When I turned eighteen years old I was extremely ecstatic. I was finally old enough to buy and sell stocks in the stock market. Since I was in sixth grade I have been obsessed with the stock market and the idea that a person could make money from the simple action of buying and selling securities. The year proceeding my eighteenth birthday I had been playing stock simulators that tracked my stocks with fake money and calculated what my returns were. I had done fairly well for myself with these simulators to the point I was confident enough to give advice to my parents about stocks. This was my big opportunity to prove that I knew how to make money. The stock that I told my parents to buy was Gaming Partners. At the time the stock was trading at $11 a share. The buy order went in and my body went numb. My parents had bought $2,000 worth of Gaming Partner’s stock. Now what happened next? Over the next few weeks it traded to $9.50 a share. My parents had lost a few hundred dollars and I was not feeling too good about myself. They asked me what to do. I told them to double the amount of money they had invested. They disagreed and sold for a pretty big loss. That was one month before I turned 18.
The day I turned 18 I took $1,000 that I had saved and opened an account with a stock broker. The first stock that I bought was Research In Motion. I bought the stock at $64 a share. This price was extremely cheap and there was a very good reason why it was cheap. Research In Motion is the company that makes Blackberries. At the time NTP was suing Research In Motion for patent infringement. I had factored this into the price and I still thought the stock was worth around $100 a share. I remember the day I bought Research In Motion. You could not have found a happier kid. I also remember the next two weeks extremely well. The Wall Street Journal decided that my decision was wrong and should be punished. They published an article “Bye Bye Blackberry” which was about how Research In Motion was not a good stock. I turned on MSNBC only to see a special about Research In Motion and every single “Expert” was saying sell the stock, it was going down. My parents had also been watching and reading this. They sat me down and for fear of me losing all of my hard earned money they made me sell Research In Motion. I was devastated. My first two stock picks I had not gained money but lost it.
It was not until six months later that I realized how valuable those two experiences were. It turns out I was right about Gaming Partners and Research In Motion. Six months later Gaming Partners was trading at $24 a share, much higher than the $9 my parents sold it at. Research In Motion had settled its lawsuit with NTP and was trading at over $140 a share. It is because of these events that I believe that a person should stick to their convictions. Through these experiences I have learned that when I think I am right I should not change my mind just because everyone else has a different opinion on the matter but I should reexamine the situation again and see if I still have my original feeling. Once I figured out that I should stick to my convictions I became a lot more profitable in my investing.
If you enjoyed this essay, please consider making a tax-deductible contribution to This I Believe, Inc.