Streetwise for Sunday Dec 28, 2008

Streetwise

Lauren Rudd

Sunday, December 28, 2008

It is the Most Wonderful Time of the Year...or is it

It is the most wonderful time of the year, or so the tune goes. However, is it really a wonderful time of the year from an investment perspective? That depends on whether you want to consider your glass to be half-full or half-empty. On the negative side, a falling brick has a lot in common with not only Wall Street but also the housing market and the economy in general.

If there is any good news it is that the price of crude has fallen to levels we have not seen in several years. And, on Wall Street there is an end of the year clearance sale on stocks, the likes of which we have not seen in many years also

Now don’t spill your eggnog but Wall Street is still the place to be if you want to increase your wealth. Additionally, there is no “good time,” or “bad time,” to invest. It is the quality of the companies that you invest in that determines your level of success.

Furthermore, anyone can successfully invest in stocks without so called professional assistance, advice, newsletters, books, charts and the myriad of free meal seminars being hawked as essential requirements for establishing and maintaining a profitable portfolio. To say you cannot is an excuse, not a reason. Four decades of experience on Wall Street tells me otherwise.

Now as you sit back, eggnog in hand, content in knowing that now is the time to grab the bull by the horns and add to your portfolio, take a moment to ask yourself this question...have you have ever helped a child, teenager, or maybe even an adult, learn the fundamentals of investing? It is never too early or too late to introduce someone to the world of disciplined investing in common stocks.

I mention this idea every year not as a result of the avalanche of letters I receive requesting that I do so but because in today’s world of instantaneous gratification, grounded in the idea of buying on credit, the discipline of saving and investing has never been as important as it is now.

For example, you cannot do better for a young child than with a gift of a few shares of Disney. Whether Disney is the most sanguine investment is not relevant. What is important is that you request the actual stock certificate, which you can then frame and hang in a place where the recipient can view it regularly.

Decorated with Disney characters, the certificate is almost a piece of art. Besides, how many pictures can your child hang on the wall that will likely increase in value?

For those family members who claim to be too old for the Mouse and crave a more exciting life, there are companies that most teenagers will not only recognize, but will likely raise their adrenaline level. For example, Microsoft, Adobe, Intel, Cisco and Hewlett-Packard are but a few.

If video games are more to their liking then there are names such as Electronic Arts, Take-Two Interactive Software and THQ. Theses companies have not done well recently but your kids should know that better than you. An enterprising teenager might even uncover a lesser known name that is ready to outperform its brethren.

So how do you go about setting up an account for your soon-to-be Wall Street prodigy? For a teenager, the shares should be in a deep discount brokerage account that can be viewed on demand via the Internet, while still maintaining whatever supervision and restriction on both trading and the withdrawal of funds that you deem necessary.

Ideally, you want to instill the idea of investing as opposed to trading. However, if your budding analyst can make a case for moving out of one stock and into another, go along with the idea. Learning should take precedence over possible returns.