A student perspective: Owning stocks in the time of COVID-19
By Rituja Bhowmik, staff writer
Disclaimer: Information in this article is based on personal opinion and experience. It should not be considered professional financial investment advice.
The coronavirus pandemic is affecting the economy as much as the public health sector right now. As of April 30, 30 million Americans have filed for unemployment, and the longer this shutdown takes, the more time small businesses and big corporations will take to recover. The chief of the World Trade Organization stated that what the economy is experiencing right now is on par with or even worse than the 2008 recession. Two Maria Carrillo High School students who have experience with investing in the stock market share what they have been doing in response to the current market crash.
MCHS junior William Li is familiar with the stock market, having invested previously. “I had like 20 shares of tech--a bit of Tesla, Microsoft and Oracle,” he said. “But I sold off everything on January 10 because of the coronavirus. And looking at 2008, I know what it means.”
Legally, minors can own stocks in their own names, but they cannot conduct any transactions with it. Therefore, for Li and most minors who are interested in the stock market, the account is owned by their parents or legal guardians.
Li’s stocks for Microsoft and Tesla were long-term: he had them for over two years, while his stocks for Oracle, which he had owned for less than a year, were short-term.
“I lost money on Oracle although stocks were up five or 10 percent on them, except Microsoft and Tesla rose enough that they made money after tax,” said Li.
To sell a stock, you have to place an order through a broker, who is a person or firm licensed to buy and sell stocks. Li used Robinhood, an online broker, to sell his.
“They weren’t hard to sell surprisingly, took a few days,” he said. “Although I should have hung on to Microsoft, it’s still going up right now.”
Though he couldn’t make a profit on all of his stocks, Li says stock trading was more of a hobby rather than a serious endeavor for him. On the other hand, MCHS junior Connor Chang has been investing for the past three years, but really started getting into trading at the beginning of this school year.
“I got very interested in swing trading when a club at my sister’s college had an investing competition, and I convinced her to put me into the competition,” Chang said. It “was the driving force that led me to go try hard in stocks.”
Swing trading is a type of trading where investors target a specific or expected price. If the stock exceeds a certain price, they will buy it. And when it approaches their estimated target price, they sell it. Swing traders can use long-term or short-term stocks. Currently, Chang only has short-term exchange-traded funds, or ETFs for short, which are commodity stocks such as gold or natural gas, rather than a company.
Recently, Chang “closed a position on DGAZ,” a kind of natural gas stock, where he made 25 percent on the trade over three days, which translated to $58 per share. This, and all other profits he makes from swing trading, he puts into his education fund.
While he stopped trading ETFs “the weeks leading up to the bigger drops,” Chang has continued to swing trade rationally during this time.
For beginners or newcomers to the stock market, Chang advises, “Practice live trading with fake money. Once you learn the basics, you can start trading and learn. But it’s important to start off paper trading or using live simulators.”
Chang has an account with the online broker TD Ameritrade, where registration is free, and used their free electronic trading platform Think-or-Swim to learn initially.
At the end of the day, Chang says, “I think it’s cool just to be able to make ‘free’ money so to speak just by making smart decisions on how you manage money.”