Someone asked me recently “how did you first learn about the stock market?” I first noted that I am not particularly astute when it comes to stocks (I’m an index fund guy), but the basic operation of public corporations and the stock market is something that I first learned about when I was a kid.
My Dad would talk about the stock market and had his broker buy 2 shares of General Motors stock at my recommendation. I liked cars and was excited about the new Chevy Camaro and Pontiac Firebird they had coming out. He thought it would be fun to buy the shares and track them. It was 1982 and the shares went for about $38 a piece.
When the shares were registered I was on the shareholders mailing list and I got a glossy annual report in the mail each year. I can remember bringing it to school and analyzing it during my study hall time. I was interested in more than just the new cars. I studied the income statement, the balance sheet, and read about the CEO and Board of Directors.
We sold the shares a few years later and remember it was for much more than we had originally paid. It looks GM doubled by the time I was in college, reaching $78 in 1985. That’s an amazing 27% annual return over 3 years. It was a good thing we weren’t long term investors, because that’s about as high as the stock ever went. (They went bankrupt in 2010)
Similarly, a few years ago, I helped my son buy a stock of his choosing: Qualcomm. It was right before they got in trouble with Chinese and EU regulators for anti-trust. We it bought for $78, but they quickly sunk to as low as $45. They looked like they might get out of their funk earlier this year (getting to $90), but now a US Federal Court has ruled they are a monopoly. The stock has now dropped to $67.
We’ve had the QCOM stock for about 5 years so far. If anything, he has learned about why not to invest in single companies and put too many eggs in one corporate basket. A couple years ago, he opened his own brokerage account and put his investment money into a simple, low-cost, index fund. Probably about all he needs to know!
How did you first invest in stocks?