Sunday, November 19th, 2017

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Student Investor Learns from His Mistakes

What is typically on your birthday list?  For guys, maybe it is the latest and greatest electronic gadget. For the ladies, maybe it’s clothing or accessories. But did you ever think of putting a stock investment on your wish list?

Well, that is what Ryan Fulmer did when he was just eight years old!  Growing up in North Canton, Ohio, this Denison University senior began his career in investing with money given to him by relatives. The first equity he purchased was News Corporation, a stock he still owns today.  Through long-term investing and the magic of compounding, Fulmer has used these early childhood experiences to grow into an experienced investor today.  

One of the reasons Fulmer started investing so early was the trust his parents placed in him to manage money. His father, Dennis, who owns a private wealth management firm in Ohio, never told his son the companies in which he should invest. Rather, he let Fulmer make his own mistakes and learn from them, even if that meant occasionally losing money. On the flip side, that made him appreciate the gains even more! 

"This sort of education could be one of the greatest assets that my father could ever give me," says Fulmer. His mother also emphasized that there was no need to be scared of occasional setbacks. Besides the financial education, his parents bestowed on him a sense of compassion and caring for others that no amount of money can buy.

For anyone serious about investing, Fulmer recommends two things: "Love the markets and be a student of the market." Because inexperienced or irrational investors often bring emotions into their purchases and sales of stocks, a seasoned and knowledgeable investor can develop a profitable strategy to take advantage of this. He warns other young investors that emotions may cause you to make a mistake, but the best thing you can do is to learn from these mistakes and become a better investor. Fulmer prefers to hold a stock for as long as he believes it offers higher potential return than the general market, not just because he likes the company.

Fulmer equates buying stocks to buying groceries. He actively maintains a list of potential stocks to buy or sell short, as would a price-conscious shopper. For high growth stocks such as Google, purchasing them at their high valuations would be like buying a trendy sweater for $100 at Abercrombie & Fitch before Thanksgiving when you knew you could buy the same one for $50 on Black Friday. In the same regard, Fulmer takes a little more risk in waiting out the markets, and trying to buy these types of stocks when everyone else seems to be selling them. 

To understand which stocks are worth buying at their current prices, he turns to widely used sources such as Value Investor Insight, Value Investor Club, SeekingAlpha.com, and Barrons. To differentiate himself and come up with new investing ideas, Fulmer also looks at what his friends and family are buying to try to find out what fashion or technological trends will be influencing companies in the near future. 

He also likes what he calls "second derivative ideas." For instance, if he thinks the PlayStation 3 will be a huge success, he will sort through patent filings and find the suppliers for the PS3. Fulmer believes markets are efficient over very long periods but may bring emotion into stock fundamentals in the short-term. He advises removing emotion from the market and exploiting good sales.

Due to his passion for investing, Fulmer’s goal is to eventually run his own hedge fund. Someday, he would also like to be a trustee of Denison University and start a foundation that helps entrepreneurs in developing countries turn business ideas into thriving companies. He trusts strongly in the positive influence of small businesses on growing economies. Fulmer has shown his faith in companies through his investing, and he believes that other young people should take advantage of the benefits of investing early, whether through money earned from a job or gifts from family and friends.

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