When I turned 16, my father bought me my first shares of stock. After I ripped through all of my presents that night, my father handed me an envelope. I opened it to find a certificate for 50 shares of Nike stock. The year was 1995. The economy was booming. The dot.com’s hadn’t quite become the rage. And given a choice of stocks, I wanted Nike because I was sporty and grew up in the “Be Like Mike” generation. For a 16-year-old, that was a pretty good reason to hold shares in Nike.
Just over a year later, my father changed financial advisors. I clearly remember the night the advisor came to our house. As I watched the television, they sat several feet away at the kitchen table. After an hour or so, my father called me over. “This is so-and-so; he’s our new advisor. He wants to discuss selling your Nike stock. He thinks that Nike will never go beyond $60.00 a share. He’d like to invest it in something with more room for growth.”
At 17, I was far from a financial guru. I was smart. I did well in school. And yet, I knew nothing about financial affairs. I knew my father watched his American National stock like a hawk each day. I knew he had computer programs that allowed him to create a laundry list of stocks that he planned to buy. He occasionally talked with my sisters about their Merck and Disney stocks. Nevertheless, I was clueless. The stock section of the newspaper might as well have been in Egyptian hieroglyphics for all I cared. And I sure as heck couldn’t find much information on the internet. The days before Google were dark ones, indeed. I can’t even remember if our Prodigy service had a real internet search engine back then.
Even though I had little background in financials, I was uncomfortable by my parents’ comments about Nike. When asked about getting rid of the Nike stock, I immediately questioned the advisor’s motives. I looked at my parents and said, “I don’t think so. I think Nike will go up; it has to. It sure isn’t going down any time soon. I mean, everything at school is Nike. There’s no way this stock can’t grow.”
Fortunately, I still have those 50 shares of Nike. I did have 100 shares and sold half of them right before the economic downturn of 2008. The stock recently split and I again have 100 shares. If Nike climbs back to where it was before it split a few months ago, I will have $10,000 in just Nike stock in my portfolio. Sure, it’s not a fortune. But I’ll take it. Ironically, if it was up to the financial advisor, I would have ended up with MCI or something with “more potential for growth.” Unfortunately, he later convinced one of my sisters to buy up some MCI stock right before it went bust. But that’s another story.
Looking back, I now know that my teenage mind made an assessment that has helped to create a great, budding stock portfolio today. When it comes to consumer stocks, common sense usually shows if it’s selling and growing, then you shouldn’t immediately sell it. And sometimes, your gut instinct is more valuable than the conjectures of a man or woman who has the title of “financial advisor.”
In the end, the stock market is a gamble; nothing is ever certain. And sometimes you have to make a decision on your own. Just because a man on T.V. espouses the merits of a stock over one you currently own doesn’t mean that you should immediately sign onto Scottrade or some other site to liquidate a part of your stock portfolio.
Ultimately, the biggest secret in the stock world is this: in a free market, no one holds the reins. No one can predict exactly what a stock is going to do. Anyone who professes that he or she knows the exact trajectory of a stock is a false prophet. And you will never profit with that approach.