Compounding Snowballs

My fifth grade teacher (I will call her Ms. R) recently invited me back to my former middle school to talk to her current class. I talked about what drives me, what it takes to be a good student, and somethings to expect in the years to come. I hope you enjoy a variation of my talk. Before I share what I talked about, I want to disclose that some of what is written below can be found on previous blog posts and ValueWalk . "You don't have to be great to start, but you have to start to be great." When my Ms. R would tell us this, it meant nothing to me as a ten year old. Looking back on it now, the only thing I can think about is how perfectly this describes my story. I am currently in ninth grade. To understand my story, we have to first understand how I got started in two businesses: the jewelry business and the camp business. When I was in 4th grade, I decided to start a business. I don’t believe it had a name, but I was extremely proud of it. I made earri...

“Quis furor, ô cives” – Lucan              “What madness was this, my countrymen?” This quotation was in Lucan’s civil war epic but is equally applicable to the craze caused by a financial bubble. Looking back on times where investor’s decisions making ability was impaired by a forming bubble, there is no other word that comes to mind than madness . This so-called mania is a product of investor’s susceptibility to decision making affected by biases. Investors revert back to simple beliefs or biases like correlation is causation, or it is easier to attribute success to skill, although luck was the only thing that affected their success. These biases send investors into crazes of overconfidence and constant self-attribution that are all traits investors attempt not to possess. The infatuation that comes over an investor throughout the time of a bubble is similar to that of the Botrytis Blight disease that inhabits the beloved Dutch...

Many grandparents are quick to send a check to their grandchildren as a present in hopes that they will use it responsibly, but recently I heard from two grandparents (and Early Bird readers) Barbara and Bob Baute and they have a next level idea. They have a combined total of nine grandchildren, with ages ranging from 12 to 20 years old. Their idea was plain and simple, give their grandchildren directions to follow (my book, Early Bird: The Power of Investing Young ), money to invest, and a contract to sign. They call it “The Investment Challenge”. On Christmas each grandchild received an envelope containing a contract for them to sign and a copy of Early Bird. The contract stated that they had to read Early Bird, and use the ideas in there to pick a stock to invest in. As long as they followed up and ran the analysis on the stocks, the grandparents would give them a certain amount of money every year for five years for investing purposes only. The deal was sealed when the grand...