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GameStop stock has gone through the roof. What are the lessons, if any, to be learned for students, teachers and parents?
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Michael Gonchar and
Students in U.S. high schools can get free digital access to The New York Times until Sept. 1, 2021.
In January, company stock for the video game retailer GameStop soared 1,700 percent. The stock isn’t rising because the company is doing well; in fact, GameStop stores are struggling because many video gamers are buying their games online, especially during the pandemic.
What’s going on is more complicated and certainly unusual. Individual traders, including some teenagers, are banding together to drive the stock price up as a way to make money, and to retaliate against large hedge funds that were betting that GameStop stock price would fall.
When this is all over, some people will make money, maybe lots of it. And some people will certainly lose money as well.
And then there are investors like Jaydyn Carr, 10, who just happened to own GameStop stock because he likes playing video games and his mom wanted him to learn how the stock market works. His shares, which he received as a Kwanzaa gift in 2019, went from an initial $60 investment to over $3,200.
What are the lessons to be learned here? Should all young people learn how to invest in the stock market?
In “A 10-Year-Old GameStop Investor Cashed In. His Return? Over 5,000%.” Christina Morales writes:
As amateur investors banded together this week to squeeze Wall Street hedge funds by sending GameStop’s stock prices to dizzying heights, some novice traders, like 10-year-old Jaydyn Carr of San Antonio, have seen their long-term investments pay off.
In December 2019, Jaydyn, then 8, was buying discounted games at GameStop and wishing for an Xbox One. Spying a way to use her son’s enthusiasm for video games to teach him about investing, Jaydyn’s mother, Nina Carr, decided to invest in 10 shares of GameStop at $6.19 a share for a Kwanzaa gift.
Ms. Carr handed her son a certificate she created from an online template to explain to him that he was the owner of a tiny part of GameStop. She told him the gift was in keeping with the spirit of ujamaa, or cooperative economics, one of the seven principles of Kwanzaa.
She added alerts on her phone and computer to track the stock’s progress. Over the past few months, she noticed it steadily rise. But on Wednesday, to the shock of Ms. Carr and her son, the value of GameStop shares surged, soaring 1,700 percent since December after millions of small investors, many spurred on by social media, came together to put a squeeze on at least two hedge funds that had bet GameStop’s shares would collapse.
“All of a sudden, I heard ‘ding, ding, ding, ding, ding,’” Ms. Carr, 31, referring to the stock alerts, said in an interview on Friday. “I grabbed my phone, and I was looking at it, and it said $351. I was shocked: ‘I bought this thing at $6,’ I thought, ‘there’s no way this can be right.’”
Ms. Carr, a nutritionist, quickly pulled her son out of virtual learning and asked him what he wanted to do. “I was trying to explain to him that this was unusual,” she told mySanAntonio.com, a segment of the San Antonio Express-News. “I asked him, ‘Do you want to stay or sell?’”
Jaydyn decided to sell his shares, earning $3,200 — a return of more than 5,000 percent on an investment of about $60.
The article continues:
Ms. Carr said she became committed to teaching her son about financial literacy after Jaydyn’s father, an Army combat medic, died in 2014 from combat-related complications. A certificate of deposit she opened with a death compensation payment provided an entry point to teach her son financial responsibility — lessons she said she didn’t learn until later in life.
She has taught Jaydyn how to speak to bank tellers, how to save his money, how to use a debit card, when to recognize when something is an impulse purchase and, recently, the charming game of the stock market.
“In the African-American community, that’s a huge gap that I wanted to fill in,” Ms. Carr said of teaching her son about the stock market. “He’s all I have left, he’s my legacy. I wish more parents would do it. I think it would definitely interrupt a debt cycle to teach your kids about financial responsibility.”
“Anything can happen to me,” Ms. Carr added. “I just want him to make sure he understands the ways of life even when I’m not here.”
Students, read the entire article, then tell us:
Should parents and schools teach students about investing in the stock market? What if parents aren’t familiar with this topic? How can society even the playing field so that all young people, no matter their background, can learn how to invest responsibly to grow wealth?
Ms. Carr said she was committed to teaching her son about financial literacy after his father died — lessons she said she didn’t learn until later in life. She said, “I wish more parents would do it. I think it would definitely interrupt a debt cycle to teach your kids about financial responsibility.” Do you agree? Can teaching children about personal finance at a young age help to address wealth inequality in the United States?
In “How to Keep Your Cool in the GameStop Market,” Jeff Sommer writes:
While there is a David versus Goliath element to the GameStop stock saga, it is likely to be a cautionary tale. The extreme volatility is reminiscent of the tulip mania in 17th-century Holland, another episode in which rollicking asset prices soared way beyond their intrinsic value. Tempting as it may be to join in the fun, at moments like these most long-term investors are usually better off if they stay sober and avoid the urge to make quick profits. A better option would be salting away money in dull, well-diversified stock and bond portfolios, these days preferably in low-cost index funds.
How do you see the stock market: as a place for quick profits and risky bets, or as a tool for careful long-term investing? How do you predict the GameStop saga will end? Who will be the biggest winners and losers?
The story of Jaydyn’s 5,000 percent return on his investment is highly unusual. Most investors don’t see those kinds of gains. And most stocks don’t behave like GameStop’s stock has over the past month. Is Jaydyn’s story just a feel-good story about a lucky child — similar to stories about lottery winners? Or, is there a larger lesson to be learned here for students, teachers and parents? And if so, what is it?
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Students 13 and older in the United States and the United Kingdom, and 16 and older elsewhere, are invited to comment. All comments are moderated by the Learning Network staff, but please keep in mind that once your comment is accepted, it will be made public.
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