Earlier this year, The Motley Fool hosted three middle school students from St. Albans to attend our "Student to Investing Whiz in a Day" program to gain investing and finance skills. "Student to Investing Whiz in a Day" is part of The Motley Fool's commitment both to local education and to charity (this day of educational fun was raffled off as part of a fundraiser). Watch the video below to learn about this experience and what the students took away.
Gaby Lapera: Hello everyone, welcome to "MBA in a Day" at The Motley Fool, a special program we're running with a local school. We're taping today on Friday, Feb. 17th. We're joined by a few young men from from St. Albans. Why don't you guys introduce yourself? Why don't we start with our blue mic?
Aram Akhavan: I'm Aram Akhavan. I'm in 8th grade at St. Albans.
Ben Shorb: I'm Ben Shorb, I'm also in 8th grade at St. Albans.
Grayson Grigorian: I'm Grayson Grigorian, also in 8th grade at St. Albans.
Lapera: Thank you guys for joining us, making me feel even older than the last taping with St. Albans boys. [laughs] It's really nice to have you guys here. Who have you talked to today? Who's been most impressive to you? Don't worry, we'll tell them.
Akhavan: I think David Gardner was really interesting, when he showed us the numbers on how, even though he had lost up to 90% or 80% on some stocks, he had a lot of loss, but there was a lot of profit as well. So, it's like, you can't really expect these 10 stocks to all do really well. You're going to have some ups and some downs. But in the end, the profit is going to outweigh the loss.
Lapera: Yeah, definitely, as long as you get into the gain.
Shorb: Yeah, I agree with Aram that David Gardner was really influential, because he knew a lot about what he was talking about. He's obviously been in the business for a long time. He really emphasized the point that you really want to work on investing in the long-term over short-term, and expect to go through some drops and falls. But if you stick with your stocks, then you can hope for eventual profit.
Grigorian: Yeah, I think David Gardner was very helpful, with how he showed us how his most profitable investment outweighed pretty much all of his negative investments, let alone his other close-to-as-profitable investments.
Lapera: Definitely. He's definitely a really interesting guy, with a really interesting investing history. I know that you guys are here to talk about Apple. I see an iPhone on the table, even, so clearly there's some personal buy-in as well as academic buy-in. Let's start with softball, what does Apple do?
Grigorian: They make electronic products, from computers to iPads, which are their tablets, and iPhones, their phone, and iPods, which are an iPhone without calling capabilities.
Lapera: Yeah, absolutely. That's really funny, I remember when iPods were basically the only thing they made besides computers. I know they're also experimenting with some new technology like with driverless cars and stuff like that. A really interesting company. Why did you guys pick Apple? Any one of you.
Shorb: Obviously, Apple is an insanely popular company, especially around here cause almost everyone has an iPhone, there's probably only one or two people in our school who don't have an iPhone, if they have a phone at all. Especially after the recent news that Warren Buffett increased his stocks in Apple, especially after he talks so much about being afraid of technology because he doesn't know a lot about it, and seeing that such a powerful investor is now investing in Apple shows promise for it. Besides that, Apple has such a strong following of customers that they really latch onto the customers. Once you buy one iPhone, you're pretty much hooked, and there's huge hype for the iPhone 8 coming out, and news of huge new designs that are eventually going to become very popular.
Lapera: Yeah, absolutely. This is definitely a case of invest in what you know, then.
Akhavan: One of the things with Apple that's really huge is how they have such a monopoly over most of the things that they make. Like with their phones, they have the new competitor, the Pixel, but Samsung suffered a big setback with the Note 7 --
Lapera: The Galaxy Note 7.
Akhavan: Yeah, with the batteries exploding. Samsung dropped behind, and that increased the lead for Apple. And now that they're venturing into more technologies, like with their smart watches and, as you said, driverless cars, they're kind of just extending their monopoly over more and more technologies.
Grigorian: Yeah, and Apple's consumer base is solidified enough that a setback like Samsung had probably wouldn't hurt them enough to take them too far down. They're also probably not a company that would make a mistake like that.
Lapera: Yeah. Fun fact, I was actually in China when the whole Galaxy Note 7 thing went down. I was with my best friend, who works for Apple. And all of them were cackling with glee about Samsung and their exploding phones. They were like, "We're going to sell so many phones!" So, you guys have told me a lot of really positive things about Apple. Do you have any concerns about the company?
Shorb: I definitely think Samsung is still a huge competitor to Apple. Most of their phones, especially the Google Pixel -- which, obviously, also Google is a big competitor -- they have the same sort of functionality as an iPhone. I feel like there are only a couple things that really limit them, meaning that the Apple community, the iMessage feature of the iPhone, limits Samsung users from contacting people with iPhones, which pretty much separates the consumers into iPhone versus everything else.
Lapera: Yeah. Listeners, in case you don't know, iPhones allow you to text other users who have iPhones using the internet, and you'll see the text pop up in blue if it's another iPhone user and green if they're using SMS text, which you would have to use with other non-Apple phones.
Shorb: And besides that, iPhones, I think, are generally more expensive. And for most of the middle class, they would prefer something cheaper, and Samsung is usually cheaper, and besides Samsung, there are many other options that could be from $300 instead of a $900 iPhone.
Lapera: Absolutely. That's a huge concern internationally, especially in developing countries were cheap and functional is the name of the game. Anyone else have any potential issues with Apple?
Akhavan: No, he pretty much stole the show.
Lapera: So, it's really important, one of the most important things to do when you are building a case for a stock is to write down all the reasons you think it's great, but also write a bear case. Say, "This is the reason I think it might fail." That way you're sure that you know the company is a good one to invest in, because you've educated yourself on all the potential pitfalls already. Do you guys have anything else you want to say about Apple?
Akhavan: I think the stock has another benefit to it, and that's the affordability of it. I think it's $130 per share?
Akhavan: Yeah. That's better for someone in the middle class, or some children whose parents don't want them to spend a lot of money on ...
Lapera: On stock.
Lapera: That's totally fair. Do you guys have jobs yet?
Lapera: No? Not yet? You guys are going to go into 9th grade next year, so, I think, according to child labor laws, you should be able to start working next year. Well, I strongly encourage you to find a job. I know I started working when I was 14, and I opened my first IRA at 18. That's a great time to start investing, just like the other guys we talked to earlier, because that way, power of compounding interest.
Grigorian: I think we've learned a lot today about how, in investing, time is the most important factor, and the earlier you start, the better off you're going to be in the end. And starting at the age we are at now is a huge advantage compared to most people, who end up wanting to start around 50 and don't have the time that we do.
Lapera: Absolutely. And you guys are getting educated early, which is the other most important part. There's a lot of people -- trust me, you get to be my age, and there's a lot of people who are like, "I have no idea how my 401K works, I don't even know what stocks exist." So, it's really good and cool to see you guys out here learning today. Thank you guys so much for joining us.
Grigorian: Thank you.
Lapera: Rick, are you convinced? Would you buy Apple?
Rick Engdahl: Already own it.
Lapera: Well, Rick is convinced already, although I'm sure you guys helped convince him even more. As usual, people on the program may have interests in the stocks they talk about, and the Motley Fool may have recommendations for or against, so don't buy or sell stocks based solely on what you hear. Contact us at Fool School at fool.com, or @TMFFoolSchool on Twitter if you have any questions. Thank you, again, to Rick, today's awesome producer, and thank you guys for joining us.