Golf and Investing
By Peter Edelstein ([email protected])
November 6, 2000
I have always tried to teach my two teenage sons about the world of investing and the importance of saving.
My younger son (age 14) has developed a passion for the game of golf and its associated equipment. Via the Internet he has developed an ability to buy low and sell high. He has become a classic value investor as he spots golf clubs selling for less than he believes others are willing to pay.
His first transaction was the purchase of a used club for $40 that he found at a golf store. He thought this was a great deal because he saw the same club selling for between $100 and $125 on eBay.com. I said, "You're the golf expert and it's your money invested." So he bought the club for $40 and sold it at auction for $105, pocketing a net profit of $65.
The boy's next transaction started when he bought another club he found in an online classified for $85. He found someone who wanted to trade a putter for his club plus $50. My son negotiated the trade of his club plus $25 for the putter. Back on the Internet, he found a buyer and negotiated the sale of the putter for $325.
For his $110 investment ($85 that he paid for the club + $25 in cash to complete the trade) he grossed $325 for a net profit of $215. Not bad for a teenage high school golfer with a taste for expensive golf clubs.
My son's third deal was one in which he found a buyer and a seller for a club he saw online. He negotiated the purchase of the club for $45 while he negotiated the sale of the club for $115. He netted $70 on this transaction. So he essentially brokered a deal in which he lined up his buyer at the same time he negotiated the purchase of the club.
I am very proud of my son's transactions. He has learned the laws of supply and demand. He has learned how to negotiate and fairly represent his product. He also learned how to communicate with his customers while filling unmet needs.
My son now talks about using his profits on each transaction to find even bigger deals with greater profit potential. He has learned the value of reinvesting his profits in his business as opposed to issuing dividends (to himself) and spending his profits at the mall.
It's exciting to witness my son's interest in business and the buying and selling of a product he enjoys. I'm confident he'll grow into a responsible adult, and of course, he will continue to be a really great son. Plus, his golf game is getting better all the time! His goal is to play in college. At the rate he is going, maybe he'll be able to negotiate for his the cost of his college education, too!