The Micah Portfolio

Many of you know I have a 10 year-old son, Micah.  A few years ago, Micah started taking more of an interest in my work and began visiting me in my office during the work day, inquiring how the market was doing, and asking what I thought would happen next?  For a while, it was cute, and I enjoyed sharing this part of my life with him.  However, about a year ago, Micah became less interested in my views, and more interested in looking at stock charts and telling me when I should have bought, sold, etc.  Amazingly, with the benefit of hindsight, Micah was able to pinpoint to the day the best times to place trades; and boy did he love telling me about it!  

Well, increasingly, I grew frustrated.  When I queried him on how prices were going to move in the future, he resorted to telling me that, "You should buy when the price is low, and sell when the price is high!"  Brilliant...  "But, how would I know the price wouldn't go even lower when considering a buy, or further up when placing a sell order," I asked him?  He didn't have much to say to that question, however, the hindsight advice continued... 

So, having had enough, I asked Micah in March of this year if he'd be interested in opening his own account where he could decide what, and when, to buy and sell in his own portfolio.  He agreed, gave me $50 from his "Save" jar, and I opened him a Custodial account at Charles Schwab.  After a bit of research, he instructed me to purchase $5 worth (or a fraction of a share) of Netflix (NFLX), Lowes (LOW), Disney (DIS) and Microsoft (MSFT).  Done.  He also asked me to buy Rocket Lab (RKLB) but, because Rocket Lab is not in the S&P 500, Schwab doesn't allow fractional purchases of its shares and he didn't have the needed funds remaining to buy a full share.  When I asked him why he wanted me to buy Rocket Lab, because this seemed like a departure from his other picks, he told me he heard me telling my father (his grandfather) once on the phone I thought it was a good stock to buy.  

With the drop in the financial markets this spring, Micah quickly found himself down a few percent and I heard a lot less advice.  It was great.  I relished the opportunity to ask him why he didn't sell his stocks in early March and if things would improve? He didn't know.  In early April, I noted Rocket Lab's price had dropped to ~$16/share, low enough that Micah now had enough leftover money in his account to buy a single share.  And while he didn't explicitly tell me to buy a share, I decided to just go ahead and do it. 

Since then, Rocket Lab has gained over 300% and Micah's portfolio is now up ~85% YTD, thanks mostly to Rocket Lab's outsized position in the portfolio.  Yep, UP eighty-five percent in seven months.  Sigh... Parents, I'm sure you know the feeling - no attempt at trying to teach your kids a lesson goes unpunished, am I right?