We don’t take Hallmark holidays too seriously in our house. Case in point: my official Father’s Day present this year consisted of a card that my children forgot to sign before they sealed it, which they then promptly lost in my wife’s car.
But unbeknownst to her, my daughter gave me the best Father’s Day present that any financial advisor could ask for, when, upon glancing at the back of the Business section of the newspaper that I was reading, she asked, “Daddy, what are all those funny looking charts?”
She was looking at charts that tracked the percentage movement of various stock indices over the past three months. And when I explained that to her, rather than nodding and moving onto something else, she asked, “Daddy, what’s the stock market?”
Oh. My. Goodness.
This is the moment that all financial advisors dream about when they become parents. (We have other dreams, too. But this is kind of a big one.) And it was happening to me!
I got to explain to my daughter that the stock market is where people can buy and sell small ownership pieces of the best companies in the world, some that she’s heard of (“I can own part of Facebook? And Nike?”) and some that she hasn’t (“What’s Allergan?”). We looked at the reporting of various stocks and read about the opening and closing prices, and how much of a change that was in percentage terms over the previous day, year-to-date, and over the past 12 months.
We talked about the fact that if you took all those different stocks and put them together in a giant “grocery store”, that’s the stock market. Except instead of being in a physical store, you buy them on the Internet. She learned that you can buy anyone that you want, and that some are more expensive than others. We also chatted a bit about what makes stocks go up and down, and how different people might look at the same stock and have wildly different ideas about how much they are worth.
I asked her what she thought the lowest percentage change could be, and she correctly answered 100%. I then asked her to find the stock with the lowest percentage change year-to-date, and she correctly found Time Warner, which had just been purchased by AT&T and subsequently had its stock price go to zero. We got to spend some time talking about why companies buy other companies, and how that can be both good and not-so-good, depending on your point of view.
At this point, I figured she was spent. Then she said, “Daddy, I think I get it. This is really interesting. But what’s a bond?”
Best Father’s Day ever.