sat down and discussed some stock investing guide with a group of teenagers. They helped me come up with similarities between investing and dating, so I’ve decided to tell you ten ways investing in stocks is like dating. I know you’re thinking “whatever”. But keep reading and you’ll see it’s true. Learn how to invest in stocks and you’ll also learn how to win at dating. Let’s start out by defining what exactly a stock is.

Stock – A way to own part of a company. Company stock, or shares, can be bought online through internet trading companies such as E-Trade or through an investment company. You can make money by buying shares of a company that you think will sell a lot of its product. Stocks can be as cheap as $1 a share or as expensive as $3000 for a single share. For example if you bought Apple around the time it started selling ipods, you could have bought 100 shares for about $800. At its high price this year, those same 100 shares would have been worth about $8,500, not too shabby a profit, right?

OK. Now for the Ten Ways Investing is Like Dating.

Rule One: It’s possible to get ahead sometimes by doing close to nothing.

Investing in stocks is all about getting ahead by doing close to nothing. That’s not to say you can be lazy and earn money because, from the moment you start learning, it will take you at least a couple of years before you develop enough knowledge before you will feel confident enough about putting that hard earned money from your job into the stock market. And that’s a couple of years of consistent learning. But once you develop confidence in your ability to invest and make money, your money will start making money for you even while you’re sleeping. And that’s getting ahead by doing close to nothing.

So how does this concept apply to dating? Every teenager knows that if you’re trying to get “in” with somebody that you really like, that the best thing that you can do is to get that person’s best friend to like you. Because if you do, you can count on that best friend to tell the person you like a lot of good things about you. There is nothing more valuable than that. And you’re getting ahead by doing close to nothing.

Rule Two: The more experience you have, the better you’ll become at it.

Becoming good at making money doesn’t come easy. You’ll find that in the beginning, when you buy stocks that you’ll want to take small risks as you develop your style and gain more confidence in your skill.

This is good advice when it comes to dating as well. The more experience you have with dating, the more confident you will become, and confidence is an aphrodisiac to members of the opposite sex. Not arrogance. But confidence. So in the beginning of your dating history, when asking someone out, take small risks until you build up your confidence that you have the right approach. After that, confidence is all you’ll ever need.

Rule Three: If you ain’t Cassanova, don’t ever try to be. Develop your own style. It’s much more attractive.

In investing, people try to copy the styles of the best investors out there. They buy the same stocks as the people that are known to have earned millions and sometimes billions in the stock market. The problem is this often doesn’t work for the average Dick and Jane because the experts that they copy have so much money that they make tons of money if stock price goes up just a few pennies. Not so for the average Dick and Jane.

It’s never that easy just to copy other people’s success. The same applies if you try to copy someone else that is popular with the opposite sex. Most times, when you try to copy someone’s style, it means your not using what you’re naturally good at. If you were, you wouldn’t have to copy someone else. So just be yourself and don’t try hard to copy a popular boy’s or girl’s style. Because nobody likes a poser or a fake.

Rule Four: Dig below the surface and you’ll discover what’s real.

Just like with boys and girls, in investing, all that glitters is not gold. In deciding what stocks to buy, you don’t want to invest in a rapidly rising “hot”stock before really doing your homework. If you do, the chances are that you will get burned. The price of many “hot” stocks fall just as quickly as they rise unless there is substance backing that hot streak.

Girls and guys are the same. You want to see if the “hot” guys and girls have anything more than just the genetics that their parents gave them. Is there anything beyond that beautiful face or body that gives them substance?. If you find out they have strong character, loyalty, and honor, then you’ve dug enough and you’ve got a winner. But if you dig and find nothing, then keep looking for something that’s real.

Rule Five: Sometimes you gotta find a way to discover what nobody else knows to get ahead.

The way to make money in investing is to find out about companies doing stuff that is really cool before anyone knows about it. If you had found out that Apple was coming out with the ipod several months before they started selling them and bought their stock, you could have made a lot of money.

Likewise, in dating, try to make these same types of discoveries. Discover what a girl or guy really likes before he or she tells you, and do something special for him or her based upon what you discover. If you do, you’ll definitely have one up on your competition.

Learn more about stock investing tips in Stock Investment Made Easy

Stock Market Investments Or Gambling? What Is The Difference?

The art of speculating in one form or another has been around forever.

When it comes to speculating, there are always three things that you can be sure of – there will be always people willing to speculate, there will always be people who will love to play the game with the first group. Lastly history can be counted on to repeat itself. Sure the object of speculation may change, the rules may change and the technology may change. But in the end it is always the same.

However what has happened before is 100 %sure to happen again. You can count on it. Everyone thinks always that they are so original when it always the same story again and again. Whether it is tulip bulbs, precious metals, mutual funds, lottery tickets or penny stocks human nature is human nature. Ignorance, greed, fear and hope determine how people react and thus how prices move and markets behave. People have speculated on everything at one time or another.

For the last hindered years and certainly into the foreseeable future speculating on stock prices offers liquidity combined with legitimacy and purpose. Stock speculation, trading and investing have become an essential and vital parts of both our economy and our lives.

Trading is just another word for speculating and investing is nothing more than speculating, except that it supposedly encompasses a longer time horizon and for some odd reason implies less risk. Speculators speculate, trader’s trade and investors invest to make money. Traders buy stock or any other object of speculation because they anticipate a price appreciation.

Speculation and gambling are similar, with a few important distinctions. One difference is the perception, sometimes true, that successful speculators profit due to their skill or an unseen advantage, while gamblers prosper due to chance or luck. Remember though that it may not happen to you but in the end given enough time or chances the odds will always prevail. The casinos in Atlantic City and Las Vegas were not built with winner’s money.

Another distinction is that gambling in most forms has been illegal (at least until government got involved and changed the rules in their favor) while speculation plays an essential role in our markets and thus our economy. These important distinctions make speculating which indeed is what our investment industry purveys as an accepted occupation – indeed one with one prestige and gamblers not being accepted in the same light. Whether a gambler, a trader or a speculator, in all cases the attraction is the same – the chance to make a lot of money in a hurry. It is the immediate gratification of the win that makes these games irresistible - an opiate of sorts.

Indeed problem gamblers have been compared to alcoholics in needing that rush which gives them such pleasure and serves amazingly to release endorphins to relax their troubled minds.

On top of that the unpredictability of the wins serves to even reinforce this addictive behavior. Not far off of the methods of B.F. Skinner and the rats of operant conditioning fame. Indeed some people will tell you that “it will almost always end with crying!”

Fundamental Investment $2

Keyword #2: Niche Product
Staffs' creativity & competency make good companies stay ahead of competitor with it's niche in unbeatable value-added products. In the same time, excellent customer service only further boost performance.

-Monetized idea is OK but old-school is better
Malaysia no longer able to depend on manufacturing industry as what it used to be. Lower manufacturing cost esp. from China & India made no benefits to us but to gain knowledge & skill to extend another step of it's value-chain industry. Successfully companies change to meet demand but silly companies change to meet supply. Therefore, it's vital to identify companies that can drive changes to their advantage rather than resist.

In the excitement of ever-changing environment we are living in, fundamentalist normally chose the bored one. Top of the list are consumer-based industries which least affected by any abrupt changes in the market. Companies like Gillette, CoCa-CoLa & AMEX has continuous demand regardless of what ones' financial status will be as it deemed as 'necessary' nowadays. It is proven throughout the time & that is why they were favorite to Buffet.

-Does Bursa has it?
There are plenty of listed companies under consumerism column. Be noted that, some are not really consumer-based industry. Personal view, consumer-based can be anything regardless of industries as long as it customers are mass population (or bulk of it's earnings derived from retail customer). PPB Group is a great but PETRONAS Dagangan is not bad too.

Lesson: Working in boring industry is boring, but too much changes cause depression.

Petroleum Engineers ??

In oil & gas industry, PE is general nick-name to Petroleum Engineer. But in Stock, P/E or PER referred to Price-Earning Ratio. It is just a matter of Price of the underlaying shares divided by it's earning-per-share (EPS). E.g. If Maybank priced at RM12.50 with lastest reported earning of RM0.75 per share, then it's P/E will be 16.7.

Basically, investors use P/E to justify if the stock is cheap. However, bare in mind that P/E itself is useless. Common practices is comparing P/E within the same industry. As a simple example, for banking industry, compare Maybank's, Public Bank's & Bank Islam's P/E. Lower P/E means cheaper in value.

Another 'analyst' way is comparing the stock' P/E within the same industry, with almost similar business model but to other region. E.g. comparing Air Asia with Virgin Air. Conclusion, price itself doesn't indicate it's value of cheap/expensive.

Fundamental Investment $1

Warren Buffet known as one of the most successful stock investor. His believe in 'Fundamental Investment' made him the richest man in the world after Bill Gates. Hold excellent stocks for ever might not working for some, but not to him. At least, his success story able to live up those who believe in buy-&-hold strategy. In fact, 'value investing' guru back then; Benjamin Graham, suddenly became so famous. So, how to succeed in this type of investment philosophy? How to make money without selling the stock? Last but not least, does it really work with Bursa Malaysia?

Keyword #1: Invest In business
As the name says for itself, one have to select which business to be in & finalized the chosen company. Identifying a fine industry might be difficult, but to discover a 'profitable germ' is more than tricky.

-Brain is #1 asset
Before proceed to record profit, one should consider effective management 1st. While property market is all about location, stock is a matter of the company's management. Let alone proven track record for analysis, one might not able to chart it's future undertakings.

The other tricky question will be, how can we (retail investor) evaluate it's management effectiveness & efficiencies? Well...one of the way will be reading clippings as much as possible on the company's news & profile. Interpret as much as possible on how the management deal with challenges, solve problems & moves forward. Silly companies normally give billions if not millions of detailed reason why they failed to meet expectations, but superb 'profitable germ' will only plan to execute solutions.

E.g. while average property-based companies keep on blaming the shortage of foreign workers available & increase in construction material cost, superb one will only identify new business opportunity with higher profit margin that able to mitigate the increase of cost & manpower shortage.

The other way of analyzing company's management is simply by looking it's working employee. While first-class leaders set world-class visions, effective management will make it happen; which success be measured by pool of staffs of energetic & competent.

E.g. if you are customers to several banks in Malaysia, you can easily noticed how one banks do than another. Excellent banks don't let his customer frustrated from long Q, made application easy & continuously enjoy entertaining the most irritating customer (ade ke bank M'sia camnih???...HaHaHa....c4urself!!). Once it's staff act as an owner, they enjoy with what they are doing & able to perform.

Lesson: Competent workforce easily available in profitable companies for their better salary

Trading ASTROMAX

I consider ASTRO as a safe bet. Fundamentally, it is in cash-rich position, strong management, monopoly factor & the most important thing is it has lot growth opportunity. I'd been trading it for the past three months with 2.9% return for each trade. Sure the figure not catchy enough, but successfully traded three times made it annualized return of 34.8% (ideal case). In fact, I am still doing it now!!! As a beginner, I simply chose the strong fundamental companies with moderate trading margin. My objective is simple, just to beat what other unit trusts / mutual funds able to deliver which normally fall within range 8%-15%. This acknowledge my ability to trade..HaHaHa..... Me..... without finance/accounting/economics background is at par or better compared to these professional fund managers... Nothing than made me feel good.

However, bare in mind that ASTRO didn't come without risk; it operating in high capex industry & problematic JV with the neighborhood country. Perhaps, that is the reason y ASTRO fall flat for the whole 2006. Despite the problem, I love trading ASTRO. Which stock has no risk at all anyway???

My Exposure

15yrs ago I was an ordinary child who wanted almost everything; remote car, transformer, lego & last but not least my doraemon comics (never missed collection since vol 01!!!) That time I only own toys bought from pasar malam (night market) which the most cost RM3.20. Looking at other kids toys, of course I want more! esp d one that been promoted in TV, wic only made available in shopping complex not pasar malam (recalled, the most luxurious shopping mall visited was WARTA in Selayang). I cannot help myself than cried all the way from night market or shopping mall to home & to room when my father didn't bought toys that I wanted. I refused to eat for days as a sign of my frustation....haha....

One evening, my father ask me to learn about stock (imagine, only 10 that time) but he simply put it as 'avenue to make money'. He made an agreement to buy anything that I want, provided I make money from stock. As a naughty silly child, I just accept. I thought it was as easy as 'buy & sell', but since I had to 'borrow' my father's money to get started, I had to justify wic company I proposed to buy. Damn tough to get through him wic then I became bored & no more interested.

As we always had vacation during school holidays, I cannot forget when he said 'jalan2 kali ni sponsored by company "X"' ('this trip is sponsored by company "X"). I really thought that time company X give money to my father for us to spend during holidays.... nice hotel, full-tank gas, delicious food, joyful activities etc... My thinking was, if there exist such a generous company like that, y i cannot get what i want (super remote control car) last time. Then only he explained the money came from stock...Hmmm.... my interest in stock start to blossom.....

While looking for job upon graduation, I took that free time opportunity to learn more about stocks. I spent hundreds of ringgit for book regarding stocks after searching no less than 49 bookstore in KL. From finance to accounting, investment style & philosophy as well as it's key behavior & attitude, i studied them all within six-months. I didn't physically attend any classes or seminar cos NO MONEY!!!! After completing all the books, I merely discuss & debate with my fathers from global economics to personal accounting (P/S: he is Malaysian Chartered Accountant). For me, he is truly a coach. After going two bulls & bears cycle in Malaysia throughout his venture into stocks, more or less I have better understanding this new "Unknown Market".

Only after another six-months of digestion of all sort of info, I began my first venture into stocks. As what people said, experience is the best teacher. Only after my purchase, I realized it is very difficult to make theory into practice in stocks, esp for beginners. Whole lots of different environment I were breathing in. Once stocks bought, emotional start to came in, forget all of the game plan. Only then my learning curve start to accelerate at tremendously. To novice investor like me, do not worry & stay calm, that is just a trick & cheat of the game.

STAY TUNE.....