An increasing number of students are investing in the stock market.
BY GEORGE BERNARD, ’23. GRAPHICS BY MOLLY HENCH, ’22.
When the world went into lockdown in early 2020, mobile stock trading platforms started to see a massive influx of new investors. Among the millions of people signing up were high schoolers.
From day traders exercising options during lunch to those who simply own a few shares of a company they like, trading among high schoolers is growing. In the past few years, with the rise of Robinhood and other mobile trading platforms, buying and selling stocks has become significantly easier for new investors.
Senior Zac Yoakam is one of those new investors. Yoakam trades multiple times a day on one account and has a second account for long term growth.
On his day trading account, he trades less stable stocks that he believes have a significant upside potential. Although he trades often, he said that he has “only about one or two big trades per year”.
He uses a different strategy for his long term account that produces more consistent returns but limits how much he can make.
“I invest in blue chip [stocks] that I think will be profitable in the long term,” Yoakam said.
Blue chip is a general term to describe larger, more stable companies such as Apple or Starbucks.
Through 2020, he saw some big fluctuations on his accounts from down 20% at the beginning of the pandemic to up over 100% by year’s end. Before the pandemic, he was seeing annual returns in the 20-25% range.
Although he trades with real money now, he started with a paper money account when he was younger.
“My aunt set up a competition between my sister and I to see who could make the most money and the winner got $100. That is what initially got me interested in the stock market,” Yoakam said.
He plans on going into the financial services industry in part because of his experience gained in the market.
“If I don’t go into the financial services industry I want to go into economic studies of the market because I’m interested in the field,” Yoakam said.
Senior Austin Henley is another student that invests in the stock market.
He trades less often, usually “weekly or monthly“.
The trading platform he uses is called Robinhood, an easy-to-use mobile trading platform with no commissions.
Although he has only been trading more recently, he started in the market many years ago.
“I bought two shares of McDonalds in 6th grade and held on to it for several years and forgot about it and ended up selling it three years ago. I then got a Robinhood account a little over two years ago,“ Henley said.
He said that he also learned to trade from his parents.
The other type of investor is like Zachary Windisch, a Junior who owns a few Tesla shares and bought two shares of Roblox when it first went public in March of this year. He doesn’t actively trade on the market; he simply holds onto a few stocks to sell for a profit in the future.
It is also important to note that the students mentioned in this article technically do not own their portfolios as the minimum age to own or trade stocks is 18-years-old. They work around this by using an account under their parents’ name.
As trading becomes more accessible, many high school students are trying it out while building a skill set vital to growing wealth. Students interested in learning more about the economy can enroll in AP Economics next school year or can join the investment club.
GameStop for Dummies
In early 2021, the world of business was dominated by one thing: GameStop. In the course of two days, the stock went from $77 to $348, a rise of over 350%. The giant rise was fueled by a sudden increase in buying. The buyers were coming from WallStreetBets.
Who Are They?
WallStreetBets is a subreddit where people share their very risky investments. Their signature move is purchasing short term out of the money options that are high risk, high return. This is akin to rolling two dice and if you roll snake eyes, you make 10-20 times your original investment, but if you roll anything else, you lose all of your money.
The Plan
When the share price was around $15, the roughly 2 million members coordinated to buy as many shares of GameStop as they could. As there are only 50 million shares of GameStop available on the market, this significantly increased the price of the stock. This raised price forced many hedge funds to abandon their short positions, raising the price further.
The Crash
It looked like there was no end in sight; GameStop was on a moon mission and nothing could stop it. That was until Robinhood stepped in. Trading platforms like Robinhood have to pay a fee every day to access stock exchanges. This fee is usually in the hundreds of millions but increases if trading volume or market volatility increase. During the rise of GameStop, there was a lot of volatility in the market. On the night of Jan. 27, Robinhood got their fee of $3 billion. That was much more than what they had, but they struck a deal. If they stopped allowing buying of GameStop shares, the fee would be reduced to $700 million, a price they could deal with; they accepted. On Jan. 28, Robinhood users discovered that they could only sell GameStop stock. It fell to less than $100 per share in less than two hours. Since then, the price had another smaller rise and has been hovering around $200 for a few months.