DAN'S PAPERS, April 11, 2008 Page 31 www.danshamptons.com
Twentysomething…By David Lion Rattiner The Stock Market Because I studied finance in college I feel obligated to invest in the stock market with the little savings I have because according to finance people, that is what you are supposed to do. It also reminds me of college, and makes me feel like a genius when I make money. On the other hand, when I lose money, I feel like a complete idiot. What I love about online trading is the email correspondence I have with others, and the stock market being the base of our friendship. I enjoy fascinating conversations about the world because money markets and politics go hand in hand. My friend Janine’s mom, who trades online, is always great to bounce ideas off of when it comes to the stock market. Then there is my high school friend Alec Overby, who is an analyst in the city. There’s also my friend Jim from college, who now attends Brown, and recently just bought stock for the first time in his life. After Visa announced the most successful IPO in human history, the e-mails started to pour in. The upside is that MasterCard went up four-fold since its IPO and the brand is now a monster with an amazing business strategy. The downside is that people who can’t pay their mortgages might not be able to pay their Visa bills either. They also have a negative earnings per share. It is everywhere that you want to be, however, so we all decided to give it a thumbs up and we bought shares, a few days after the IPO of course, just to see how things would unfold. Well, we kind of missed the boat. Visa shot up from 40 bucks a share to 60 bucks a share — the price I bought it at — within the first couple of days, and has been hovering around there since. But I still feel confident. We will just have to wait and see. What is amazing about the stock market is that once you make a bit of money in it, all you really want to do is protect your profit, so you naturally get less risky with investments as you grow older. I think this emotional experience is exactly why older people tend to get more involved in low-risk investments. One of the biggest issues I have with the stock market is when people ask me for a stock tip. I always give them my opinion, but in the back of my mind, I pray to God that I’m right. What’s frustrating for me is that I usually am right with my advice, but I have a hard time taking my own advice and I usually miss out. When you are your own financial advisor, all you can do is argue with yourself, and that’s no fun. I actually know people who hire stockbrokers because they want somebody to yell when they start to lose money. They tried the online thing, and hate being mad at themselves. We all do strange things sometimes. It has occurred to me just now as I write that there might be some pretty serious financial people reading this. After all, this is the East
End (I refuse to say the Hamptons). So feel free to send me e-mails, and we’ll bond by talking about bonds, I mean stocks. You know what I mean. I could use the help. My old buddies from college with whom I studied finance are all doing pretty well in New York City. They work as analysts or junior analysts and spend all day recommending investments based on mathematics and economic indicators. What has always bothered me about stock market mathematics is
that there is always a number that you plug into the equation that is completely made up. It basically comes from a guy who says, “I think it should be this,” and then it gets worked into the equation and usually that number is the number that ultimately influences the decision on whether or not you should buy or sell. Either way, trading stocks online is one heck of a way to spend the day. Not only does it make you money sometimes, it teaches you emotional stability. I remember the first time I lost money I was ready to jump out the window. Why? I was a sophomore in college and lost $200. Hey, that was a lot of beer way back then.
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