Very interesting read about a 17 year old guy from Canada who started investing proper even earlier than me.. really makes me feel old ;)
I agree with Brandon on the following key points which makes a good young investor:
- Good in arithmetic/maths/counting/numeracy (he's just too humble)
- Research, research and lots of research, which IS time-consuming but often rewarding
- Willingness and ability to take calculated risks
- Passion for investing
- Focus more on growth stocks than dividend plays
- Passion (again!), the willingness to experiment and a go-getter attitude (rather than leaving the investing to funds)
- Self awareness
- Willing to learn from mistakes and not be in a state of denial
"...Brandon is top of his maths class but he doesn’t think this gives him the edge when it comes to stock picking. What enables him to pick winners, he said, is the amount of research he carries out into his stocks, typically between one and six hours a day.
His age means he can afford to take more risk than most investors. “You can start with £1,000 when you’re 18 and you could build up a lot over time,” he said. “If you make even 10pc a year you could have a huge amount by the time you’re in your 30s.”
When Brandon gets home from school his mind is instantly drawn to investing. He said: “When I get in I don’t feel like doing my homework – especially if it’s geography. I spend most of my time investing. I love it. The feeling when your stocks are doing well is amazing.”
He models his own investing on the work of Peter Lynch, the American fund manager who ran the Fidelity Magellan fund and achieved the best 20-year average returns on record. Brandon’s everyday activities include trawling through company reports to assess their profits and assets.
He described himself as a “growth” investor and buys only small individual stocks, which he holds for a few months. But he added: “If I buy something I make sure I’m ready to hold it for a long time if it tanks. I want to invest in a company that’s going to do well in the long term – even if I’m only aiming to hold it for the short or medium term.”
The young stock-picker currently has his entire £49,000 portfolio in one share. He doesn’t want us to name it, but it has a market value of around £20m.
Companies he has held in the past include Disney, Ryder, an American trucking company, and media firm InterActiveCorp, He’s never owned a fund because he thinks the point of investing is to beat the market and he’d be less likely to do this with a fund.
Brandon said his biggest mistake had been feeling too scared to buy shares at the right time. He advised cautious investors to “learn until you’re not nervous any more” and said a lot of novices went wrong because they didn’t research properly.
“If you didn’t research a stock and its shares go down, it’s your fault. Learn from your mistakes,” he said. “A lot of people get scared out of stocks. A lot of them jump a bit and then go back up. My advice is do your homework and trust the numbers,” he says.
His track record is short, but he does appear to practise what he preaches. The day after he bought InterActiveCorp its shares plummeted by 12pc. That’s when he doubled his position. By the time the shares were back up at the original price he had made 6pc, and when he sold the shares two months later he had made 30pc.
"People also buy stocks because they are a great company. But there’s a difference between a good stock and a good company. For example, Netflix and Tesla were good stocks when I bought them, but they are overpriced now. Netflix has a price to earnings ratio of 84 which is really high,” he said.
When asked why most teenagers didn’t invest, he said young people just wanted to have fun. “But to me this is my fun.”
Brandon claimed to know several other children his age who also invested real money on the stock market, although he said they didn’t go around shouting about how much they were making. “If people ask, I’ll tell them, but my investing friends and I tend to keep it to ourselves. We like to discuss investing ideas with each other but we don’t really tell each other how much money we’ve got.”
Full article at this link: