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See A Winning STATE Level Middle School Essay from Spring 2015!

Spring 2015 InvestWrite Grades 6 - 8           STATE WINNER

Background

In his Motley Fool editorial, Jason Hall claims you can “turn $10 a day into $1.3 million.” He writes: “people who continue to put money in their accounts every month–in good markets and bad ones–get the best returns. It's when people try to outsmart the market, jumping in and out in an effort to time market cycles, that they lose money in stocks. Putting a little money to work on a regular basis, for as many years as you can, works better than anything else.”

Let’s put his theory to the test.

Essay Question:

Imagine you are a time traveler. Your mission is to travel back in time to January 1, 2005 to prove or disprove Jason Hall’s theory. Identify a stock, bond, or mutual fund from your Stock Market Game team portfolio or one that interests you. Would you have earned money by now if you had invested in it then? Would you have earned money if you had sold it one year later on January 1, 2006? Five years later on January 1, 2010?

Describe the stock’s, bond’s or mutual fund’s movement over the course of time. What factors influenced its price? Explain whether you think the stock, bond or mutual fund is a good investment or not. You can be as creative as you want.

Winning Student: Maryssa Bizier
Winning Teacher: Laura Doliber
Grade: 7th
Place: St. Margaret School, Rumford, RI

Maryssa's Winning Essay:

Jason Hall's theory simply states that if you buy and hold on to a strong stock, then you will gain a larger profit than if you sell the stock when it goes down, or buy more shares when it goes up and try to "time the market". For example, in the Stock Market Game, my team recently "bought" Apple stock for our portfolio. If we had "purchased" it on January 9, 2015, the stock would have been for sale for $112.01 per share. Over the course of the next seven days, the stock went down over $6 per share, which I calculated to be the equivalent of 5.4%. If my team went against Jason Hall's "buy and hold" theory, and sold our stock during the seven day decline, then we would have missed the $20 per share increase after the decline, and we would have lost our money. If we had decided to keep the stock, then we would have gained money during this large dramatic increase. Based upon these two possible examples, I believe Jason Hall's theory to be correct-but how do I prove it for sure.........

I decided that I would need to go back in time to January 1, 2005. I painted a picture of myself at noontime on New Year's Day on my magic easel. I jumped through the picture to find myself in my toddler bed with my Cinderella themed pull-ups wrapped snugly around my waist. That Monday, while watching an investment show called Squawk Box, and eating my Gerber’s cereal, I hear about the fairly new Apple stock that has increased 200% in 2004, and was selling for a low price of $4.60 per share. I thought," I could afford a share of that, and I'm only three years old!" Back through the magic easel, I arrived on January 2, 2006. After my daily showing of "Dora the Explorer", I flip the channel, And once again Squawk Box is on, talking about Apple stock. As of that day, the stock had gone up to an increased price of $10.90 per share. Curious, I time jump to January 4, 2010. I turn on the television, this time, intending to watch Squawk Box. The show was once again talking about the Apple company stock which had increased to a price of $30.28 per share. The stock was going up rapidly.

When I arrived back at the present, I decided for sure to select Apple stop for my InvestWrite essay. This is because of the dramatic increases and the occasional decreases of the stock, which can provide excellent examples to prove Jason Hall's theory correct, and also because the stock contains objects that we use every day, such as computers, cell phones, laptops, home phones, tablets, etc. If I had used my first birthday money and purchased 100 shares of Apple stock on January 3, 2005 then it would have cost me $460. Today, those same 100 shares would be worth $12,700. This is 2660% increase! Therefore, I would have definitely on money if I had purchased the stock at the beginning of 2005 and still held it today. This is because the stock was low in 2005, but continued to constantly increase, and although it dipped in 2008 and late in 2012-2013, it went up after that and went even higher than ever. If I had decided that the stock hadn't been going up quickly enough, and had sold it on January 2, 2006, I would have made money on the stock but my profit would have been limited to $630. If I had sold it on January 4, 2010, I would have made $2568. Though I would have made money, these gains are much smaller than the "unrealized" gain of $12,240 I would have if I still held the stock today. Although Apple had some decreases in 2008, these variations were due to the variations in the stock market as a whole as a result of a weak economy. Another drop in Apple stock occurred in late 2012 into early 2013. The reason for this isn't clearly known, but there were many rumors involving declining orders and market share they could have easily caused the drop. It is important to note that after each of these drops the stock came back worth more than twice as much as before.

I think Apple is a good long-term investment because of the good-quality, ahead of its time products, good management, strong market share, top ranked ratings, and strong profits. Apple always seems to be one step ahead of their competition, making them the market leader. They always hire top-notch technology experts who are always working on lineups of new technology preparing to be introduced to the market.

After the fun of revisiting my early childhood days, I feel as though I've learned a lot about Apple's journey, and proved Jason Hall's theory to be correct. Clearly Hall's "buy and hold" resulted in more profits than I would have received if I try to time the market and sold the stock earlier. Thanks for the MacBook, Apple!



 
 
 
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