Argumentative Research Paper

Title: Stock Knowledge

Name: Cody Borreson

Table of Contents

Abstract… 1
Introduction… 2
Process… 3
Discussion of Information… 3
Refutations… 3-5
Connected Research… 5
Limitations… 5-6
Conclusion… 6
Bibliography… 6-7

Descriptive Abstract

There exists an image of investing that the only people who should participate in the

stock market or bonds are older professionals who have decades of experience watching how the

market fluctuates, and knowing when to jump on a stock. This image has kept young people

away from investing for generations, and now, according to a study from Bankrate Money Pulse

Survey, “Less than half, or 48%, of American adults have money in stocks” (Bankrate, 2015).

Investing is certainly a large topic that can be tough to handle, but there’s no reason for every

investor to know the market like Warren Buffett. If you would have kept $1 in a bank in 1926,

you would have $21 today; $1 invested in stocks in 1926 would be worth around $5400 today

(DQYDJ). Giving people enough knowledge and removing fears or negative images of the

market via simulations will help produce healthier retirements. This project seeks to give

students the tools necessary for starting out on a firm financial footing.
Introduction

According to a GOBankingRates survey in 2017, 39% of Americans report having

nothing in their savings account. This statistic is alarming simply because of the sheer size of the

problem as that would mean nearly 100 million Americans haven’t even considered planning for

retirement. The beginnings of retirement planning is storing money away, the next step is

investing that money, and then using it - many haven’t taken the first step.

It is helpful to try to influence adults to start saving as it’s going to be impossible to

continue some government social programs without them saving, but there are generations

coming up through our public school systems who aren’t getting the exposure they should to the

markets and economics as a whole. Currently, there are only 17 states that require students to

take a personal finance class before they graduate, and colleges don’t have much for

requirements there while art appreciation remains mandatory for some programs that have no

direct ties to the arts.

Personal finance is one of the most applicable subjects someone will ever take in high

school, and no matter what careers a person chooses, they will still need to take care of their

finances.

Process

The project is about getting kids information and interest pertaining to the stock market

and personal finance as the two are tightly intertwined. For the project, curriculum will be

created and presented to a middle school class to assist the teacher in bringing financial literacy
into schools where games are used to maintain the interest of the kids while teaching them about

an important (albeit occasionally dull) subject.

This project is a crusade in the classroom designed to bring up coming generations of

investors that will stimulate the economy and be able to retire without relying on government

programs.

Discussion of Information

Research centered primarily around market terminology as well as statistics on the

American population’s investment strategies. The most concerning findings deal with current

adult populations and the overall lack of saving and investing. According to AARP: In 2013,

23% of Americans 65 years or older relied on social security for 90% or more of their family

income (AARP, 2013). The grandparents of today were not prepared for retirement and now a

large chunk of that population relies on the government to help them from going under.

Refutations

#1: Adolescents have no interest in the markets

Interest in a topic and that topic’s importance are rarely equal. Very little attention is

given to health in American society despite its direct effect on every aspect of a person’s life.

The interest of a person is something accumulated through life and can be influenced through an

explanation of what they will get. Man is a self-serving creature by nature, and the stock market

speak to this part of people.

 When someone imagines the stock market, what generally comes to mind as a

stereotypical group of people comes to mind? Millennial women - 60% - equate an investor with

old, white men (Stash, 2016). One of the results of this is that millennials as a whole are not

testing out the market. A survey by Harris Poll from 2016 shows 4 in 5 millennials have no

money in the market. Only 13% of those in the Harris Poll who didn’t have money in the market

cited student loans as a reason. Investors no longer solely rely on reading the newspaper as this

information is available online and includes analyst ratings for free. The younger generations

have been growing up in this technology age and understand it better, giving them what should

be a type of edge over their grandparents.

#2: People don’t need to start saving until their late-30s or 40s

There is no urgency to do much of anything when there lies ahead 4-5 decades of

possibility, but early investing is vastly beneficial as it affords more time to learn from mistakes,

and to allow wealth to compound. Albert Einstein called compound interest the 8th wonder of

the world. With a 5% interest rate, a $10,000 investment at age 20 would be worth $70,000 by

the time the investor is readying for retirement (60). If this same sum were invested at age 40, it

would produce an outcome of a little over $26,000.

The younger a person is, the lesser amount of stress they will be under to prepare for the

expenses of retirement. Essentially, there is no immediate threat which opens the possibility of

more volatile investing which can produce large returns - putting the young investor in a great

spot - well ahead of their peers.

 Connected Research

Parents in America spend on average 25 minutes more per day in 2012 than they did in

1965 (The Economist, 2017). But without the parents teaching their kids financial literacy, they

are leaving the task up to the school system which often doesn’t make it a top priority.

Limitations

Wealth is an entity that is accumulated and built over time. One of the foreseeable issues

with investing is a lack of disposable income to begin in the market with. While there is no stated

sum required to ‘enter’ the market, many Americans are living paycheck-to-paycheck and don’t

have anything to put away for later. In fact, according to NBC in 2017, 80% of Americans claim

to be living off their latest paycheck. This type of situation does pose a clear obstacle to

investing, but as a full-time student at Tulane University, Tim Sykes turned $12,000 into $1.65M

trading penny stocks. Even without the initial sum of $12,000, most Americans can cut off

excess purchases and save $10 per week adding up to $500 per year. Adding $500 a year to a

portfolio and allowing compound interest to work can quickly produce large dividends.

Knowledge of investing is the largest limiting factor for young people who do invest:

“When millennials were asked by researchers about the best way to invest money they wouldn’t

need for 10 years or more, stocks ranked a distant fourth behind real estate, cash, and gold”

(Time Magazine). If the goal is investing for retirement (long-term), stocks have been the surest

bet over any 5-year period. Overall, a $10,000 investment in stocks over a 196 year period would
have a return of $5.6B, whereas gold would have slightly better than doubled the initial

investment (Joshua Kennon).

Conclusion

Investing is not for the old - it is for the wise. Young people need to be investing their

money as it is beneficial to the individual, to companies, to employees, etc. The effects of

consumer investing trickle down through the ranks and help improve the overall state of the

economy.

The earlier people enter the market, the better the returns on investment will be thanks to

compound interest which helps ‘work’ for the investor, creating amounts that would have

otherwise been impossible. Investors do not need a large initial investment to create returns - the

trick is to save excess cash for several months until the market drops which creates the perfect

situation: buying low with better odds of selling high.

Young investors can take more risk with their money as they are in less dire straits than a

new investor in their 40s with 20 years (or less) to build wealth in preparation for retirement.

Young investors need to keep in mind that just because a stock drops it doesn’t mean you lost

money. As an investor, not a dime is lost until you sell out of a position. Hold underperforming

stocks as long as is feasible.

Bibliography

Bell, Claes. “Americans Avoid Investing In Stock Market - Money Pulse.”

 Bankrate, Bankrate.com, 22 Jan. 2018

PK. “S&P 500 Return Calculator, with Dividend Reinvestment – DQYDJ.”

DQYDJ, DQYDJ, 3 Feb. 2018

Huddleston, Cameron. “More Than Half of Americans Have Less Than $1,000 in

Savings in 2017.” GOBankingRates, GOBankingRates, 19 Sept. 2017

Klein-Pineda, Anneliese. “Investing While Female.” Stash Learn, Collective

Returns, Inc., 30 Aug. 2016

Manning-Schafel, Vivian. “How Does Living Paycheck-to-Paycheck Affect Your

Health? A Lot.” NBCNews.com, NBCUniversal News Group, 2 Nov. 2017

Updegrave, Walter. “Millennials Are Doing Just Fine Investing For Retirement |

Money.” Time, Time, 29 Aug. 2017

Kennon, Joshua. “Stocks vs Bonds vs Gold Returns for the Past 200 Years.”

Joshua Kennon, Joshua Kennon, LLC, 26 July 2011

Public Policy Institute. “People Aged 65 and Older Who Rely on Social Security for 90%

of Family...” AARP, AARP, 12 Nov. 2015

“Parents Now Spend Twice as Much Time with Their Children as 50 Years Ago.” The
Economist, The Economist Newspaper, 27 Nov. 2017