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Every two weeks, I share my writing about investing, career transitions, parenting, and other topics that engage me. I'm just trying to figure stuff out.

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Big Trade

Last Thursday, my phone alerted me that a buy order had been executed in my Fidelity account, which was odd for a few reasons.

For starters, I was sitting in a meeting and hadn’t placed any trades. In fact, I hadn’t traded anything in a while. At the time, I honestly couldn’t remember if I had an active brokerage account at Fidelity.

Plus, it was for a fractional share of a company. When I do trade, I’m certainly not moving big blocks, but I tend to trade more than one share.

In full disclosure, I didn’t even know it was possible to trade fractional shares, but apparently, you can.

After a few minutes of poking around my phone, I figured out what happened. James, my 14-year-old son, had made his first big trade. He took a swing at Nvidia.

You see, last year, we opened a teen brokerage account at Fidelity. The main purpose was to access the debit card and a yield on savings roughly 10x what banks offered. As a side benefit, the process presented the perfect opportunity to wade into fundamental personal finance topics like savings, interest, and the power of compounding.

James was thrilled to learn he would earn nearly 5% on his growing four-figure cash hoard (he’s a serious saver). He couldn’t understand why anyone would take more risk trying to earn more than that. Still, he reluctantly agreed to activate the stock trading feature and revisit that asset class down the road.

Apparently, that time arrived this week when a senior on James’s robotics team revealed how much he’d made on his Nvidia position this year.

That’s all it took. With that, James decided to test that stock trading feature.

Isn’t that how it usually starts? FOMO kicks in early.

Later that day, when we were in the car together, James shared his rationale. It was just an experiment. He was curious and wanted to learn by doing. To his credit, it was a tiny trade - less than $20 of his own money. He knew he could lose it all, so he sized his bet appropriately and tinkered.

I loved that explanation and told him as much.

Then came the best part.

He started asking some excellent questions about stock markets and investing. I was surprised to hear how much he already knew. It turns out that a Minecraft game he played taught him the foundations of market structure. He understood how bids and offers worked. Who knew?

Our conversation covered some definitions (market cap), trading strategy (limits), and even basic valuation. Sure, I enjoyed passing along some of what I’d learned in the trenches. But really, I was grateful he introduced a new context for us to build a connection.

As of today (1/28/24), Nvidia is a $1.5 trillion company. It’s up 218% over the past twelve months. It’s one of the most divisive stocks on the planet. If you’re a professional investor measured against a large-cap benchmark, you probably love Nvidia or hate it.

I don’t own it, but of course, I wish I had.

Fortunately, I have the luxury of being able to avoid obsessing about it or the other handful of stocks leading the market.

That said, I’m grateful that James chose to pull the trigger, but not for the reason you think.

Whether James’s interest in the stock market grows or evaporates in the coming days, it doesn’t much matter to me. I’ve tried to give him the space to develop independent interests instead of encouraging him to mimic mine.

I’m grateful for his trade because it presented a fresh avenue for conversation. But more than that, it also reminded me to rekindle that same independent curiosity, to experiment and learn by doing. Our kids teach us, constantly.

For the record, he made 50 cents on his two-day trade. The kid is batting .1000.

Our next topic of conversation might be short-term capital gains.

Other Stuff

Six Takeaways from America's Rental Housing 2024 A quick summary of the full report from the Joint Center for Housing of Harvard University (JCHS). Their six key takes are: 1) rental markets are softening, 2) affordability is worse than ever, 3) housing instability is rising, 4) rental assistance falls far short of the need, and 5) the rental stock has significant investment needs, and 6) high interest rates are dampening rental market activity. While most readers will be familiar with many of these ongoing issues, the trend in the data appears to be getting worse. According to the report, more than 50% of Americans now spend more than 30% of their income on housing, the generally accepted metric of being "cost-burdened." That's 22 million Americans, a new record.

​Read the article (5 mins)

Peter Lynch: The Wisdom of Walking Away This short post describes investing legend Peter Lynch's decision to retire from the Magellan Fund in the early 90s. I never crossed paths with Lynch, nor had I heard this side of the story. But I had heard about some of his amazing charitable work in the second act of his career.

​Read the post (4 mins)

Perplexity This tool (app and web) is amazing when you have a specific question. Perplexity is an internet search optimized for the AI age. More than 10 million users have already discovered it. I heard about it last week when Nathan Labenz raved on Dan Shipper's "How Do You Use Chat-GPT" Podcast. You get answers to your questions, plus source links and suggested follow-up questions. The free version has been amazingly useful. Of course, you can also upgrade to a more powerful paid tier.

​Check out the web version here (not an affiliate link)

And a Farewell Photo...