"I Went All-In at 11": Investor Recalls Buying First Stock Amidst World War II Gloom
In a remarkable anecdote shared on CNBC, a seasoned investor reminisced about his first foray into the stock market, an experience that occurred during the bleakest days of World War II. While most 11-year-olds might be preoccupied with toys and games, this individual, whose identity was not disclosed, was already exhibiting an audacious investment mindset.
The year was 1942, and the world was engulfed in a global conflict. News headlines were grim, with reports of sinking ships, crumbling European defenses, and the impending fall of the Philippines. The Dow Jones Industrial Average had plunged, marking a bleak period for the financial markets.
Despite the somber atmosphere, the young investor felt a unique opportunity unfolding. "Everything was going badly, and that day that I bought, March 11th, the Dow Jones cracked a hundred on the downside," he explained, recalling the 2% decline that would translate to a staggering 500-point drop today.
It was on the evening before, March 10th, that the then-11-year-old investor decided to "go all-in" with his savings. Armed with just $125, he purchased three shares of City Service Preferred at a price of $38.25 per share. “It was down from 80 for the year before and down from 55 in January,” he recounted, explaining his rationale for buying into a stock perceived as cheap.
The investment, however, proved to be a calculated gamble. The young investor’s bold move paid off handsomely; City Service Preferred eventually surged to over 200, with his investment ultimately yielding a significant return. However, he sold his shares at $40, showcasing a disciplined approach to capitalizing on gains.
This anecdote highlights the enduring power of investing – a lesson often taught through hardship. The young investor’s experience serves as a reminder that opportunities can arise even during turbulent times, and a willingness to take calculated risks, even when young, can yield extraordinary results.
A 11-Year-Old’s Stock Market Gamble: A Lesson in Long-Term Investing from a CNBC Guest
In a recent CNBC segment, a guest recounted a personal anecdote with a remarkable twist – a story of an 11-year-old boy making a bold stock market bet in 1942, against the backdrop of grim wartime headlines. This story isn’t just a nostalgic anecdote; it’s a testament to the power of long-term investing and a reminder that sometimes, the most unexpected decisions can yield remarkable results.
Key Takeaways:
- Investing at a Young Age: The guest’s story highlights the potential benefits of starting to invest early. Even with limited funds as an 11-year-old, his investment demonstrated a commitment to long-term wealth building.
- Ignoring Short-Term Volatility: The global turmoil of 1942 was certainly a time of fear and uncertainty. Yet, the guest’s decision to invest in City Service Preferred despite the market downturn underscores the importance of focusing on long-term growth over short-term fluctuations.
- The Power of "All-In" Investing: The guest’s strategy of putting all his savings into his chosen investment demonstrates a "go big or go home" philosophy, which, while risky, can lead to significant returns. This echoes his later investment approach in Apple, highlighting his consistent investment style.
- Buy Low, Sell High: The guest identified a potential bargain in City Service Preferred at its then-depressed price point, demonstrating an understanding of fundamental value investing concepts. This approach, implemented at a tender age, ultimately led to his success.
A Look at the Historic Context
The year 1942 was a dark period in global history. World War II was raging, and the news was filled with reports of grim battles, sinking ships, and falling economies. In the U.S., the Philippines was on the verge of falling to the Japanese forces, European battles raged, and the overall sentiment was one of anxiety and uncertainty. It was a time when fear dominated the headlines, and many would have been hesitant to invest in the stock market.
But the guest, an 11-year-old boy, saw an opportunity. He recognized that amidst the chaos, the stock market might be presenting a chance to buy stocks at discounted prices. He, therefore, chose to ignore the negative headlines and focus on the long-term potential of the market.
A Bold Investment and a Long-Term Approach
The guest recounted how he noticed City Service Preferred trading at a significantly lower price than it had in previous years. It was a company with a solid history, but the overall market conditions had pushed its stock down. He saw this as an opportunity to acquire a valuable stock at a discounted price. Ultimately, his decision was driven by his belief in the company’s long-term prospects, not by the immediate market volatility.
He didn’t hesitate. He used his entire savings of $125 to buy three shares of the stock, demonstrating a level of conviction that is often seen in seasoned investors, not 11-year-olds. This wasn’t just a casual investment; it was a bet on the long-term value of the company and a reflection of his belief that the market would eventually recover.
The Value of Patience: A Lesson in Long-Term Investment
This story is valuable not only for its unique context but also for the lessons it provides about investing. The guest’s decision to ignore short-term market fluctuations and focus on the long-term growth potential of City Service Preferred is a testament to the power of patience in investing. He held onto the stock for years, letting its value grow steadily, demonstrating a crucial aspect of successful long-term investing. This approach, while often challenging in the face of market volatility, is a key element of building wealth over time.
As he later mentioned, he eventually sold his shares at a significant profit, showcasing how his decision to invest in a company he believed in, even amidst a challenging global landscape, paid off in the long run. This reinforces the idea that consistent investing strategies, focused on long-term growth, can yield significant returns.
The Importance of Research and Diversification
While the guest’s story underscores the potential rewards of long-term investing, it is crucial to emphasize that his investment strategy should not be interpreted as a recommendation for every investor.
Firstly, it’s essential to conduct thorough research before investing in any stock. The guest recognized City Service Preferred‘s inherent value, which factored into his decision. However, not all companies are built to withstand market fluctuations, and investors must carefully evaluate a company’s financials, management team, and industry outlook before making any investment.
Secondly, diversification plays a crucial role in managing risk. The guest’s decision to put all his money into a single stock, while demonstrating conviction, carries significant risk. Investors should always aim to spread their investments across different asset classes and industries to mitigate losses and optimize returns.
From 11 to Entrepreneur: A Legacy of Investment
The guest’s story is a powerful reminder that it is never too early to start investing. His early experience, even though rooted in his youth, taught him the fundamentals of long-term investing. He went on to become a successful entrepreneur, showcasing the impact that early financial understanding can have on long-term success.
The narrative underscores that while investing is not a guaranteed path to riches, it can be a powerful tool for wealth creation. By embracing a long-term perspective, ignoring short-term market volatility, and actively learning about the market, individuals, even at a young age, can build a strong financial future.
