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Only a few years back, Jay Liebowitz was
your typical kid in the seventh grade with an affection for computers. At the
age of 12, he wrote a simple shareware program that helped people download
programs from the Internet. Marketing the program on Compuserve for $30 to $50
a pop, he eventually drew the interest of a larger company and they
bought him out for $30,000. Not too shabby, but that’s just the beginning of
the story.
Of course, one would think that Jay
would continue creating computer
software and programs with visions of becoming the next Bill Gates or Michael
Dell. Well, that’s where the story changes. Instead of using his new found
wealth to build a technology empire, Jay focused on a different avenue
building an investment empire. He took the $30,000 and invested it into stocks
of companies that he used. Using old fashioned research, Jay took as much
guesswork out of the equation as possible and formulated a system to gauge
stocks based on company strengths and long-term projections, and concentrated
less on numbers. So far, his portfolio has grown at times to as high as a 41%
return on investment.
It’s this success and knowledge that
have helped Jay to create and run a successful investing Website for teens and
go on to author a new book on the subject, Wall Street Wizard: Sound Ideas
From A Savvy Teen Investor (Simon & Schuster). Now a student at the
prestigious Wharton School of Business at the University of Pennsylvania, Jay
hopes to learn skills that will take him to a career centered around
entrepreneurship and Wall Street. He’s also looking for opportunities to take
WallStreetWiz to a larger level and expand its offerings.
What kind of advice would Jay give to
future investors or entrepreneurs?
Open
your eyes to your own potential. Most people
don’t realize that they can be entrepreneurs. Many young people see
themselves as getting a job every summer then going to college and getting a
job after graduation. They don’t realize that they can become business
owners, rather than employees for someone else. He talks about “working
smarter” instead of just working harder. Look around you, see what
services or products people you know are buying or paying for. Think about
what you could do that other people might be interested in buying. Of course, having a job and being an entrepreneur are
not necessarily exclusive of one another. You can do both at the same time.
Jay tells about a friend who had a regular job, but bought, fixed up, and
sold used cars on the side. Simply put, open your mind to the possibilities.- Pay attention to where you spend your money. Little things add up fast. In 1998, teens spent an average of $5,400 each. That is about $15 a day. Imagine if you bought one less soda or candy bar each day for a year. That $1.00 a day would add up to $365 by the end of the year. Now imagine if you had started keeping an eye on that four years ago. You would now have almost $1,500 and have made your dentist happy at the same time.
- Invest. Many people don’t realize the beauty of compound interest. If you had taken that $365 each year and invested it in the stock market, you have $1,953 rather than $1,500, a full 30% more! (Assuming a 12% annual gain) If you never added another penny to that $1,953 but left it in the same place, in 10 years it would grow to $6,068. Not bad for the cost of a candy bar a day.
- Be realistic. As Jay says, “I know that I’m not smarter than the market; it’s going to do what it wants.” Investing, no matter how carefully executed, is vulnerable to losses, so be prepared for stocks to take a dip. If you’ve committed to the long term goals of a company and have stayed involved in their current dealings, in the end you should come out a winner.