Alexandria, VA (April 6, 1998) --
"Once you bring life into the world, you must protect it. We must protect it by changing the world."
-- Elie Wiesel
The Fool Port was stung for a 2.10% loss today, compared with a somewhat less sizable 1.42% drop in the Nasdaq and a barely imperceptible 0.12% dip for the S&P 500. (Good thing we don't take short-term, day-to-day movements too seriously, eh?)
Looking at some specific stocks, America Online (NYSE: AOL) dipped 2%, perhaps on news that its Instant Message(TM) and Buddy List(TM) technologies were now housed in the permanent collection of the Smithsonian Institute. (Fear not, Fools -- this doesn't mean that you'll have to travel to Washington to check whether your mom is online.) Shares of Amazon.com (Nasdaq: AMZN) also slumped today, falling nearly 5%. There wasn't any major reason evident for this... but might the stock simply be taking a breather after doubling in the space of five months? It's now up 132% for our humble Fool Port.
Some of you might remember that last week I penned a Fool Port report urging readers to join the revolutionary "Random Acts of Foolishness" movement. I received a few encouraging e-mails from readers. For the most part, either they were eager to sign up or they explained how they had already been engaging in campaigns of their own. Consider this note from a Fool named Everett (SEL22204@aol.com):
I own a campground and employ many summer high school students. I am amazed at their lack of knowledge concerning money, credit, stocks... Last summer I talked to one high school girl about the benefits of Dividend Reinvestment Plan (DRP) investing and we discussed several companies. She bought one share of Intel towards the end of the summer, after I showed her the benefits of compounding. After the other girls spent their money on things like stylish clothes, which quickly went out of style, the group opinion for this summer is that they all want to open DRP accounts. They like the idea of being able to buy a home when they turn 30 years old. Oh, and that one girl's parents... Now they want to start a DRP account, as well.
What a great note. Everett gave a little time and energy to others, explaining some important Foolish concepts like the power of compounding. And what's the end result? Already, one previously unFoolish person has taken her first modest step toward financial independence. On top of that, a bunch of others are looking on and planning to do the same themselves. This is very exciting just by itself, but consider the effect years down the road.
Everett's first convert will probably continue to buy more shares of Intel (among other stocks). If the shares do as well in the next ten years as they did in the last, her first $100 investment will be worth some $2,000. Instead of having an old sweater and pair of jeans in a corner of her closet, she'll have a growing little nest egg. It's also likely that having caught the investment bug, she will have continued saving and investing over the years. Let's run some numbers.
Imagine that she's 18 and invests $500 per year through age 22. From age 23 through 29, she invests $1,000 per year. From age 30 through age 50, she'll sock away $2,500 each year. By the time she's (a still young) 50, if her investments grow at the historical market rate of 11% per year, she'll have accumulated some $339,000. (The total of her initial investments: $37,500.) If she had begun using the Dow Dividend Approach at age 30 and earned, say, 17% per year from then on, she'd end up at 50 with more than $840,000. Wow.
A few generations later, it's likely that she'll be fondly remembered by her descendents as someone who turned the family onto investing and left a considerable sum to her children and grandchildren, themselves avid investors. Her friends from camp will probably have reached similar ends. And all this because one Fool named Everett did a good deed. Imagine how many lives we can change for the better if we all reach out to a few people we know.
Everett's story had another impact on me. I was originally going to write this Fool Portfolio report about Bavaria, odometers, horseradish and phonics, but have been inspired to write about kids, instead.
It's great that Everett reached out and helped some people. But it's even more powerful that he got the message through to kids. Young people have absolutely the most to gain from investing. We can admire the compounding clown all we want, but most of us will only see it dance for maybe four decades (still not bad, though). Kids can compound money perhaps close to twice as long. After all, who knows how long people will be living by the time today's youngsters reach their late years. $1,000 invested once and growing at 11% for 40 years will turn into an admirable $65,000. Let it sit there for another 20 years, though, and you end up with $524,000. Quite a difference. Imagine adding to the $1,000 over the years and you end up with even bigger piles of security.
We've often received mail asking if we have any materials for kids on investing. Until recently, the answer was "Sorry -- not yet." But no longer. We've recently launched a modest area targeted at teens: Young Fools: Teens & Investing. If you have any kids, or know any kids, or teach any kids, or are a kid, or plan to meet any kids, consider having them check it out. We plan to have more offerings for kids in the future, but this is our initial foray into the area.
In the Young Fools collection, we've included an introductory piece called Why Invest? that's meant to get kids' interest piqued. In addition, there are pieces on How to Grow a Million Dollars, What's Up with Banks?, Risk and Return, and Ways to Lose Your Money. We also explain the workings of stocks and describe alternative investments to stocks, such as bonds, bank accounts, CDs, and so on.
And in case you weren't already aware of this, we've also got a growing collection of articles aimed at helping parents talk to kids about money: The Family Fool.
I was going to close this report without any further promotional ado, but I just learned that our own TMFSpeedy, Mistress of FoolMart, is celebrating her birthday today. Now, I know that most of you don't know her, but I'll assure you that she's a stand-up Fool (who finds homes for kittens in her spare time). If you want to give her a thrill and were planning on perusing the online boutique that she built, consider making your purchase today. Nothing makes her go "woo-hoo!" more than a strong sales day.
Before I fall deeper into a promotional stupor, I'll close with some interesting quotations about children:
"All God's children are not beautiful. Most of God's children are, in fact, barely presentable."
-- Fran Lebowitz
"She discovered with great delight that one does not love one's children just because they are one's children but because of the friendship formed while raising them."
-- Gabriel Garcï¿½a Mï¿½rquez
"What the vast majority of American children needs is to stop being pampered, stop being indulged, stop being chauffeured, stop being catered to. In the final analysis it is not what you do for your children but what you have taught them to do for themselves that will make them successful human beings."
-- Ann Landers
"Nothing you do for children is ever wasted. They seem not to notice us, hovering, averting our eyes, and they seldom offer thanks, but what we do for them is never wasted."
-- Garrison Keillor
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Today's FoolWatch: all the latest in Fooldom.
Day Month Year History FOOL -2.10% 2.51% 15.07% 286.19% S&P: -0.12% 1.78% 15.56% 144.63% NASDAQ: -1.42% -0.36% 16.48% 153.98% Rec'd # Security In At Now Change 8/5/94 710 AmOnline 3.64 72.88 1904.02% 5/17/95 1960 Iomega Cor 1.28 6.81 432.06% 10/1/96 84 LucentTech 23.81 69.50 191.92% 9/9/97 290 Amazon.com 38.22 88.63 131.87% 8/12/96 130 AT&T 39.58 65.81 66.29% 1/8/98 115 S&P Depos. 95.91 111.69 16.45% 2/20/98 215 DuPont 59.83 67.69 13.13% 2/20/98 200 Exxon 64.09 68.44 6.78% 1/8/98 425 3Dfx 25.67 26.38 2.76% 2/20/98 270 Int'l Pape 47.69 49.00 2.74% 4/30/97 -1170*Trump* 8.47 8.88 -4.80% 6/26/97 325 Innovex 27.71 25.63 -7.52% 8/24/95 130 KLA-Tencor 44.71 37.50 -16.13% 8/13/96 250 3Com Corp. 46.86 33.31 -28.92% Rec'd # Security In At Value Change 8/5/94 710 AmOnline 2581.87 51741.25 $49159.38 9/9/97 290 Amazon.com 11084.24 25701.25 $14617.01 5/17/95 1960 Iomega Cor 2509.60 13352.50 $10842.90 10/1/96 84 LucentTech 1999.88 5838.00 $3838.12 8/12/96 130 AT&T 5145.11 8555.63 $3410.52 1/8/98 115 S&P Depos. 11029.25 12844.06 $1814.81 2/20/98 215 DuPont 12864.25 14552.81 $1688.56 2/20/98 200 Exxon 12818.00 13687.50 $869.50 2/20/98 270 Int'l Pape 12876.75 13230.00 $353.25 1/8/98 425 3Dfx 10908.63 11209.38 $300.75 4/30/97 -1170*Trump* -9908.50 -10383.75 -$475.25 6/26/97 325 Innovex 9005.62 8328.13 -$677.50 8/24/95 130 KLA-Tencor 5812.49 4875.00 -$937.49 8/13/96 250 3Com Corp. 11715.99 8328.13 -$3387.87 CASH $11233.54 TOTAL $193093.42