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Stock Investing For Students: The Book I’ve Always Wanted To Write

Self-investing starting at a young age can ensure a successful financial future and an early and comfortable retirement. So why is nobody doing this? The answer is complicated and includes such factors and the social pressures facing our youth, certain pre-conceived ideas regarding our ability to successfully self-invest and the education or lack thereof needed to motivate our youth to undertake such a long-term project.

How often have we heard the expression “if I only knew then what I know now….” You said it, I said it and many of our friends and family have also used that comment because it is true. By the time we realize that we should have, would have and could have, we start playing catch-up and in many cases it’s too late. Our youth is simply not educated in a practical manner as to how to self-invest despite the fact that it is one of the most critical skills they need to be taught. My hope is that my new book will, in some ways, change that and have a lasting impact on the quality of life of our children. I have always wanted to write this book but covered call writing took a front seat to my time and effort as I spent the past 6 years focused in that arena. In mid-2012, I decided it was time. My goals were two-fold:

  • Educate our youth on the basics of stock investing so the concept will not be intimidating
  • Set up a user-friendly game plan based on historical statistics that will lead to a wealthy and secure retirement

The book was written in a way that I would have wanted it written when I was in school…with respect to the reader, easy to understand and filled with color charts and graphs to assist in the education. It uses basic financial concepts that have been proven effective over the years such as dollar-cost averaging, cash allocation, dividend re-investment as well as fundamental and technical analysis. Certain basic assumptions are made that can be adjusted according to the reader’s specific situation but here are the basic assumptions:

  • You invest 10% of your gross income each year (earn $50k, invest $5k)
  • Start at age 18 (can be adjusted)
  • Average gross annual income of $60k for the first 20 years and $80k for the second 20 years of our 40-year plan (can be adjusted)
  • Start off using broad market mutual funds until portfolio value reaches $25k
  • Switch to individual stocks after $25k
  • Set up specific guidelines for exiting a position that can be automated
  • Use an online stock screener using fundamental, technical, descriptive and common sense requirements for stock selection a few years after beginning to self-invest
  • Portfolio re-balancing annually

Given these parameters, here is what a retirement portfolio will look like after 40-years using conservative historical statistics:

Stock investing-retirement plan

Stock Investing For Students: 40-year plan

Using a savings calculator, conservative historical statistics and basic financial principles you can retire at age 58 with $1.8 million. The key is to start at a young age and use the power of compounding, the 8th wonder of the world. The techniques presented in the book are for everybody because they are user friendly and self-motivational as our youth watches their portfolio grow larger and larger as will their confidence and quality of life. This is my hope and my dream.

Here is the book’s table of contents:

Table of Contents

Acknowledgments

Introduction

About this book

1. Basics of Stock Investing

2. Fundamental Analysis

3. Technical Analysis

4. Portfolio Management

5. Exchange-Traded Funds (ETFs) and Mutual Funds

6. Game Plan

7. Executing a Stock Trade

8. Stock Splits

9. Tax Implications

10. Other Factors that Influence Stock Performance

11. Related Topics of Interest

12. Covered Call Writing- Using stock options to enhance returns

Appendix

I. Strategy outline

II. Online discount broker list

III. Long-term chart of S&P 500

IV. Stock selection summary

V- Game plan summary

VI. Master figure list of charts and graphs

VII. Plans for alternate time frames

Glossary

Index

About the Author

 

PRE-ORDER DISCOUNT:

Books will be available for shipment by the end of October. Use promo code: SISDISCOUNT to get an early order 10% discount @ checkout:

http://www.thebluecollarinvestor.com/stock-investing-for-students/

***PREMIUM MEMBERS HAVE BEEN EMAILED A SEPARATE PROMO CODE

 

Next live seminar:

Chicago: Saturday November 9, 2013

http://www.aaii.com/chapters/info?ChapterID=1

DePaul University Center

8th Floor

Room 8005

 

Market tone:

Now that the government is back open, the economic reports are beginning to get published and available for inspection:

  • According to the Labor Department, the US economy added 148,000 jobs in September, lower than the 160,000 expected
  • The unemployment rate declined to 7.2%, below the 7.3% anticipated and the lowest rate since November, 2008
  • 11.3 million people still remain unemployed
  • Construction spending rose 0.6% in August to an annual rate of $915.1 billion, a 7.1% increase from one year ago and the highest level since April, 2009
  • The US trade deficit widened by 0.1% in August as exports slightly declined
  • Existing home sales decreased by 1.9% in September to an adjusted annual rate of 5.29 million from 5.39 million in August. Sales of previously-owned homes, however, are up 10.7% from a year ago
  • The median price of existing homes fell to $199,200 in September from $209,700 in August but is still 11.7% higher than a year ago
  • Factory orders of durable goods (A measure of the number of orders for a broad range of products—from computers and furniture to autos and defense aircraft—with an expected life of at least three years. Durable-goods orders are a leading indicator of industrial production and capital spending. Data fluctuate widely from month to month and are often subject to significant revision) rose by 3.7% in September from 0.2% in August, driven mainly by commercial aircraft orders

For the week, the S&P 500 rose by 0.9%, for a year-to-date return of 26%, including dividends.

Summary:

 IBD: Confirmed uptrend

BCI: Moderately bullish favoring out-of-the-money strikes 3-to-2

Wishing you the best in investing,

Alan (alan@thebluecollarinvestor.com)

www.thebluecollarinvestor.com

 

 

 

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About Alan Ellman

Alan Ellman loves options trading so much he has written four top selling books on the topic of selling covered calls, one about put-selling and a sixth book about long-term investing. Alan is a national speaker for The Money Show, The Stock Traders Expo and the American Association of Individual Investors. He also writes financial columns for both US and International publications along with his own award-winning blog.. He is a retired dentist, a personal fitness trainer, successful real estate investor, but he is known mostly for his practical and successful stock option strategies.

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10 Responses to “Stock Investing For Students: The Book I’ve Always Wanted To Write”

  1. B October 26, 2013 6:00 pm #

    Premium Members,

    This week’s Weekly Stock Screen And Watch List has been uploaded to The Blue Collar Investor premium member site and is available for download in the “Reports” section. Look for the report dated 10-25-13.

    Also, be sure to check out the latest BCI Training Videos and “Ask Alan” segments. You can view them at The Blue Collar YouTube Channel. For your convenience, the link to the BCI YouTube Channel is:

    http://www.youtube.com/user/BlueCollarInvestor

    Since we are in Earnings Season, be sure to read Alan’s article, “Constructing Your Covered Call Portfolio During Earnings Season”. You can access it at:

    http://www.thebluecollarinvestor.com/constructing-your-covered-call-portfolio-during-earnings-season/

    Best,
    Barry and The BCI Team

  2. Fran October 27, 2013 2:17 am #

    Alan,

    I have 3 children ages 12, 15 and 17. Is your new book appropriate for all 3? I think it’s a great idea to start our kids off with a financial education as early as possible. Keep up the good work.

    Fran

    • Alan Ellman October 27, 2013 10:55 am #

      Fran,

      Absolutely for your two older children. Your 12-year old may be a bit young but a highly motivated 12 year old especially with parental or older sibling support will benefit as well. Wouldn’t it be great if your 3 children can learn and watch their retirement accounts grow together!

      Alan

  3. Steve Z October 27, 2013 10:44 am #

    Alan, congratulations on getting the book out. Is much needed.

    I have a similar question to Fran, who do you see as the target audience for the book? Is it for parents, junior & senior high students, college, early 20s, teens through 30s, etc?

    Steve

    • Alan Ellman October 27, 2013 10:59 am #

      Steve,

      My dream is to have this book in high schools and colleges throughout the world. So my target is young teens through college grads. However, although I frame it as a 40-year plan in my book, I emphasize that the time frame along with other parameters can be adjusted. Below is a screenshot taken from an appendix in the book showing a 20-year and 30-year plan based on the parameters discussed in this article. So, anyone not nearing retirement will benefit.

      Good to hear from you Steve.

      CLICK ON IMAGE TO ENLARGE AND USE THE BACK ARROW TO RETURN TO THIS BLOG

      Alan

  4. Sharon Marchisello October 28, 2013 12:55 pm #

    Dear Alan,
    Your new book sounds very interesting and would have been a great tool to have when I was growing up.
    I recently published an e-book entitled, Live Cheaply, Be Happy, Grow Wealthy which targets the same audience you are trying to reach and could be a good companion to your book. Its concepts are more basic, and I don’t get into stock investing and covered-call writing until the last chapter. (And I do recommend your website and books as a resource for more in-depth information about covered calls.)
    Please check it out and if you like it, I’d be thrilled if you’d recommend it to your readers.
    Thanks!

  5. Alan Ellman October 29, 2013 11:20 am #

    Running list stocks in the news: NUS:

    Nu Skin, a stock on our premium watch list for 8 weeks, is a company that produces personal care products and nutritional supplements. On October 22nd, it reported its 8th consecutive positive earnings surprise (see chart below) as revenues rose by 76%. Management as well as analysts also raised guidance for the remainder of this year and also for next year. Analysts predict earnings growth of 66% in 2013 and 15% in 2014. Despite dramatic share appreciation, NUS trades at an industry average forward PE of 18x.

    Our Premium Running List shows an industry rank of “A”, a beta of 1.24 and a % dividend yield of 1%.

    Below is a chart showing 5 of the previous positive earnings surprises (CLICK ON CHART TO ENLARGE AND USE THE BACK ARROW TO RETURN TO BLOG).

    Alan

  6. Alan Ellman October 29, 2013 2:14 pm #

    To our members:

    The first shipment of my latest book, “Stock Investing For Students” will be going out today based on the date ordered. Thanks very much for your interest and support.

    Alan

  7. joe hefferon November 26, 2014 9:12 am #

    Just found your website. Great idea. I started playing a stock-picking game with my son last year (he’s 12 now). We choose an arbitrary sum of mad-money, say 20K, and buy equal amounts of five companies. You earn points weekly for being up or down from the previous week and then at the end for total portfolio return. In order to hold his interest we start in Sept and end it Christmas week. He’s already talking about keeping Hasbro for 2015. A future long-term thinker (whew).

    • Alan Ellman November 28, 2014 11:08 am #

      Joe,

      This is fantastic. The younger our children get started the better than financial lives will be later in life. This is what parenting is all about.

      Congratulations!!!

      Alan

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