Three generations of Dan Mangani
Kindness: And Eat
Joseph Kennedy Sr. had his boy in shoe polish. I have my 13-year-old son – and my father.
About 92 years ago, Kennedy – the father of a US president and two other children who became senators – is said to have sold his substantial portfolio on the stock market after a boy cleaning his shoes gave him some advice. about actions.
The story goes that Kennedy thought this was a sell-off – everything.
He argued that when shoe-polishing boys announced actions as safe things, there was a lot of stupid money on the market, claiming prices that would certainly fall.
Kennedy’s move saved his fortune.
But others believed that advertising lost everything in the fall of Wall Street in the fall of 1929.
On Thursday, I thought I saw that boy in shoes standing in front of me waving a $ 10 bill.
My 13-year-old son was enthusiastically asking permission to buy a cryptocurrency – dogecoin – which, he shouted, would explode in price by the end of the night, quintupling or more his investment in hours.
“Elon Musk guarantees it!” said my son.
“What the?” that was my first question.
My second was, “Did you read that in WallStreetBets?” “”
He immediately confirmed that he was, unknown to me, reading the Reddit group r / WallStreetBets.
The same group last week sparked a crazy rise in GameStop stock prices, costing hedge funds nearly $ 30 billion in short-selling exemptions.
It also led to a flood of comments about stock market morality, speculation and short selling, as well as shocks by lawmakers across the political spectrum, from progressive representative Alexandria Ocasio-Cortez, DN.Y., to the Conservative senator. Ted Cruz, GOP Texas.
And some users of r / WallStreetBets also claimed the virtues of buying dogecoin, hoping to lead a similar wave of price increases.
I laughed at my son.
But he kept pushing me to let him buy some dogecoins. And he went on to mention Elon Musk.
I made him look at a chart of the history of cryptocurrency prices in 2013, which showed stomach declines that followed the bubbles in that investment sector.
“It’s only $ 10,” he insisted.
I pushed a book in his hand, “Blue Chip Kids”, a basic but excellent explanation of how markets and financial instruments work. The author of the book, David Bianchi, wrote it after he set out to teach his own 13-year-old son about money.
My son quickly put that book on the couch.
Then I showed him another book, “Extraordinary Popular Illusions and the Madness of the Crowds.”
Since its publication in 1841, Charles Mackay’s account of the Mississippi scheme, the South Sea bubble, and the Dutch tulip madness has been the gold standard for understanding why financial bubbles happen and how they invariably end very, very, very bad for investors when they arise. .
My son didn’t even pretend to read the summary on the back cover of the book.
I’m not surprised.
Children and adults – especially adults – are hard to argue when they are overwhelmed by the enthusiasm for the idea of a quick and easy financial return or some other mania.
I was a child – well, at the age of 20 – the last time I fell prey to this kind of enthusiasm. In the years that followed, we certainly lost the chance for big monetary gains. But we also avoided the crushing losses.
This is probably due to my father.
When I was a child, my father often cared about me and my sisters – and our mother – about money and investment.
He also told us how his own grandfather, who had been a wealthy veterinarian, lost a lot of money in the same 1929 accident that Joe Kennedy had managed to escape.
And today he repeated to me a mantra that resonates in my head: buy and hold mutual funds, do not buy or sell on the market, invest in vehicles with deferred taxes as much as you can and do not spend money on frivolous things.
My father was a police officer who came out disabled due to an injury after years of work. His compensation dropped to half his full-time salary when he was a police officer.
You would not believe how small this amount was and how it has never increased by a penny in more than three decades. However, he and my mother managed to send three children to private colleagues about what they did.
He did this by paying close attention to money and investment management, spending hours reading financial and tax publications.
My father’s focus on finance probably came from his own father’s example. My grandfather lived a modest life after his own father was hit in the fall of 1929. But my grandfather also managed to invest well and leave his son, my father, a decent amount of money to raise.
I haven’t heard for a long time, I haven’t even tried to listen to my father’s mantra about investing.
In the late 1980s, I made my first share purchase ever: at a local bank where I had opened my first savings account.
I spent $ 500 on 100 shares of that bank.
The bank, like apparently any other small lender in Connecticut, was dramatically expanding its real estate lending business and trying to establish itself as an attractive candidate for taking over what was expected to be a large-scale consolidation of banks in the region.
Insiders at those banks, their friends and people like me bought their shares in the hope – and expectation – that there will be a big payout when they are bought.
That didn’t happen.
Instead, in the months after I bought the stock, its price dropped lower and lower. Once I reached $ 1 per share, I saw enough and sold my shares for a loss of 80%.
Shortly afterwards, the bank entered the first major wave of banking failures in the country since the Great Depression.
I covered many of these failures as a young reporter. Since then, I have had a deeply skeptical eye when looking at any banker’s predictions.
My father told me years later that losing my shirt on that bench was the best thing that ever happened to me because it cured me of the idea that I had the talent to take stock.
My father told me years later that the best thing that ever happened to me was to lose my shirt on that bench, because it cured me of the idea that I had a talent for stockpiling.
Except for another small share acquisition in the 1920s, I did not buy shares in an individual company.
Instead, I followed my father’s advice and actually put my investments into autopilot: regular and consistent acquisitions of mutual fund shares – which I don’t sell – while maintaining ultra-low administration fees and maximizing the use of deferred tax vehicles, such as 401ks and IRAs.
And I never, ever, buy anything that is hyped.
When my father died, I spoke at his funeral and described how, for years, as a teenager and young man, I did my best to close my ears to his preaching “about money and investment.” an epiphany one night I was right. “
“And then I started hectorizing my friends about managing their money, hearing his words coming from my lips,” I added.
This morning, as I sat down to write this article, I heard my son screaming from his bedroom.
The price of Dogecoin has risen. He had failed to quickly turn his $ 10 into over $ 30 because I had refused to buy it.
Then he came out to my office to blow me up for it.
I have a lot of work to do with him.