Teaching Our Kids About Money
Rich parents will more likely have rich kids. Education from our kids always starts from home. They learn from our way of living, how we are doing in everyday life. They are very observant to adults, grasping little by little , day by day . One day , I saw my 3 years old kid facing the mirror holding a disposable razor with plastic handle trying to shave his mustache. He was very curious, no doubt in my mind he saw me doing the shaving of my mustache. When I bought a pocket organizer and phone book, he has to have one too. The learning never stops and there is so much to learn. We need to encourage our kids to read more books as many as they can. My eight years old and ten years old kids already knows how to valuate stocks if it is cheaper or expensive to buy based on P/E ratio. They even learned technical analysis using the 50 days moving average and 200 days moving average. The can even tell if the stocks are overbought or oversold using the slow and fast stochastic. As eight and ten years old kid, they learned so much and enjoyed it thru our interfamily tournament every month. The first month we started buying stocks based on the stocks they know and heard about. The both memorized already all the 30 DOW Jones components and 20- 50 NASDAQ stocks. The next few months of our tournament. We are buying stocks screened with their fundamentals. As the economy keeps on deteriorating, We decided to stay on the old defensive stocks which both of them are gaining every end of the month. The incorporate one very volatile stocks like RFMD, FLEX and even CMGI. My younger once are very aggressive. Since, he been watching CMGI that it keeps on falling hard and he had an idea that this stocks will jump so high. He decided to buy this stocks after 7 days of falling. I advice him not to buy the stocks because it is very dangerous stocks, in real money you will lose a lot. He just replied, I know Pa. So he did what he want, The next day CMGI jumped 38%, and he was so happy because he was ahead of the game. Now I did advice him this a is already a big jumped, most of the stocks will pullback. You might consider selling the stocks.. Well, I still want to hold just for one day and I am going to sell if it jumped one more, he replied. The next day, CMGI rose another 39% and then he sold it. The third day after he bought the CMGI, it fell 17% AND then another 8% day by day. He was laughing he did gain 77% in two days. He sold his CMGI and bought MCD and gain l;ittle by little. Then he tried another speculation MFNX a $3 stocks which I already told him that is not reliable stocks. He lost 5% in one day and decided to protect his losses by selling in one day and bought WMT as part of his defensive stocks. On the seventh month of our tournament, We are choosing stocks based on fundamental analysis, technical analysis heavily weighed on defensive sector like BA (Boeing) , Citigroup, and THC in the healthcare sector for the reason that I Explained to them the economy is still slowing down and there is know visibility seen yet. My two kids did finished reading two stock market books at the age of 8 and 10.
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