Sunday, November 19th, 2017

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Young Investor Makes Stock Market Seem Like a Game

Michael Stahl has been featured in the Wall Street Journal (twice), has appeared on CNN/fn and Bloomberg Financial Television, and was even interviewed in Investor’s Business Daily and Business Week, but there’s one media outlet he hasn’t been able to get into: his school newspaper.

Yes, the senior at the Wharton School of the University of Pennsylvania has yet to be mentioned in his school’s paper, but don’t think that gets him down.

“Apparently, it’s easier to get into the Wall Street Journal than the [school paper],” he said.

Stahl, the author of 2000’s Early to Rise, a book about investing for teens, began his investing career in the fourth grade. He came into some money from a family gift, and — using the strategy of “buy what you know” — invested in Atari. The video game company was making one last shot at getting back into the business, releasing two consoles: the hand-held Lynx and the 64-bit Jaguar.

Although the two products ended up flopping, Atari’s stock went up 400 percent in five months. Then, Stahl did what any good, young investor would do when their stock reaches a peak: he sold it.

“The sales for those [products] were really good at first, and the stock took a big jump,” he said. “I sold near the top.”

Despite Stahl’s short-term successes early on, he doesn’t recommend any get rich quick scheme of investing. In fact, his current company, Streetsage, sets out to teach kids about the benefits of long-term investing.

The company’s interactive game is intended as a supplement to existing financial curriculum offered by colleges. StreetSage allows students to take investing principles they learn from textbooks or in lectures, such as compounding or diversification, and actively apply them using the game. While the program lasts only 10 weeks, the time is simulated over a period of 35 years — with time speeding along much like the popular SimCity computer game.

But don’t think this is just a little dinky operation. Stahl and his team created a market from scratch. There are literally hundreds of fictional companies to choose from, a fluctuating market, reams of financial data, and fictional news articles. On top of that, companies go bankrupt, companies go public, even simulated world events have an effect on Streetsage’s stock market.

“The game format’s pretty detailed,” Stahl said. “It’s much more interactive and exciting than some of the alternatives. We can compete with the student’s attention spans with some of those other mediums.”

When he’s not running a company or taking classes in Wharton’s massive new Huntsman Hall, he’s continuing to invest. Although the economy has taken a bit of a hit in the past year, he’s not worried.

“[People my age] have very few big things to save for that are right on the horizon,” Stahl said. “We have a much longer-term outlook. If this were a case where I was a parent who had a kid who was going to school in a year, I might be more pessimistic.

“I have so many years to buy a house, decades to retirement, decades… until my kids go to college. I am ungodly optimistic.”

As advice for young investors starting out, he says that mutual or index funds are the way to go. In terms of the preference of those two, Stahl considers index funds the top choice. After doing some research, he realized that for the past decades index funds have outperformed about three-fourths of mutual funds.

“In mutual funds, the goal is to beat the market,” he said. “Well, if two-thirds of them don’t beat the market — why not just match the market?”

Stahl wouldn’t say what his investments are worth now, but admitted he’s not doing poorly. It seems that, for this college senior, there’s nowhere to go but up.

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